Senate Bill 889 Enhances Tax Code, Protects Taxpayers' Interests
Tuesday, October 10, 2023
Section: States

In a recent development, California Governor Gavin Newsom has signed Senate Bill 889 into law. This eagerly awaited event ushers in a series of revisions to the Revenue and Tax Codes, including a significant update to Revenue and Tax Section 6355, which plays a crucial role in defining the market value threshold for sales taxes charged on bulk sales of monetized bullion, nonmonetized gold or silver bullion, and numismatic coins.

This legislative achievement is the outcome of dedicated efforts by the National Coin & Bullion Association (NCBA) in conjunction with a California advocacy group that has been actively advocating for members’ interests with the California Department of Tax and Fee Administration (CDTFA).

The most substantial change introduced by SB 889 is the reinforcement of the evaluation process for determining the sales-tax threshold value. Under this legislation, the CDTFA is required to reassess and, if necessary, recalculate the threshold by December 31 of each year. Equally significant, SB 889 establishes that the effective date for any new threshold will be July 1 of the following year.

Prior to the enactment of SB 889, CDTFA had failed to meet that statutory deadline for evaluating and setting a new threshold in 2023. Despite this lapse, CDTFA had unilaterally declared the new threshold effective January 1, 2023. The problem lay in the fact that, according to the pre-SB 889 regulations, any new threshold was only supposed to take effect on January 1 of the year following its calculation. Setting the effective date for 2023 imposed a considerable burden on taxpayers, where dealers would have been compelled either to collect the tax from customers retroactively or absorb the cost themselves.

Swift to act in the best interests of taxpayers, advocacy groups confronted CDTFA about the illegality of their declaration and its effective date. These advocates also made it clear that they would resort to legal action if CDTFA did not rectify the situation.

The passage of SB 889 represents a collaborative effort between the Senate Committee on Governance and Finance and the California Department of Tax and Fee Administration to update various sections of the Revenue and Tax Code. Crucially, advocates’ intervention played a pivotal role in the development of this bill, protecting taxpayers from CDTFA’s attempts to bypass the previous statutory implementation date.

NCBA and its associates would like to take the opportunity to express appreciation to CDTFA, Director Nicolas Maduros, and the agency’s dedicated staff for their responsiveness and cooperation throughout this process.