California – Emergency Adoption of Regulation 2000

SALT Report 2591 – The State Board of Equalization announced that it voted to readopt Regulation 2000, Retailer Reimbursement Retention, as an emergency regulation, while the Board considers the adoption of a permanent regulation that would specify the amount of reimbursement a retailer may retain pursuant to Public Resources Code section 4629.5, subdivision (a)(3).

Regulation 2000

Assembly Bill 1492 imposes a 1% assessment on purchasers of lumber products and engineered wood products to be collected by retailers at the time of sale. The Bill also authorizes the Board to adopt regulations regarding the amount a retailer may retain from the assessments they collect as reimbursement. Specifically, the Bill provides that:

The retailer shall collect the assessment from the person at the time of sale, and may retain an amount equal to the amount of reimbursement, as determined by the State Board of Equalization pursuant to regulations, for any costs associated with the collection of the assessment, to be taken on the first return or next consecutive returns until the entire reimbursement amount is retained.

The statute provides that retailers may only retain the Board-prescribed amount of $250 one time, on the retailers’ first return or next consecutive returns filed immediately after the retailers are required to begin collecting the assessment on January 1, 2013. The statute does not authorize retailers to retain additional amounts to offset the cost of complying with the law thereafter.

Initially, the California Forestry Association supported the adoption of Regulation 2000 and the $250 reimbursement amount provided in the regulation. However, the California Retailers’ Association and the West Coast Lumber & Building Material Association argued that retailers should receive more reimbursement and on a continual basis.

As a result, the Board is considering the adoption of new regulations that would either, allow “a retailer required to collect the Lumber Products Assessment to retain $485 per location, in addition to the $250 allowed by Regulation 2000, as reimbursement for start-up costs associated with the collection of the assessment. They are also considering a regulation that would allow retailers to retain $5,500 per lumber location, and an additional $1,500 on an annual basis.

The Board will meet to discuss these matters on June 11, 2013.

For Further Information

California State Board of Equalization – Emergency Special Tax Regulation 2000, Retailer Reimbursement Retention