CA SB 1406
enactedSales and Use Tax Law: vehicles: shell companies.
California · 2025-2026 Regular Session · upper
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Quick answers
Did CA SB 1406 pass?
Yes. CA SB 1406 has been enacted into law. Latest recorded action (2026-09-30): Chaptered by Secretary of State. Chapter 1036, Statutes of 2026.
What is CA SB 1406 about?
The Sales and Use Tax Law imposes a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state, measured by sales price. Under the Sales and Use Tax Law, there is a presumption that a vehicle, vessel, or aircraft shipped or brought into this state within 12 months from the date of its purchase was acquired for storage, use, or other consumption in this state and is subject to the use tax if any of specified conditions are satisfied, including where the vehicle is purchased by a resident of this state, as defined. Existing law provides that, for purposes of this presumption, a closely held company or limited liability company is considered a resident of this state if 50% or more of the shares or membership interests are held by shareholders or members who are residents of this state. This bill would additionally provide that a partnership, limited partnership, or limited liability partnership is a resident of this state if 50% of the partnership, limited partnership, or limited liability partnership interests are held by partners that are residents of this state. The bill would also provide that, for purposes of the above-described presumption, a shell company, as defined, is a resident of this state if any shareholder, partner, member, or beneficial owner is a resident of this state. The bill would hold any officer, manager, partner, beneficial owner, or member of a shell company personally liable for any unpaid taxes, and any interest and penalties on those taxes, the nonpayment of which may constitute a crime, due on the purchase of a vehicle, vessel, or aircraft. By expanding the scope of crimes related to the violation of the Sales and Use Tax Law, this bill would impose a state-mandated local program. The bill would also make nonsubstantive and conforming changes to these provisions. This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIIIA of the California Constitution, and thus would require for passage the approval of 23 of the membership of each house of the Legislature. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. This bill would take effect immediately as a tax levy.
Who sponsors CA SB 1406?
McNerney is the primary sponsor of CA SB 1406, joined by 1 cosponsor.
Description
The Sales and Use Tax Law imposes a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state, measured by sales price. Under the Sales and Use Tax Law, there is a presumption that a vehicle, vessel, or aircraft shipped or brought into this state within 12 months from the date of its purchase was acquired for storage, use, or other consumption in this state and is subject to the use tax if any of specified conditions are satisfied, including where the vehicle is purchased by a resident of this state, as defined. Existing law provides that, for purposes of this presumption, a closely held company or limited liability company is considered a resident of this state if 50% or more of the shares or membership interests are held by shareholders or members who are residents of this state. This bill would additionally provide that a partnership, limited partnership, or limited liability partnership is a resident of this state if 50% of the partnership, limited partnership, or limited liability partnership interests are held by partners that are residents of this state. The bill would also provide that, for purposes of the above-described presumption, a shell company, as defined, is a resident of this state if any shareholder, partner, member, or beneficial owner is a resident of this state. The bill would hold any officer, manager, partner, beneficial owner, or member of a shell company personally liable for any unpaid taxes, and any interest and penalties on those taxes, the nonpayment of which may constitute a crime, due on the purchase of a vehicle, vessel, or aircraft. By expanding the scope of crimes related to the violation of the Sales and Use Tax Law, this bill would impose a state-mandated local program. The bill would also make nonsubstantive and conforming changes to these provisions. This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIIIA of the California Constitution, and thus would require for passage the approval of 23 of the membership of each house of the Legislature. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. This bill would take effect immediately as a tax levy.
- Introduced
- 2026-02-20
- Latest action
- 2026-09-30 — Chaptered by Secretary of State. Chapter 1036, Statutes of 2026.
- Bill type
- bill
- Last updated
- —
Subjects
Sponsors
- McNerneyauthor
- Graysoncoauthor
Committees
Not provided by source.
Action timeline
Newest first
2026-09-30
Chaptered by Secretary of State. Chapter 1036, Statutes of 2026.
became-law
2026-09-30
Approved by the Governor.
executive-signature
2026-09-03
Enrolled and presented to the Governor at 3 p.m.
executive-receipt
2026-08-27
In Senate. Ordered to engrossing and enrolling.
