Sales and use taxes: exemption: manufacturing equipment: corporate income tax: single sales factor.

The Sales and Use Tax Law imposes a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. That law provides various exemptions from those taxes. This bill would exempt from those taxes, on or after specified dates beginning March 15, 2011, the gross receipts from the sale of, and the storage, use, or other consumption of, tangible personal property purchased by a qualified person, as defined, for use in the manufacturing process, as specified, and tangible personal property purchased for use by a contractor to perform a construction contract for a qualified person, for specified purposes. This bill would state the intent of the Legislature to extend this exemption to all manufacturing activity on and after July 1, 2013. The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes counties and cities to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and existing law authorizes districts, as specified, to impose transactions and use taxes in conformity with the Transactions and Use Tax Law, which conforms to the Sales and Use Tax Law. Exemptions from state sales and use taxes are incorporated into these laws. This bill would specify that this exemption does not apply to local sales and use taxes, transactions and use taxes, and specified state taxes. The Corporation Tax Law imposes taxes measured by income and, in the case of a business with income derived from or attributable to sources both within and without this state, apportions the income between this state and other states and foreign countries in accordance with a specified 4-factor formula based on the property, payroll, and sales within and without this state, except that in the case of an apportioning trade or business that derives more than 50% of its gross business receipts from conducting one or more qualified business activities, as defined, business income is apportioned in accordance with a specified 3-factor formula. Existing law, for taxable years beginning on or after January 1, 2011, allows a taxpayer to make an annual election to have that income apportioned in accordance with a single sales factor formula, except as provided. This bill would, for a taxpayer that would otherwise be able to elect to have its income apportioned in accordance with a single sales factor formula, require the taxpayer to apportion its income in accordance with a single sales factor formula. This bill would take effect immediately as a tax levy.