Senate BillChaptered/SignedRevenue and Taxation
SB 863: Taxation.
What SB 863 does, verified December 6, 2025
The bill aims to amend various tax laws in California. It requires remittances to be deemed received on the date they are received by the county treasurer-tax collector, unless specified otherwise. The bill also allows tax collectors to reduce the minimum price for selling tax-defaulted property where the minimum necessary to redeem is decreased due to the removal or reduction of defaulted taxes resulting from a special assessment or direct charge. Additionally, the bill changes the requirements for ordinances adopted under the transactions and use tax law, allowing them to become operative on the first day of a calendar quarter or prior to that, but only after an election on the ordinance proposing the tax. The bill also updates the allocation of motion picture credits and the certified studio credit, prohibiting credits generated by disregarded single member limited liability companie…
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Last action: Chaptered by Secretary of State. Chapter 462, Statutes of 2025. (2025-09-08)Alert me
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| Oct. 07, 2025 | Chaptered by Secretary of State. Chapter 462, Statutes of 2025. |
| Oct. 07, 2025 | Approved by the Governor. |
| Sep. 16, 2025 | Enrolled and presented to the Governor at 3 p.m. |
| Sep. 08, 2025 | Assembly amendments concurred in. (Ayes 39. Noes 0. Page 2579.) Ordered to engrossing and enrolling. |
| Sep. 08, 2025 | Assembly amendments concurred in. (Ayes 39. Noes 0. Page 2579.) Ordered to engrossing and enrolling. |
Latest bill textChaptered version, October 7, 2025 · 2,883 words
Senate Bill No. 863
CHAPTER 462
An act to amend Sections 2512, 3706, 7265, 23696, and 30101.7 of the Revenue and Taxation Code, relating to taxation.
[ Approved by Governor October 07, 2025. Filed with Secretary of State October 07, 2025. ]
LEGISLATIVE COUNSEL'S DIGEST
SB 863, Committee on Revenue and Taxation. Taxation.
(1) Existing property tax law specifies the date on which a remittance to a taxing agency is deemed to be received depending on the method of delivery, as provided, including for items mailed with an official postmark.
This bill would require, in the absence of any specified dates, the remittance to be deemed received on the date the remittance is received by the county treasurer-tax collector, except as provided.
(2) Existing property tax law authorizes a tax collector to sell property that has become tax defaulted, as provided, and has not been redeemed. Existing law requires the tax collector to sell the property at a public auction to the highest bidder and prohibits the tax collector from accepting an offer less than the minimum price approved, as provided, except that the tax collector may reduce the minimum price if there has been a partial redemption or partial cancellation, as specified.
This bill would also authorize a tax collector to reduce the minimum price where the minimum necessary to redeem is decreased due to the removal or reduction of defaulted taxes resulting from the removal or reduction of a special assessment or a direct charge against the property.
(3) The Transactions and Use Tax Law authorizes various local governmental entities, subject to certain limitations and approval requirements, to levy transactions and use taxes as special taxes in accordance with the procedures and requirements set forth in that law. The Transactions and Use Tax Law prohibits an ordinance adopted under its provisions from becoming operative on other than the first day of a calendar quarter, or prior to the first day of the first calendar quarter, commencing more than 110 days after the adoption of the ordinance.
This bill would instead prohibit an ordinance adopted under the Transactions and Use Tax Law from becoming operative on other than the first day of a calendar quarter, or prior to the first day of the first calendar quarter, commencing more than 110 days after the election on the ordinance proposing the tax.
