CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION Assembly Bill No. 1065Introduced by Assembly Member Ortega(Coauthors: Senators Cortese and Ochoa Bogh)February 20, 2025 An act to add Division 25.5 (commencing with Section 100050) to the Financial Code, relating to service fees. LEGISLATIVE COUNSEL'S DIGESTAB 1065, as introduced, Ortega. Credit card transaction fees: tax payments: Consumer Inflation Reduction and Tax Fairness Act.Existing law, the Financial Code, provides for the licensure and regulation of various types of financial institutions and transactions. Existing law, the Song-Beverly Credit Card Act of 1971, regulates the issuance, use, and processing of credit cards and credit card transactions. This bill would enact the Consumer Inflation Reduction and Tax Fairness Act, within the Financial Code, to require that the calculation of interchange fees charged by a issuer, a payment card network, an acquirer bank, or a processor not take into account gratuity or certain state and local taxes and fees, as specified. The bill would define various terms for these purposes. The bill would prohibit a payment card network, an acquirer bank, or a processor from altering the computation of interchange fees, either by increasing the rate or the amount of fees applicable, to circumvent the effects of the act. The bill would provide that a violation of these provisions would be subject to a civil penalty of $1,000, and would require that the charges be refunded to the merchant or seller, as provided.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. Division 25.5 (commencing with Section 100050) is added to the Financial Code, to read:DIVISION 25.5. Consumer Inflation Reduction and Tax Fairness Act100050. This division shall be known, and may be cited, as the Consumer Inflation Reduction and Tax Fairness Act.100052. For purposes of this division:(a) Acquirer bank means a member of a payment card network that contracts with a merchant for the settlement of electronic payment transactions. An acquirer bank may contract directly with merchants or indirectly through a processor to process electronic payment transactions. (b) Authorization means the process through which a merchant requests approval for an electronic payment transaction from the issuer. (c) Clearance means the process of transmitting final transaction data from a merchant to an issuer for posting to the cardholders account and the calculation of fees and charges, including interchange fees, that apply to the issuer and the merchant.(d) Credit card has the same meaning as defined in Section 1747.02 of the Civil Code.(e) (1) Debit card has the same meaning as defined in Section 1748.30 of the Civil Code.(2) For purposes of this division, debit card includes a general use prepaid card, as that term is defined in Section 1693l-1 of Title 15 of the United States Code.(3) Debit card shall not include paper checks.(f) Electronic payment transaction means a transaction in which a person uses a debit card, credit card, or other payment code or device, issued or approved through a payment card network to debit a deposit account or use a line of credit, whether authorization is based on a signature, personal identification number, or other means.(g) Gratuity means a voluntary monetary contribution to an employee from a guest, patron, or customer in connection with services rendered.(h) Interchange fee means a fee established, charged, or received by a payment card network for the purpose of compensating the issuer for its involvement in an electronic payment transaction.(i) Issuer means a person issuing a debit card or credit card, or the issuers agent.(j) Merchant means a person that collects and remits a tax.(k) Payment card network means an entity that satisfies both of the following:(1) Directly, or through licensed members, processors, or agents, provides the proprietary services, infrastructure, and software that routes information and data to conduct debit card or credit card transaction authorization, clearance, and settlement.(2) Is used by a merchant or seller in order to accept as a form of payment a brand of debit card, credit card, or other device that may be used to carry out debit or credit transactions.(l) Person means any individual, firm, public or private corporation, government, partnership, association, or any other organization or entity. (m) Processor means an entity that facilitates, services, processes, or manages the debit or credit authorization, billing, transfer, payment procedures, or settlement with respect to any electronic payment transaction. (n) Settlement means the process of transmitting sales information to the issuing bank for collection and reimbursement of funds to the merchant and calculating and reporting the net transaction amount to the issuer and merchant for an electronic payment transaction that is cleared.(o) Tax means any state or local tax or fee that is calculated based on an electronic payment transaction amount and is listed separately on the payment invoice or other demand for payment. Tax includes, but is not limited to, the following:(1) Sales and Use Tax Law (Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code).