RCRC has expressed support for Senate Bill 792, authored by Senator Steve Glazer (D-Orinda), which would place reporting requirements on local sales tax collected by online retailers with annual qualified online sales of more than $50 million.
The ever-growing trend of online sales across the state is having significant impacts on California’s economy. In particular, rural communities that would otherwise benefit from a distribution of sales tax under the Bradley-Burns Uniform Sales Tax Act (Bradley-Burns) tied to the jurisdiction of the purchaser’s residence are now finding diminishing revenues as Bradley-Burns allocations are made at the point-of-sale where distribution centers, company offices, or warehouses are located. Rural communities are unnatural fits for centralized distribution or sales of goods for major retailers, making it nearly impossible to compete or incentivize companies to locate in those areas. The current practice of “kickback agreements” where municipalities give retailers a percentage of Bradley-Burns allocations in exchange for certain economic development benefits also skew toward urban and suburban areas with more space for industrial development.
SB 792 would place new reporting requirements on retailers with more than $50 million in transacted online revenue during the previous year to help demonstrate that economic development agreements divert revenues away from jurisdictions that would receive residence-based Bradley-Burns allocations.
SB 792 passed the Assembly Revenue & Taxation Committee on July 5, 2021, and has been referred to the Assembly Appropriations Committee. RCRC’s letter of support can be accessed here. For more information, contact Staci Heaton, RCRC Senior Regulatory Affairs Advocate by email or call (916) 447-4806.