Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013
 

Uniform Local Sales And Use Tax Law

CHAPTER 1 GENERAL PROVISIONS

Section 7204.2

7204.2. Aerospace refunds. (a) The State Board of Equalization shall continue to negotiate a settlement with the government of the United States relating to the amount and repayment of the sales tax refund liability of the state and local agencies pursuant to the court decision in Aerospace Corporation v. State Board of Equalization, 218 Cal.App.3d 1300. To the maximum extent possible, the board shall include in the settlement agreement a provision that, upon adoption of the settlement agreement between the board and the government of the United States, the board, the government of the United States, and the aerospace contractors affected by the court's decision in Aerospace Corporation v. State Board of Equalization shall cease to incur any further costs associated with the audit of claims for sales tax refunds, and the repayment of the sales tax refund by local agencies shall be made on or after July 1, 1993, through deductions in sales and use tax transmittals to cities and counties pursuant to a method to be determined as specified in subdivisions (b) and (c), respectively, or pursuant to the formula determined by the board as specified in subdivision (e).

(b) (1) The State Board of Equalization shall establish a Cities Task Force on Aerospace Refunds. The task force shall be appointed by the League of California Cities. The task force shall meet regularly for the purpose specified in paragraph (2).

(2) The task force shall be responsible for establishing a method for the distribution of the sales tax refund liability among cities in the state arising from the court decision in Aerospace Corporation v. State Board of Equalization, 218 Cal.App.3d 1300.

(3) On or before April 1, 1993, the task force shall submit to the board its recommendation of the method for the distribution of the sales tax refund liability among cities associated with the Aerospace Corporation case.

(4) The board shall adopt the recommendation of the task force and implement the method contained in the recommendation for making the deduction from city sales and use tax transmittals effective July 1, 1993.

(5) If the task force fails to submit its recommendation to the board as specified in paragraph (3), the board shall implement the formula specified in

subdivision (e) to govern the distribution of deductions of sales and use tax transmittals among cities effective July 1, 1993.

(c) (1) The State Board of Equalization shall establish a Counties Task Force on Aerospace Refunds. The task force members shall be appointed by the California State Association of Counties. The task force shall meet regularly for the purpose specified in paragraph (2).

(2) The task force shall be responsible for establishing a method for the distribution of the sales tax refund liability among counties in the state arising from the court decision in Aerospace Corporation v. State Board of Equalization, 218 Cal.App.3d 1300.

(3) On or before April 1, 1993, the task force shall submit to the board its recommendation of the method for the allocation of the sales tax refund liability among counties associated with the Aerospace Corporation case.

(4) The board shall adopt the recommendation of the task force and implement the method contained in the recommendation for making the deduction from county sales and use tax transmittals effective July 1, 1993.

(5) If the task force fails to submit its recommendation to the board as specified in paragraph (3), the board shall implement the formula as specified in subdivision (e) to govern the distribution of deductions of sales and use tax transmittals among counties effective July 1, 1993.

(d) The deductions from the sales and use tax transmittals pursuant to the methods established pursuant to subdivisions (b) and (c) shall, in the aggregate, equal the amount of the refund required of cities and counties by the Aerospace Corporation court decision.

(e) (1) If, on or before April 1, 1993, the Cities Task Force on Aerospace Refunds or the Counties Task Force on Aerospace Refunds does not submit its recommendation to the board for distributing the deductions from the sales and use tax transmittals among cities and counties, respectively, the board shall use the formula specified in this subdivision to govern the distribution among cities and counties.

(2) With regard to transmittals to each city, county, and city and county pursuant to Section 7204, the board, on or after July 1, 1993, shall deduct from the transmittals those refunds required to be paid as a result of the decision in Aerospace Corporation v. State Board of Equalization. Refunds of local taxes attributable to the Aerospace decision shall be allocated based on the following calculations:

(A) In the case of a contractor with a single business location in this state:

A = A 1 (X*L)

B = B 1 [(X*L)]*Y 1

C = C 1 [(X*L)]*Y 2

D = D 1 [(X*L)]*Y 3

(B) In the case of a contractor with multiple business locations in this state:

A = A 1 (X*M)*L

B = B 1 [(X*M)*L]*Y 1

C = C 1 [(X*M)*L]*Y 2

D = D 1 [(X*M)*L]*Y 3

(3) The formula or formulas specified in this section shall be used if the contractor's business practice was such that it purchased substantially all of the property, for which it is entitled to be reimbursed as an item of indirect cost on a tax-paid basis. It shall not apply if the contractor's business practice was such that it purchases that property without payment of tax and reported use tax on a self-accrual basis, in which case the entity where the self-accrued use tax was reported would be allocated the deduction from its sales and use tax transmittals equal to the refund required by this decision.

