Sales and use taxes: retailer: construction contractor.

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. A construction contractor generally does not sell materials to his or her customer, but instead uses the materials in furnishing and installing the materials in the performance of a construction contract, with either sales tax applying to the sale of materials to the construction contractor, or if sales tax does not apply, use tax applying to the storage, use, or other consumption of the materials purchased by the construction contractor. If the contractor has not purchased the materials, but has acquired them from its real property, no sales or use tax applies. This bill would, for contracts awarded on and after April 1, 2011, deem a construction contractor the retailer of any aggregate-based materials that the contractor fabricates, manufactures, processes, or produces, and permanently incorporates into a construction project. The bill would specify how the gross receipts from the deemed retail sale are determined. 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. Those laws require that a local sales and use tax ordinance or transactions and use tax ordinance provide that amendments to the Sales and Use Tax Law automatically become a part of the ordinance. The provisions of this bill would automatically be incorporated into those ordinances. This bill would result in a change in state taxes for the purpose of increasing state revenues within the meaning of Section 3 of Article XIIIA of the California Constitution, and thus would require for passage the approval of 23 of the membership of each house of the Legislature. This bill would take effect immediately as a tax levy.