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

Plain English Breakdown

The candidate explanation accurately reflects the content of the bill as described by the official source material.

Tax Sharing Agreements: Consultant Compensation Limits

This law sets limits on how much money can be paid to consultants for tax sharing agreements and applies these rules only to new agreements made after January 1, 2027.

What This Bill Does

• Limits the amount of money that can be given to a consultant working on a specific tax sharing agreement to no more than 5% of the total shared tax revenue or $250,000, whichever is less.
• Defines a 'tax sharing agreement' as any arrangement where sales and use tax revenue is paid, transferred, diverted, or rebated to someone for any reason under the Bradley-Burns Uniform Local Sales and Use Tax Law.
• Exempts agreements between local agencies and their own staff members or technical consultants who provide free advice from these limits.

Who It Names or Affects

• Local agencies entering into tax sharing agreements after January 1, 2027
• Consultants working on tax sharing agreements

Terms To Know

Tax Sharing Agreement

An arrangement where sales and use tax revenue is paid, transferred, diverted, or rebated to someone for any reason under the Bradley-Burns Uniform Local Sales and Use Tax Law.

Limits and Unknowns

• The bill only applies to agreements made on or after January 1, 2027.
• It does not specify what happens if a consultant is paid more than the limit 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