CaliforniaSales and Use Tax Law: vehicles: shell companies.
What it does
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, measured by sales price. Under the Sales and Use Tax Law, there is a presumption that a vehicle, vessel, or aircraft shipped or brought into this state within 12 months from the date of its purchase was acquired for storage, use, or other consumption in this state and is subject to the use tax if any of specified conditions are satisfied, including where the vehicle is purchased by a resident of this state, as defined. Existing law provides that, for purposes of this presumption, a closely held company or limited liability company is considered a resident of this state if 50% or more of the shares or membership interests are held by shareholders or members who are residents of this state.
More detail
This bill would additionally provide that a partnership, limited partnership, or limited liability partnership is a resident of this state if 50% of the partnership, limited partnership, or limited liability partnership interests are held by partners that are residents of this state. The bill would also provide that, for purposes of the above-described presumption, a shell company, as defined, is a resident of this state if any shareholder, partner, member, or beneficial owner is a resident of this state. The bill would hold any officer, manager, partner, beneficial owner, or member of a shell company personally liable for any unpaid taxes, and any interest and penalties on those taxes, the nonpayment of which may constitute a crime, due on the purchase of a vehicle, vessel, or aircraft. By expanding the scope of crimes related to the violation of the Sales and Use Tax Law, this bill would impose a state-mandated local program. The bill would also make nonsubstantive and conforming changes to these provisions.
This bill would include a change in state statute that would result in a taxpayer paying a higher tax 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.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
This bill would take effect immediately as a tax levy.
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Where it stands
- Introduced
- Passed Senate
- Passed Assembly
- To Governor
- Became Law
Looking ahead
No hearings or votes scheduled.
History
- 2026
- Sep 30Chaptered by Secretary of State. Chapter 1036, Statutes of 2026.Latest
- Sep 30Approved by the Governor Gavin Newsom.Became Law
- Sep 3Enrolled and presented to the Governor at 3 p.m.To Governor
- Aug 27In Senate. Ordered to engrossing and enrolling.Minor
- Aug 26Read third time. Passed. (Ayes 59. Noes 19. Page 6619.) Ordered to the Senate.Passed Assembly
- Vote recorded SB 1406 McNerney Senate Third Reading By Aguiar-Curry. Result: pass.Lower
- Aug 13Read second time. Ordered to third reading.Minor
- Vote recorded Do pass. Result: pass.Lower
- Aug 13From committee: Do pass. (Ayes 11. Noes 4.) (August 13).Minor
- Aug 13Assembly Rule 63 suspended.
- Aug 5August 5 set for first hearing. Placed on suspense file.
- Jun 30From committee: Do pass and re-refer to Com. on APPR. (Ayes 5. Noes 2.) (June 29). Re-referred to Com. on APPR.Minor
- Jun 29
- Vote recorded Do pass and be re-referred to the Committee on [Appropriations]. Result: pass.Lower
- Jun 15June 15 set for first hearing. Placed on suspense file.
- May 26Referred to Com. on REV. & TAX.Minor
- May 20In Assembly. Read first time. Held at Desk.Minor
- May 19Read third time. Passed. (Ayes 31. Noes 8. Page 4339.) Ordered to the Assembly.Passed Senate
- Vote recorded 3rd Reading SB1406 McNerney et al. Result: pass.Upper
- May 12Read second time. Ordered to third reading.Minor
- May 11From committee: Be ordered to second reading pursuant to Senate Rule 28.8.Minor
- May 7Set for hearing May 11.
- May 6From committee: Do pass and re-refer to Com. on APPR. (Ayes 4. Noes 0. Page 4154.) (May 6). Re-referred to Com. on APPR.Minor
- Vote recorded Do pass, but first be re-referred to the Committee on [Appropriations]. Result: pass.Upper
- Apr 23From committee with author's amendments. Read second time and amended. Re-referred to Com. on REV. & TAX.Major
- Apr 9Set for hearing May 6.
- Apr 8Re-referred to Com. on REV. & TAX.Minor
- Mar 23From committee with author's amendments. Read second time and amended. Re-referred to Com. on RLS.Major
- Mar 4Referred to Com. on RLS.Minor
- Feb 23Read first time.Minor
- Feb 23From printer. May be acted upon on or after March 23.
- Feb 20Introduced. To Com. on RLS. for assignment. To print.Introduced