Tax Revenue Sharing Agreements for Jurisdictions

Assembly Bill No. 2854 (Stats. 2024, ch. 842) added section 7213 to the Revenue and Taxation Code (RTC). This guide provides information about the reporting and publication requirements RTC section 7213 imposes on a local agency, as defined in Government Code section 53084.5.

RTC section provides that "rebated sales and use tax revenues" means any direct or indirect payment, transfer, diversion, or rebate of any tax revenue resulting from the imposition of a sales and use tax under the Bradley-Burns Uniform Local Sales and Use Tax Law (Bradley-Burns) (commencing with RTC section 7200) to any person pursuant to an agreement (tax revenue sharing agreement). Beginning January 1, 2025, RTC section 7213 requires each local agency to annually report information concerning tax revenue sharing agreements in effect for the previous fiscal year to CDTFA. Tax revenue sharing agreements include those agreements resulting in the direct or indirect payment, transfer, diversion, or rebate of Bradley-Burns local tax revenues.

Additionally, if a local agency is required to report information about any tax revenue sharing agreements to CDTFA, RTC section 7213 requires the local agency to publish the information reported about the tax revenue sharing agreements on its website and maintain a visible hyperlink to the webpage containing the published information on the homepage of the local agency's website at all times.

Reporting Requirements

RTC section 7213 requires each local agency to report information to CDTFA annually, on or before April 30, for the preceding fiscal year, even if they do not have any tax revenue sharing agreements to report. The first information reporting due date is on April 30, 2025. We intend to email each local agency a link to a form to use to report the information required by RTC section 7213 to CDTFA. This email will come from Local Revenue Branch (LRB)-Jurisdiction Services, Jservices@cdtfa.ca.gov.

RTC section 7213 requires the following information to be reported to CDTFA by a local agency for each tax revenue sharing agreement that resulted in rebated sales and use tax revenue during the immediately preceding fiscal year:

The name or names of parties to the agreement.
The date the agreement was originally executed.
The date the agreement terminated or will terminate, absent any renewal.
The total dollar amount of rebated sales and use tax revenues received by each party to the agreement on or after the date of execution of the agreement through and including June 30 of the fiscal year immediately preceding the date of the report.
The total dollar amount of rebated sales and use tax revenues received by each party to the agreement during the fiscal year immediately preceding the date of the report.
The percentage of a retailer's sales and use taxes, if any, used to calculate or otherwise determine the rebated sales and use tax revenues received by each party to the agreement.
The percentage of a retailer's sales and use taxes, if any, used to calculate or otherwise determine the rebated sales and use tax revenues received by any other person who is not a party to the agreement.

If a local agency has not directly or indirectly paid, transferred, diverted, or rebated any sales and use tax revenues pursuant to an agreement in the immediately preceding fiscal year, then RTC section 7213 requires the local agency to report that fact to CDTFA and exempts the local agency from the publication requirements applicable to tax revenue sharing agreements.

Publishing Requirements

RTC section 7213 requires a local agency to publish the information submitted to CDTFA about each tax revenue sharing agreement on its website. It also requires a hyperlink to the internet webpage containing the information to be present and visible on the homepage of the local agency's website at all times.

RTC section 7213 requires CDTFA to publish the information reported to CDTFA about each tax revenue sharing agreement on CDTFA's website on or before June 1, 2025, and annually thereafter.

Extensions

If a local agency does not timely provide the information required or does not publish the required information on its internet website, RTC section 7213 requires CDTFA to notify the local agency by certified mail that it has 45 days from the mailing of the notice to provide or publish the required information or submit a statement to CDTFA explaining why it is unable to provide or publish the required information within the 45-day period.

If a local agency submits such a statement, RTC section 7213 provides that CDTFA may extend the 45-day period to provide or publish the required information by 30 days if the local agency demonstrates that the failure to timely comply with the applicable requirement was due to reasonable cause and circumstances beyond the local agency's control, occurred notwithstanding the exercise of ordinary care, and occurred in the absence of willful neglect. RTC section 7213 also provides that CDTFA shall not grant an extension for a local agency based on the local agency's claim that the information is confidential.

A local agency may use CDTFA-868, Request for Extension (Tax Revenue Sharing Agreements), to submit a statement to CDTFA. A local agency may send a statement to CDTFA, including a completed CDTFA-868, Request for Extension (Tax Revenue Sharing Agreements), by email to our Local Revenue Branch at JServices@cdtfa.ca.gov.

If CDTFA grants an extension, RTC section 7213 requires CDTFA to notify the local agency by certified mail that it has 30 days to provide or publish the required information commencing on the next business day following the expiration of the 45-day period.

If CDTFA declines to grant an extension, RTC section 7213 requires the local agency to provide or publish the required information within 10 days after CDTFA notifies the local agency by certified mail that it has denied the extension.

RTC section 7213 requires a CDTFA notice granting or denying an extension to be addressed to the person authorized to receive confidential data at the local agency's address as it appears in CDTFA's records. RTC section 7213 also provides that the mailing of the notice shall be deemed complete at the time of the deposit of the notice in the United States Post Office, or a mailbox, sub-post office, substation or mail chute, or other facility regularly maintained or provided by the United States Postal Service, without extension of time for any reason. To verify or update the person authorized to receive confidential data at a local agency, please email CDTFA's Local Revenue Branch at Jservices@cdtfa.ca.gov.

Penalties

If a local agency does not report or publish the information required by RTC section 7213 within the applicable period, RTC section 7213 provides that CDTFA may impose a penalty for each day after the expiration of the applicable period the local agency fails to provide or publish the information, up to 365 days after the expiration of the applicable period, as follows:

For days one to 180, inclusive, one thousand dollars ($1,000) per day.
For days 181 to 365, inclusive, four thousand dollars ($4,000) per day.

Questions

If you have questions about the new tax revenue sharing agreement reporting and publication requirements, please contact our Local Revenue Branch by calling 1-916-309-5800 or by emailing us at Jservices@cdtfa.ca.gov.