(4) The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws, including various motion picture credits, commonly referred to as motion picture credit 1.0, 2.0, 3.0, and 4.0, and the certified studio credit, to be allocated by the California Film Commission in differing amounts equal to specified percentages of the qualified expenditures of a qualified motion picture in this state. Existing law allows a qualified taxpayer, if a motion picture credit exceeds the taxpayer’s tax liability, to elect to assign a portion of the credit to one or more affiliated corporations for each taxable year in which the credit is allowed, as specified. AB 1138 (Chapter 27 of the Statutes of 2025), effective July 3, 2025, among other things, for purposes of the motion picture credit 3.0 and 4.0 and for purposes of the certified studio credit, expands the definition of a qualified taxpayer to include a single member limited liability company that is disregarded for tax purposes. AB 1138 prohibits a motion picture credit 1.0 and 2.0 or certified studio credit generated by a disregarded single member limited liability company from being ineligible for certain reasons for assignment to a corporation that, directly or indirectly, owns the disregarded single member limited liability company, or to an affiliated corporation of that corporation.
This bill would additionally prohibit a motion picture credit 3.0 generated by a disregarded single member limited liability company from being ineligible for those same reasons for assignment to a corporation that, directly or indirectly, owns the disregarded single member limited liability company, or to an affiliated corporation of that corporation.
(5) The California Constitution provides for the establishment of the State Board of Equalization, which, before July 1, 2017, had primary responsibility for most of the state’s duties, powers, and responsibilities regarding the administration of taxes and fees. Existing law, on July 1, 2017, transferred to the California Department of Tax and Fee Administration various duties, powers, and responsibilities of the State Board of Equalization, including enforcing specified licensing and tax provisions of the Cigarette and Tobacco Products Tax Law and providing information to the Attorney General relative to a seller’s failure or attempt to comply with specified provisions of federal law.
This bill would change references in these provisions of the Cigarette and Tobacco Products Tax Law from the “State Board of Equalization” or “board” to the “California Department of Tax and Fee Administration” or “department,” as applicable, to reflect the transfer of the board’s duties, powers, and responsibilities to the department.
The people of the State of California do enact as follows:
SECTION 1.
Section 2512 of the Revenue and Taxation Code is amended to read:2512.
(a) If a remittance to cover a payment required by law to be made to a taxing agency prior to a specified date and hour is (a) deposited in the United States mail in a sealed envelope, properly addressed with the required postage prepaid, or (b) deposited for shipment with an independent delivery service that is an Internal Revenue Service designated delivery service or has been approved by the tax collector, in a sealed envelope or package, properly addressed with the required fee prepaid, delivery of which shall not be later than 5 p.m. on the next business day after the effective delinquent date, the remittance shall be deemed received on the date shown by the post office cancellation mark stamped upon the envelope containing the remittance, or the independent delivery service shipment date shown on the packing slip or air bill attached to the outside of the envelope or package containing the remittance, or, in the absence of any of the aforementioned dates, on the date received by the county treasurer-tax collector, or on the date it was mailed if proof satisfactory to the tax collector establishes that the mailing occurred on an earlier date. The taxing agency is not required to accept a payment actually received in the mail if it is received more than 30 days after the date and time set by law for the payment.(b) If a remittance to cover a payment, required by law to be made to a taxing agency prior to a specified date and hour, is made by an electronic payment option, such as wire transfer, telephoned credit card, or electronic internet means, the remittance shall be deemed received on the date the transaction was completed by the taxpayer, if the remittance was made on the taxing agency’s authorized internet website or via the taxing agency’s authorized telephone number. Proof of completion of the transaction in the form of a confirmation number or other convincing evidence shall be presented by the taxpayer to the satisfaction of the tax collector. This subdivision does not apply to payments by electronic fund transfer as provided in Sections 2503.1 and 2503.2.
(c) This section does not, for purposes of applying subdivision (a) of Section 3707, apply to a remittance sent by mail, by independent delivery service, or by electronic payment option for the redemption of tax-defaulted property.
SEC. 2.
Section 3706 of the Revenue and Taxation Code is amended to read:3706.
