California SB 1406 — Sales and Use Tax Law: vehicles: shell companies.

California, 20252026. SB 1406: Sales and Use Tax Law: vehicles: shell companies.

Plural source record ↗

Official legislative source ↗

Latest action

September 30, 2026 — Chaptered by Secretary of State. Chapter 1036, Statutes of 2026.

Summary

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.

Sponsors

• McNerney — primary sponsor
• Grayson

Bill text

SB1406 Read version ↗

02/20/26 - Introduced Read version ↗

03/23/26 - Amended Senate Read version ↗

04/23/26 - Amended Senate Read version ↗

08/30/26 - Enrolled Read version ↗

09/30/26 - Chaptered Read version ↗

Recorded votes

Legislative history

1. September 30, 2026Chaptered by Secretary of State. Chapter 1036, Statutes of 2026.
2. September 30, 2026Approved by the Governor.
3. September 3, 2026Enrolled and presented to the Governor at 3 p.m.
4. August 27, 2026In Senate. Ordered to engrossing and enrolling.
5. August 26, 2026Read third time. Passed. (Ayes 59. Noes 19. Page 6619.) Ordered to the Senate.
6. August 13, 2026Read second time. Ordered to third reading.
7. August 13, 2026From committee: Do pass. (Ayes 11. Noes 4.) (August 13).
8. August 13, 2026Assembly Rule 63 suspended.
9. August 5, 2026August 5 set for first hearing. Placed on suspense file.
10. June 30, 2026From committee: Do pass and re-refer to Com. on APPR. (Ayes 5. Noes 2.) (June 29). Re-referred to Com. on APPR.
11. June 15, 2026June 15 set for first hearing. Placed on suspense file.
12. May 26, 2026Referred to Com. on REV. & TAX.
13. May 20, 2026In Assembly. Read first time. Held at Desk.
14. May 19, 2026Read third time. Passed. (Ayes 31. Noes 8. Page 4339.) Ordered to the Assembly.
15. May 12, 2026Read second time. Ordered to third reading.
16. May 11, 2026From committee: Be ordered to second reading pursuant to Senate Rule 28.8.
17. May 7, 2026Set for hearing May 11.
18. May 6, 2026From committee: Do pass and re-refer to Com. on APPR. (Ayes 4. Noes 0. Page 4154.) (May 6). Re-referred to Com. on APPR.
19. April 23, 2026From committee with author's amendments. Read second time and amended. Re-referred to Com. on REV. & TAX.
20. April 9, 2026Set for hearing May 6.
21. April 8, 2026Re-referred to Com. on REV. & TAX.
22. March 23, 2026From committee with author's amendments. Read second time and amended. Re-referred to Com. on RLS.
23. March 4, 2026Referred to Com. on RLS.
24. February 23, 2026Read first time.
25. February 23, 2026From printer. May be acted upon on or after March 23.
26. February 20, 2026Introduced. To Com. on RLS. for assignment. To print.

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