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The Revenue and Taxation committee approved a bill which could possibly extend the moratorium on the Internet Tax out all the way to January 1, 2008. This moratorium would not only cover Internet access and computer services but would also encompass taxation of bit and bandwidth. The current moratorium is set to expire January 1, 2004. (A.B. 128, introduced January 15, 2003)

(02/15/2003)

As requested last month by Governor Gray Davis, The California Commission on Tax Policy in the New Economy has decided to solicit public comment on issues of tax policy prior to issuing an interim report at the end of April. The next Commission meeting will be held on March 12, 2003 to identify tax issues the public would like to be discussed at the forum. The hearings will be held in San Francisco on March 24 and in Los Angeles on April 14. (California Commission on Tax Policy in the New Economy Meeting, Sacramento, California, February 24, 2003, Ch. 619 (S.B. 1933))

(02/15/2003)

A state regulation has recently been amended for clarification purposes regarding publishing. Regulation 1543 states that any transfer of copy or a manuscript, cartoon and/or comic strip from an author to a publisher explicitly for publication purposes is a nontaxable activity. The transfer of the original manuscript or copy, whether in tangible or machine-readable form is incidental and the author is to be considered the consumer of the property. (Regulation 1543, California State Board of Equalization, effective September 18, 2002)

(12/15/2002)

In California, the distribution of coupons can be considered a selling activity under state law. The California State Board of Equalization determined an out-of-state online retailer was responsible for use tax on sales to all California customers because of their affiliation with an in-state store. Customers purchasing items at these particular in-state stores were given a promotional shopping bag with both the affiliate's and the online retailer's logos on them. Inside were coupon books that could only be redeemed at the online retailer's business. The online retailer also paid for all printing costs and the insertion of the coupons into the shopping bags. The online retailer argued that solicitation was not a selling activity but the SBE considered the situation a joint marketing activity in which a customer base was being targeted. They also stated the efforts the in-state representatives made were an integral part in assisting the out-of-state sales for the online retailer. (Barnes&Noble.com, California State Board of Equalization, Mem. Opin. SC OHB 97-732835, September 12, 2002)

(12/15/2002)

As of September 1, 2001, the sale, storage, use, or other consumption of off-road commercial timber harvesting equipment and machinery is exempt from California sales and use tax. As of January 1, 2002, the exemption applies to the 5% state rate, but not to the .5% component authorized by the Bradley-Burns Uniform local sales and use tax law. If the exemption certificate was provided to the retailer by September 30, 2002, the purchaser was entitled to claim the partial exemption for the period of September 1, 2001 to June 30, 2002. (California Reg. 1534)

(11/15/2002)

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