If the property is not redeemed before the close of business on the last business day prior to the date of the sale of the property, the tax collector shall sell the property at public auction to the highest bidder at the time and place fixed. In the case of a sale at public auction, no bid shall be accepted for a sum less than the minimum price approved in the resolution of the board of supervisors; provided, however, the tax collector may reduce the minimum price under any of the following circumstances:
(a) If a partial redemption has been made under Chapter 2 (commencing with Section 4131) of Part 7 of Division 1.
(b) If a partial cancellation has been made under Chapter 4 (commencing with Section 4985) of Part 9 of Division 1 after that price was fixed, by not more than the ratio that the delinquency on the portion so redeemed or canceled bears to the delinquency upon the whole.
(c) If the total amount necessary to redeem is decreased due to the removal or reduction of default taxes resulting from the removal or reduction of a special assessment or a direct charge against the property.
SEC. 3.
Section 7265 of the Revenue and Taxation Code is amended to read:7265.
No ordinance adopted pursuant to this part shall be operative on other than the first day of a calendar quarter, or prior to the first day of the first calendar quarter, commencing more than 110 days after the election on the ordinance proposing the tax.SEC. 4.
Section 23696 of the Revenue and Taxation Code is amended to read:23696.
(a) Notwithstanding anything to the contrary in Sections 23685 and 23695, and in Section 23698, as that section read on January 1, 2025, a credit, or any portion thereof, allowed under Section 23685, 23695, or 23698 and generated by a disregarded single member limited liability company shall not be ineligible for assignment to a corporation that, directly or indirectly, owns the disregarded single member limited liability company, or to an affiliated corporation of that corporation, based on either of the following:(1) The disregarded single member limited liability company is not considered a qualified taxpayer, as defined in subdivision (b) of Sections 23685 and 23695 and subdivision (b) of 23698, as that section read on January 1, 2025.
(2) The amount of credit allowed under Section 23685, 23695, or 23698 does not exceed the tax liability of the disregarded single member limited liability company for purposes of paragraph (1) of subdivision (c) of Sections 23685 or 23695 or paragraph (1) of subdivision (c) of Section 23698, as that section read on January 1, 2025, respectively.
(b) For purposes of this section, “affiliated corporation” has the same meaning as defined in paragraph (1) of subdivision (c) of Sections 23685 and 23695 and paragraph (1) of subdivision (c) of Section 23698, as that section read on January 1, 2025.
(c) This section shall apply only when the credits affected by this section were assigned and claimed on a tax return timely filed with the Franchise Tax Board for taxable years beginning on or before January 1, 2025.
SEC. 5.
Section 30101.7 of the Revenue and Taxation Code is amended to read:30101.7.
(a) It is the intent of the Legislature in enacting this section to facilitate the collection of all applicable state surtaxes, sales or use taxes, and escrow and other payment obligations on cigarettes sold to residents of the state and to ensure compliance with the Prevent All Cigarette Trafficking Act of 2009 (PACT Act; Public Law 111-154).(b) Except as provided in subdivision (d), no person may engage in a retail sale of cigarettes or tobacco products in California unless the sale is a vendor-assisted, face-to-face sale.
(c) For the purposes of this section, the following definitions shall apply:
(1) “Cigarette” has the same meaning as provided in Section 375 of Title 15 of the United States Code, as amended from time to time.
(2) “Consumer” means a person who purchases cigarettes or tobacco products. “Consumer” does not include any person licensed under this part or under Division 8.6 (commencing with Section 22970) of the Business and Professions Code and lawfully operating as a manufacturer, distributor, wholesaler, or retailer of cigarettes or tobacco products.
(3) “Delivery sale” means sale of cigarettes or tobacco products into and in this state in either of the following cases:
(A) The consumer submits the order for the sale by means of a telephone or other method of voice transmission, the mail, or the Internet or other online service, or the seller is otherwise not in the physical presence of the consumer when the request for purchase or order is made.
(B) The cigarettes or tobacco products are delivered to the consumer by common carrier, private delivery service, or other method of remote delivery, or the seller is not in the physical presence of the consumer when the consumer obtains possession of the cigarettes or tobacco products.
