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Daily Tax Report: State

California Looks to Nix Tampon Tax, Ease Use Tax on Some Sellers

June 18, 2019, 3:17 PM

Diapers and menstrual products would be tax-free for two years, and some remote sellers would get use tax relief in a bill heading to the California governor.

The state Assembly and Senate passed S.B. 92 unanimously June 17.

Lawmakers supported the bill even with a $17.5 million tax loss in fiscal year 2019-20 to the state general fund and a $35 million loss in subsequent years. The exemptions, which Gov. Gavin Newsom (D) supported in his May revisions to the state budget, would start in 2020.

  • S.B. 92 also would simplify the rules for the Office of Tax Appeals to allow one administrative law judge—instead of three—to hear small cases.
  • And the bill would provide relief for out-of-state online Fulfillment by Amazon sellers who could face up to eight years of use tax liability because FBA placed their inventory in the state. Under the bill, the state tax department could go back three years—instead of eight—from April 1, 2019, when Newsom signed a law (A.B. 147) setting sales thresholds for out-of-state sellers in response to the U.S. Supreme Court’s South Dakota v. Wayfair ruling.
  • SB 92 is a trailer bill, policy legislation with language implementing the main budget. Newsom must sign the overall plan by July 1, the start of the next fiscal year.

To contact the reporter on this story: Joyce E. Cutler in San Francisco at jcutler@bloomberglaw.com

To contact the editors responsible for this story: Jeff Harrington at jharrington@bloombergtax.com; Megan Pannone at mpannone@bloombergtax.com

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