Bradley-Burns Uniform Local Sales and Use Tax Law: tax sharing agreements.

Plain English Breakdown

The bill summary and digest do not provide specific details on how tax sharing agreements are defined beyond the context of compensation limits for consultants. The term 'tax sharing agreement' is used broadly but its full scope in other contexts is not detailed here.

Limits on Consultant Compensation for Tax Sharing Agreements

This law sets limits on the amount of money that can be paid to consultants working on tax sharing agreements starting in 2027.

What This Bill Does

• Prohibits a person from paying compensation to a consultant with respect to a specific tax sharing agreement, as defined, that exceeds the lower of 5% of the total tax revenues shared pursuant to the tax sharing agreement and $250,000.
• Defines a 'tax sharing agreement' for this purpose to mean any agreement that would result in the payment, transfer, diversion, or rebate of sales and use tax revenue under the Bradley-Burns Uniform Local Sales and Use Tax Law.
• Excludes agreements between local agencies and their staff members directly employed by the agency or technical consultants providing noncompensated advisory services from these compensation limits.

Who It Names or Affects

• Local government agencies that enter into tax sharing agreements starting January 1, 2027.
• Consultants working on tax sharing agreements after this date.

Terms To Know

Tax Sharing Agreement

An agreement between local agencies to share sales and use tax revenue in a specific way.

Consultant

A person hired by an agency to provide advice or services, often for a fee.

Limits and Unknowns

• The bill only applies to agreements made on and after January 1, 2027.
• It does not affect existing tax sharing agreements in place before this date.

Official Summary Text

SB 1172, as amended, Hurtado.
Bradley-Burns Uniform Local Sales and Use Tax Law: tax sharing agreements.
Existing law prohibits a local agency from entering into any form of agreement that would result, directly or indirectly, in the payment, transfer, diversion, or rebate of any tax revenue resulting from the imposition of a sales and use tax under the Bradley-Burns Uniform Local Sales and Use Tax Law to any person for any purpose when the agreement results in a reduction in the amount of revenue under the Bradley-Burns Uniform Local Sales and Use Tax Law that, in the absence of the agreement, would be received by another local agency and the retailer continues to maintain a physical presence within the territorial jurisdiction of that other local agency. Existing law also requires a local agency entering into an agreement that results in a reduction of the amount of revenue under the Bradley-Burns Uniform Local Sales and Use Tax Law that, in the absence of the agreement, would be
received by another local agency to take certain actions with respect to that agreement, including posting the proposed agreement on its internet website for at least 30 days prior to ratification or approval of that agreement by its governing body.
This bill would prohibit a person from paying compensation to a consultant with respect to a specific tax sharing agreement, as defined, that exceeds the lower of 5% of the total tax revenues shared pursuant to the tax sharing agreement and $250,000. The bill would define a tax sharing agreement for this purpose to mean any agreement that would result, directly or indirectly, in the payment, transfer, diversion, or rebate of any tax revenue resulting from the imposition of a sales and use tax under the Bradley-Burns Uniform Local Sales and Use Tax Law to any person for any purpose. The bill would exclude from these provisions agreements between a local agency and a member of the agency’s staff directly employed by the
jurisdiction or technical consultants providing noncompensated advisory services. The bill would apply these provisions only to agreements entered into on and after January 1, 2027.
The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.

Current Bill Text

Download Bill PDF