Tax Sharing Agreement (AB2854)
Compliance Report for AB 2854
AB 2854 requires cities with sales tax sharing agreements with any type of retailer—online or brick-and-mortar—that result in a rebate amount of Bradley-Burns Local Sales and Use Tax to report the following information to the CDTFA and post it ontheir websites by April 30 of each year.
Tax Sharing Agreements
The City of Alameda does not have any sales tax sharing agreements. Click here(PDF, 374KB) to view the City of Alameda's Tax Revenue Sharing Agreement Reporting Form.
What is AB 2854?
This law requires local agencies to annually provide specified information to the California Department of Tax and Fee Administration (CDTFA) relating to each agreement resulting in the direct or indirect payment, transfer, diversion, or rebate of Bradley-Burns local tax revenues (sales tax sharing agreement(s)). Additionally, agencies are required to publish this information on their internet website. Failure to comply will result in monetary penalties on any local agency that fails to provide information to the department or fails to publish information to its internet website.
Why Does AB 2854 Matter?
This newly-chaptered law relates to rebated sales and use tax revenues, which is any direct/indirect payment, transfer, diversion, or rebate of any sales tax to any person/company pursuant to an agreement between the local agency and party(s).
Sales tax sharing agreements are often used by local agencies to incentivize businesses to establish or maintain operations in their jurisdictions. While these agreements can promote economic development, they also raise concerns about fairness, transparency, and the equitable distribution of tax revenues. AB 2854 aims to ensure public accountability and accessibility of information about these agreements.
Who Needs to Comply with AB 2854?
All local agencies in California, including cities, counties, and special districts, are required to comply with AB 2854’s provisions. Even agencies that do not have any sales tax sharing agreements must submit a statement confirming this to the CDTFA.
Reporting Requirements of AB 2854
1. Reporting Obligations
Local agencies must submit their first reports to the CDTFA by April 30, 2025, and every April 30th thereafter. The CDTFA will publish this information on its website annually by June 1.
Agencies must report:
- The names of all parties to each agreement.
- Total cumulative and fiscal year-specific rebated sales tax amounts received by each party.
- The agreement's execution date and termination date (or anticipated termination date).
- Percentages of sales taxes used in rebate calculations for parties to the agreement and other third parties.
Agencies without agreements must simply report that fact.
2. Public Website Requirement
Each agency must maintain a prominent link on its homepage to a dedicated webpage containing the required reporting information. This link must be visible at all times, ensuring easy public access.