Report 2017-106 All Recommendation Responses
Report 2017-106: The Bradley-Burns Tax and Local Transportation Funds: Changing the Allocation Structure for the Bradley-Burns Tax Would Result in a More Equitable Distribution of Local Transportation Funding (Release Date: November 2017)
Recommendation for Legislative Action
To ensure that Bradley-Burns tax revenue is more evenly distributed and remove the incentive for local jurisdictions to vie for commercial development as a means to increase their tax revenue, the Legislature should amend the Bradley-Burns tax law to allocate revenues from Internet sales based on the destination of sold goods (a destination-based allocation structure) rather than their place of sale (situs-based).
Description of Legislative Action
The Legislature did not take action during the 2021-2022 legislative session to address this specific recommendation.
- Legislative Action Current As-of: November 2022
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of November 30, 2021, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: November 2021
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of November 30, 2020, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: November 2020
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
Assembly Constitutional Amendment 13 (Obernolte) would provide that, on and after January 1, 2021, for the purpose of distributing the revenues derived under a sales tax imposed pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law, the retail sale of tangible personal property by a qualified retailer that is transacted online is consummated at the point of the delivery to the purchaser. This measure was introduced on March 26, 2019, and is pending in the Assembly.
- Legislative Action Current As-of: December 2019
California State Auditor's Assessment of Annual Follow-Up Status: Legislation Proposed But Not Enacted
Description of Legislative Action
Senate Constitutional Amendment 20 (Glazer) would have, upon approval of the voters, amended the California Constitution to provide that the retail sale of tangible personal property transacted online is consummated at the point of delivery for the purpose of sales taxes. This measure died in the Senate Appropriation Committee.
- Legislative Action Current As-of: December 2018
California State Auditor's Assessment of 1-Year Status: Legislation Proposed But Not Enacted
Description of Legislative Action
Senate Constitutional Amendment 20 (Glazer) would, upon approval of the voters, amend the California Constitution to provide that the retail sale of tangible personal property transacted online is consummated at the point of delivery for the purpose of sales taxes.
- Legislative Action Current As-of: May 2018
California State Auditor's Assessment of 6-Month Status: Legislation Introduced
Description of Legislative Action
Legislation has not been introduced to address this specific recommendation.
- Legislative Action Current As-of: February 2018
California State Auditor's Assessment of 60-Day Status: No Action Taken
Recommendation for Legislative Action
To increase budgetary control and ensure that it has the information necessary to make decisions that reflect the State's best interests, the Legislature should regularly review and evaluate tax expenditures, including exemptions and exclusions to the Bradley-Burns tax and general sales and use taxes, by performing annual reviews of existing tax expenditures and eliminating those that no longer serve their intended purposes.
Description of Legislative Action
The Legislature did not take action during the 2021-2022 legislative session to address this specific recommendation.
- Legislative Action Current As-of: November 2022
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of November 30, 2021, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: November 2021
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of November 30, 2020, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: November 2020
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of November 2019, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: December 2019
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
The Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: December 2018
California State Auditor's Assessment of 1-Year Status: No Action Taken
Description of Legislative Action
Legislation has not been introduced to address this specific recommendation.
- Legislative Action Current As-of: May 2018
California State Auditor's Assessment of 6-Month Status: No Action Taken
Description of Legislative Action
Legislation has not been introduced to address this specific recommendation.
- Legislative Action Current As-of: February 2018
California State Auditor's Assessment of 60-Day Status: No Action Taken
Recommendation for Legislative Action
To increase budgetary control and ensure that it has the information necessary to make decisions that reflect the State's best interests, the Legislature should regularly review and evaluate tax expenditures, including exemptions and exclusions to the Bradley-Burns tax and general sales and use taxes, by reviewing tax expenditures that have no stated legislative purpose and either adding clarifying language to those statutes or eliminating them.
Description of Legislative Action
The Legislature did not take action during the 2021-2022 Legislative Session to address this specific recommendation.
- Legislative Action Current As-of: November 2022
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of November 30, 2021, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: November 2021
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of November 30, 2020, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: November 2020
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of November 2019, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: December 2019
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
The Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: December 2018
California State Auditor's Assessment of 1-Year Status: No Action Taken
Description of Legislative Action
Legislation has not been introduced to address this specific recommendation.
- Legislative Action Current As-of: May 2018
California State Auditor's Assessment of 6-Month Status: No Action Taken
Description of Legislative Action
Legislation has not been introduced to address this specific recommendation.