(4) “Delivery seller” means a person who makes a delivery sale.
(5) “Face-to-face sale” means a sale in which the purchaser is in the physical presence of the seller or the seller’s employee or agent at the time of the sale. A face-to-face sale does not include a delivery sale.
(6) “Indian country” shall have the same meaning as provided in Section 1151 of Title 18 of the United States Code, and includes any other land held by the United States in trust or restricted status for one or more Indian tribes.
(7) “Interstate commerce” means commerce between a state and any place outside the state, commerce between a state and Indian country in the state, or commerce between points in the same state but through a place outside of the state or through any Indian country.
(8) “Tobacco products” shall have the same meaning as otherwise defined under this part with the exception of cigars.
(d) A person may engage in delivery sale of cigarettes or tobacco products to a person in California provided that all of the following conditions are met:
(1) The delivery seller has fully complied with all of the requirements of Chapter 10A (commencing with Section 375) of Title 15 of the United States Code, otherwise known as the Jenkins Act.
(2) The delivery seller obtains and maintains any applicable license under this part and under Division 8.6 (commencing with Section 22970) of the Business and Professions Code, as if the delivery sales occurred entirely within this state.
(3) The delivery seller complies with any applicable state law that imposes escrow or other payment obligations on tobacco product manufacturers, including, but not limited to, Sections 104555 to 104557, inclusive, of the Health and Safety Code.
(4) The delivery seller complies with any applicable state law or local ordinance that imposes restrictions on the retail sale of cigarettes or tobacco products directly to the public from a retail location, including Section 104559.5 of the Health and Safety Code, as if the delivery sales occurred entirely within the state and place.
(5) The Attorney General may require the delivery seller to report to the Attorney General its delivery sales of cigarettes and tobacco products to California consumers in the form and manner specified by the Attorney General.
(e) Any violation of this section by any person is a misdemeanor. Each offense shall be punishable by a fine not to exceed five thousand dollars ($5,000), or imprisonment not to exceed one year in a county jail, or both the fine and imprisonment. The amount of any fines assessed shall be deposited in the Cigarette and Tobacco Products Compliance Fund.
(f) The California Department of Tax and Fee Administration may provide information relative to a seller’s failure or attempt to comply with the PACT Act and the Jenkins Act to the Attorney General.
(g) The Attorney General or a city attorney, county counsel, or district attorney may bring a civil action to enforce this section against a person that violates this section and, in addition to any other remedy provided by law, the court shall assess a civil penalty in accordance with the following schedule:
(1) A civil penalty of not less than one thousand dollars ($1,000) and not more than two thousand dollars ($2,000) for the first violation.
(2) A civil penalty of not less than two thousand five hundred dollars ($2,500) and not more than three thousand five hundred dollars ($3,500) for the second violation within a five-year period.
(3) A civil penalty of not less than four thousand dollars ($4,000) and not more than five thousand dollars ($5,000) for the third violation within a five-year period.
(4) A civil penalty of not less than five thousand five hundred dollars ($5,500) and not more than six thousand five hundred dollars ($6,500) for a fourth violation within a five-year period.
(5) A civil penalty of up to ten thousand dollars ($10,000) for a fifth or subsequent violation within a five-year period.
(h) This section does not prohibit the lawful sale of a tobacco product that occurs by means of a vending machine.
(i) Nothing in this section shall relieve the seller of cigarettes from any other applicable requirement of state law relating to the sale or distribution of cigarettes or tobacco products in this state.
(j) The California Department of Tax and Fee Administration shall enforce the licensing and tax provisions of this section. Other provisions of this section shall be enforced by the Attorney General.
(k) The provisions of this section are severable. If any provision of this section or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
Text of SB 863 as chaptered, from the official record. Connect Plus keeps every version and highlights what changed.Compare versions