2026-08-26
Read third time. Passed. Ordered to the Senate.
2026-08-26
Read third time. Passed. (Ayes 59. Noes 19. Page 6619.) Ordered to the Senate.
passage,reading-1,reading-3
2026-08-13
Assembly Rule 63 suspended.
2026-08-13
From committee: Do pass. (Ayes 11. Noes 4.) (August 13).
2026-08-13
Read second time. Ordered to third reading.
2026-08-05
August 5 set for first hearing. Placed on suspense file.
2026-06-30
From committee: Do pass and re-refer to Com. on APPR. (Ayes 5. Noes 2.) (June 29). Re-referred to Com. on APPR.
committee-passage,committee-passage-favorable,referral-committee
2026-06-15
June 15 set for first hearing. Placed on suspense file.
2026-05-26
Referred to Com. on REV. & TAX.
referral-committee
2026-05-20
In Assembly. Read first time. Held at Desk.
reading-1
2026-05-19
Read third time. Passed. (Ayes 31. Noes 8. Page 4339.) Ordered to the Assembly.
passage,reading-1,reading-3
2026-05-12
Read second time. Ordered to third reading.
reading-1,reading-2,reading-3
2026-05-11
From committee: Be ordered to second reading pursuant to Senate Rule 28.8.
committee-passage,reading-1,reading-2
2026-05-07
Set for hearing May 11.
2026-05-06
From committee: Do pass and re-refer to Com. on APPR. (Ayes 4. Noes 0. Page 4154.) (May 6). Re-referred to Com. on APPR.
committee-passage,committee-passage-favorable,referral-committee
2026-04-23
From committee with author's amendments. Read second time and amended. Re-referred to Com. on REV. & TAX.
amendment-passage,committee-passage,reading-1,reading-2,referral-committee
2026-04-09
Set for hearing May 6.
2026-04-08
Re-referred to Com. on REV. & TAX.
referral-committee
2026-03-23
From committee with author's amendments. Read second time and amended. Re-referred to Com. on RLS.
amendment-passage,committee-passage,reading-1,reading-2,referral-committee
2026-03-04
Referred to Com. on RLS.
referral-committee
2026-02-23
Read first time.
reading-1
2026-02-23
From printer. May be acted upon on or after March 23.
2026-02-20
Introduced. To Com. on RLS. for assignment. To print.
introduction,referral-committee
Versions
Documents
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Votes
Do pass, but first be re-referred to the Committee on [Appropriations]
2026-05-06 · pass · 4-0
Member-level votes (5)
- Ashby: yes
- McNerney: yes
- Grayson: yes
- Becker: yes
- Alvarado-Gil: other
3rd Reading SB1406 McNerney et al.
2026-05-19 · pass · 31-8
Member-level votes (40)
- Weber Pierson: yes
- Allen: yes
- Cortese: yes
- Hurtado: yes
- Wiener: yes
- Limón: yes
- Grayson: yes
- Becker: yes
- Cervantes: yes
- Rubio: yes
- McGuire: yes
- Stern: yes
- Smallwood-Cuevas: yes
- Gonzalez: yes
- Padilla: yes
- Choi: yes
- Durazo: yes
- Cabaldon: yes
- Arreguín: yes
- Umberg: yes
- Ashby: yes
- Menjivar: yes
- Laird: yes
- Blakespear: yes
- Archuleta: yes
- Richardson: yes
- McNerney: yes
- Pérez: yes
- Caballero: yes
- Reyes: yes
- Wahab: yes
- Strickland: no
- Alvarado-Gil: no
- Ochoa Bogh: no
- Dahle: no
- Jones: no
- Grove: no
- Valladares: no
- Seyarto: no
- Niello: other
Do pass and be re-referred to the Committee on [Appropriations]
2026-06-29 · pass · 5-2
Member-level votes (7)
- Quirk-Silva: yes
- Gipson: yes
- McKinnor: yes
- Carrillo: yes
- Michelle Rodriguez: yes
- Sanchez: no
- DeMaio: no
Related bills
No related bills recorded for this bill.
Official source
Attribution
Data from openstates_api_sync, retrieved 2026-10-01T20:25:01.457668Z
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