(4) The following definitions govern the symbols used in this subdivision:

A = Amount of local tax allocated to the jurisdiction of the contractor's actual business location.

B = Amount of local tax allocated to the city, county, or city and county within the same county of the contractor's business location.

C = Amount of local tax allocated to the city, county, or city and county adjoining the county of the contractor's actual business location (adjoining counties share a common border with the county of the contractor's actual business location).

D = Amount of local tax allocated to the city, county, or city and county in all other counties, excluding amounts allocated to A, B, and C above.

A 1 = Percentage of tax overpaid by contractor at business location established pursuant to an analysis of completed Aerospace claims for refund.

B 1 = Percentage of tax overpaid by contractor in the county of the business location, excluding A above, established pursuant to an analysis of completed Aerospace claims for refund.

C 1 = Percentage of tax overpaid by contractor in adjoining counties of the business location established pursuant to an analysis of completed Aerospace claims for refund.

D 1 = Percentage of tax overpaid by contractor in all other counties, excluding B 1 and C 1 above, established pursuant to an analysis of completed Aerospace claims for refund.

X = Pro rata share of tax plus interest overpaid by contractors based on the agreed-to total refund to the government of the United States. Contractor's pro rata share shall be computed as follows:

X = The quotient of the contractor's computed refund divided by the total computed refund (actual and estimated), multiplied by the settlement amount.

L = Local tax rate factor established pursuant to an analysis of tax rates in effect during the period of the contractor's claim for refund.

Y 1 = Percentage of local tax allocated to the city, county, or city and county within the county of the contractor's business location, excluding A above, during the period of the claim for refund established pursuant to an analysis of the board's annual reports.

Y 2 = Percentage of local tax allocated to the city, county, or city and county in adjoining counties of the contractor's business location during the period of the claim for refund as established pursuant to an analysis of the board's annual reports.

Y 3 = Percentage of local tax allocated to city, county, or city and county in all other counties, excluding Y 1 and Y 2 above, of the contractor's business location during the period of the claim for refund as established pursuant to an analysis of the board's annual reports.

M = Percentage of tax to be allocated to each location of a contractor with multiple locations within the state as determined by an analysis of reported taxable sales during the period of the claim for refund. This shall be computed as follows:

M = The quotient of taxable sales by location divided by total taxable sales.

(5) Percentages to be applied to elements A 1 , B 1 , C 1 , and D 1 as determined by board data analysis shall be as follows:

% Elements Alameda County Los Angeles County Orange County

A 1

36.91% 33.87% 22.14%

B 1

33.49% 54.95% 23.15%

C 1

25.63% 8.02% 38.62%

D 1

3.97% 3.16% 16.09%

% Elements San Diego County Santa Barbara County Santa Clara County (All Other Counties)

A 1

48.26% 20.43% 28.31% 30.04%

B 1

16.15% 25.97% 35.33% 45.22%

C 1

5.91% 15.44% 33.43% 13.50%

D 1

29.68% 38.16% 2.93% 11.24%

(6) With regard to transmittals to districts pursuant to Section 7271, the board shall deduct from the transmittals those refunds attributable to the court decision in Aerospace Corporation v. State Board of Equalization based on the formula in paragraph (7).

(7) Refunds of transaction taxes attributable to the Aerospace decision shall be allocated based on the following calculation: T = T * X.

The following definitions govern the symbols used in this paragraph:

T = Transit tax rate factor established pursuant to an analysis of the transit tax rates in effect at contractor's location or locations during the claim for refund period.

X = Pro rata share of tax plus interest overpaid by contractor based on the agreed-to total refund to the government of the United States. Contractor's pro rata share shall be computed as follows:

X = The quotient of contractor's computed overpayment divided by the total overpayment (actual and estimated), multiplied by the settlement amount.

History.—Added by Stats. 1992, Ch. 802, in effect September 22, 1992.