- Legislative Action Current As-of: February 2018
California State Auditor's Assessment of 60-Day Status: No Action Taken
Recommendation for Legislative Action
To increase budgetary control and ensure that it has the information necessary to make decisions that reflect the State's best interests, the Legislature should regularly review and evaluate tax expenditures, including exemptions and exclusions to the Bradley-Burns tax and general sales and use taxes, by requiring the Franchise Tax Board and the Department of Finance to include in their annual reports on tax expenditures the estimated costs of those expenditures before implementation compared to actual forgone revenues to date.
Description of Legislative Action
The Legislature did not take action during the 2021-2022 Legislative Session to address this specific recommendation.
- Legislative Action Current As-of: November 2022
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of November 30, 2021, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: November 2021
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of November 30, 2020, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: November 2020
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of November 2019, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: December 2019
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
The Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: December 2018
California State Auditor's Assessment of 1-Year Status: No Action Taken
Description of Legislative Action
Legislation has not been introduced to address this specific recommendation.
- Legislative Action Current As-of: May 2018
California State Auditor's Assessment of 6-Month Status: No Action Taken
Description of Legislative Action
Legislation has not been introduced to address this specific recommendation.
- Legislative Action Current As-of: February 2018
California State Auditor's Assessment of 60-Day Status: No Action Taken
Recommendation for Legislative Action
To increase the tax bases for the general sales and use taxes and the Bradley-Burns tax, the Legislature should amend state law to specify that digital goods are taxable.
Description of Legislative Action
The Legislature did not take action during the 2021-2022 Legislative Session to address this specific recommendation.
- Legislative Action Current As-of: November 2022
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of November 30, 2021, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: November 2021
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of November 30, 2020, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: November 2020
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
As of November 2019, the Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: December 2019
California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken
Description of Legislative Action
The Legislature has not taken action to address this specific recommendation.
- Legislative Action Current As-of: December 2018
California State Auditor's Assessment of 1-Year Status: No Action Taken
Description of Legislative Action
Legislation has not been introduced to address this specific recommendation.
- Legislative Action Current As-of: May 2018
California State Auditor's Assessment of 6-Month Status: No Action Taken
Description of Legislative Action
Legislation has not been introduced to address this specific recommendation.
- Legislative Action Current As-of: February 2018
California State Auditor's Assessment of 60-Day Status: No Action Taken
Recommendation #6 To: Tax and Fee Administration, California Department of
To help address California's e-commerce tax gap and further ensure out-of-state retailers' compliance with state law regarding nexus, Tax Administration should implement a two-year pilot of its authorized reward program for information resulting in the identification of unreported sales and use taxes.
Annual Follow-Up Agency Response From October 2019
Since the 2017 release of the audit findings, the responsibility for use tax on e-commerce transactions and the definition of nexus has changed for out-of-state retailers. As a result of the U.S. Supreme Court's 2018 decision in Wayfair v. South Dakota and the Legislature's subsequent passage of AB 147 and SB 92, California now has an economic nexus standard that requires any business making sales over $500,000 in this state to collect use tax from its California customers and report it directly to CDTFA. Additionally, effective October 1, 2019, marketplace facilitators are required to collect the sales or use tax on sales facilitated through the marketplace. These statutory changes are expected to significantly reduce the e-commerce tax gap, therefore, the reward program will not be pursued at this time.
California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement
1-Year Agency Response
The CDTFA is currently drafting a sales and use tax regulation for the reward program to be completed and sent to the Office of Administrative Law by July 31, 2019.
- Estimated Completion Date: July 31, 2019
- Response Date: October 2018
California State Auditor's Assessment of 1-Year Status: Pending
6-Month Agency Response
CDTFA is contacting other states to determine whether they offer reward programs and if so, what revenue is generated from them and under what terms. The information gathered will be used to determine the viability of a budget change proposal. We are expecting to acquire responses to this survey by the end of May, 2018 and anticipate completing our analysis and determination of next steps by June 2018.
- Estimated Completion Date: July 1, 2019
- Response Date: May 2018
California State Auditor's Assessment of 6-Month Status: Pending
Tax Administration says it needs to complete its review and analysis of other states before implementing our recommendation.
60-Day Agency Response
The CDTFA appreciates the recommendation made by the CSA and the related authority to operate a reward program. We are open to piloting a reward program and will explore the feasibility of a pilot program within our existing authority. Please note that the CDTFA currently has a mechanism for stakeholders to provide information of potential non-compliance with tax and fee laws. Since non-compliance results in unfair competition, we often receive such information from law-abiding citizens who want to ensure a level playing field.
- Estimated Completion Date: Not Yet Determined
- Response Date: January 2018
California State Auditor's Assessment of 60-Day Status: No Action Taken
The agency is open to the recommendation but has taken no steps towards implementing it yet.
All Recommendations in 2017-106
Agency responses received are posted verbatim.