Risk Management Blog

[Latest Update from the California Escrow Association (CEA) – 6/29/2012]

We know it is month end; you are busy, and tired, and just glad it’s Friday.  But SB 12 goes to the Assembly Revenue & Taxation Committee on Monday, July 2^nd. Assembly Members on the committee will be briefed by their staffs on Monday morning.

It is MORE URGENT THAN EVER BEFORE that you send in your letter AND make your call today.

The following “to do” list may look daunting, but I’ve timed it, and you can bang all steps out in about 10-15 minutes or fewer, using the template and details we’ve attached.  If those of you who do bulks include remittance numbers (item 3) this might take you a little longer but these numbers are significant and important  to the Rev & Tax Committee – however if this takes you too long, please delete that section and send your letter anyway).

Please do these TODAY:

1. Confirm your Assembly Member (click here to enter your RESIDENCE AND BUSINESS addresses to determine this).
2. If your Assembly Member serves on Assembly Revenue & Taxation Committee (see committee list attached; this call to action applies if your legislator is listed as a committee member).
   1.  CALL the Assembly Member’s office to request his or her “NO” vote on SB 12 (see below for details)
   2. Write the letter and FAX to your Assembly Member.
   3. If you do bulk sale escrow transactions, include in your letter, if you have it available or can quickly obtain it, the total amounts of funds you have remitted through bulk sales transactions to your local county tax collector, as well as the State Board of Equalization, Franchise Tax Board, and Employment Development Departments for the first five months of 2012 (or some other recent period, such as “Calendar Year 2011” but please be specific about the time period covered).
   4. FAX a copy of your letter to CEA  at 916-924-7323.
   5. Contact your local county tax collector, inform them about AB 12 and ask them to have their opposition letter submitted to the Assembly Revenue and Taxation Committee TODAY.
   6. Even if you do not do bulk sale transactions, please do this!

Calling your legislator:  In most cases you will speak to whomever answers the phone. You will likely be asked your name, address, and phone number; it is possible but unlikely they will ask you for other specifics.

It’s EASY and FAST!  Your call will probably go something like this:

You:  Hi I’m ___.  I’m a constituent of Assembly Member ___.  I am calling to express my opposition to Senate Bill 12 and request his/her NO vote when Senate Bill 12 is heard in the Assembly Revenue and Taxation Committee on Monday, July 2^nd.

Them: Thank you for calling and letting us know. Would you like to leave your address?

You: Yes, please (and give them your address and any other details they might ask for)

Most importantly, please remember that being respectful in your communications is imperative.

 What is SB 12?

SB 12 (Corbett) is a bill that seeks to repeal Division 6 of the California Commercial Code, the Bulk Sales Law.  According to the author’s office, bulk sales are so complicated that they result in buyers and sellers circumventing the bulk sale law to avoid the many steps needed for a buyer to avoid successor liability for the seller’s business obligations. The bill was recently amended to retain the bulk sales law only for transactions including alcohol and cigarette/tobacco products distributors and wholesalers.

CEA is opposed to this bill because the while the bulk sale law may be complex, it provides for a known, statutory process by which creditors, many themselves small businesses, as well as local, state and federal tax agencies, can have their claims resolved in the escrow transaction rather than in the court system. Our members who do bulk sales transactions provide a very real public service, not the least of which is the remittance of sales and other taxes, ultimately benefiting all California taxpayers.  CEA sees little to justify a special rule for alcohol and tobacco products while leaving all other creditors, as well as sellers and buyers, at risk.  CEA is working with the Escrow Institute, the California Newspaper Publishers Association, CLTA, and a coalition of others including beverage distributors.

You don’t have to be handling bulk sales escrows to participate – if you don’t handle bulk sales, simply modify the letter as appropriate to indicate your general opposition, and make the call.

If you have questions or if we can assist with something further, please let us know.