(2) Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code).(3) Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code).(4) Motor Vehicle Fuel Tax Law (Part 2 (commencing with Section 7301) of Division 2 of the Revenue and Taxation Code).(5) Use Fuel Tax Law (Part 3 (commencing with Section 8601) of Division 2 of the Revenue and Taxation Code).(6) Cigarette and Tobacco Products Tax Law (Part 13 (commencing with Section 30001) of Division 2 of the Revenue and Taxation Code).(7) Alcoholic Beverage Tax Law (Part 14 (commencing with Section 32001) of Division 2 of the Revenue and Taxation Code).(8) Cannabis Tax Law (Part 14.5 (commencing with Section 34010) of Division 2 of the Revenue and Taxation Code).(9) Diesel Fuel Tax Law (Part 31 (commencing with Section 60001) of Division 2 of the Revenue and Taxation Code).(p) Tax documentation means documentation sufficient for the payment card network to determine the total amount of the electronic payment transaction and the tax or gratuity amount of the transaction. Tax documentation may be related to a single electronic payment transaction or multiple electronic payment transactions aggregated over a period of time. Examples of tax documentation include, but are not limited to, invoices, receipts, journals, ledgers, and tax returns filed with the Internal Revenue Service, the California Department of Tax and Fee Administration, or any other state or local taxing authority.100054. (a) An issuer, a payment card network, an acquirer bank, or a processor shall not receive or charge a merchant any interchange fee on the tax amount or gratuity of an electronic payment transaction if the merchant informs the acquirer bank or its designee of the tax or gratuity amount as part of the authorization or settlement process for the electronic payment transaction. The merchant shall transmit the tax or gratuity amount data as part of the authorization or settlement process to avoid being charged interchange fees on the tax or gratuity amount of an electronic payment transaction. (b) A merchant that does not transmit the tax or gratuity amount data in accordance with this section may submit tax documentation for the electronic payment transaction to the acquirer bank or its designee no later than 180 days after the date of the electronic payment transaction, and the issuer shall credit to the merchant the amount of interchange fees charged on the tax or gratuity amount of the electronic payment transaction within 30 days after the merchant submits any necessary tax documentation.(c) This section does not create liability for a payment card network regarding the accuracy of the tax or gratuity data reported by the merchant.(d) A payment card network, an acquirer bank, or a processor shall not alter or manipulate the computation and imposition of interchange fees by increasing the rate or amount of the fees applicable to or imposed upon the portion of a credit card or debit card transaction not attributable to taxes or other fees charged to the retailer to circumvent the effects of this section.100056. An issuer, a payment card network, an acquirer bank, a processor, or other designated entity that has received the tax or gratuity amount data and violates the provisions of this division is subject to a civil penalty of one thousand dollars ($1,000) per electronic payment transaction, and the issuer, payment card network, acquirer bank, processor, or designated entity shall refund the merchant that amount of any interchange fee calculated on the tax or gratuity amount of the electronic payment transaction.SEC. 2. The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION Assembly Bill No. 1065Introduced by Assembly Member Ortega(Coauthors: Senators Cortese and Ochoa Bogh)February 20, 2025 An act to add Division 25.5 (commencing with Section 100050) to the Financial Code, relating to service fees. LEGISLATIVE COUNSEL'S DIGESTAB 1065, as introduced, Ortega. Credit card transaction fees: tax payments: Consumer Inflation Reduction and Tax Fairness Act.Existing law, the Financial Code, provides for the licensure and regulation of various types of financial institutions and transactions. Existing law, the Song-Beverly Credit Card Act of 1971, regulates the issuance, use, and processing of credit cards and credit card transactions. This bill would enact the Consumer Inflation Reduction and Tax Fairness Act, within the Financial Code, to require that the calculation of interchange fees charged by a issuer, a payment card network, an acquirer bank, or a processor not take into account gratuity or certain state and local taxes and fees, as specified. The bill would define various terms for these purposes. The bill would prohibit a payment card network, an acquirer bank, or a processor from altering the computation of interchange fees, either by increasing the rate or the amount of fees applicable, to circumvent the effects of the act. The bill would provide that a violation of these provisions would be subject to a civil penalty of $1,000, and would require that the charges be refunded to the merchant or seller, as provided.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NO
CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION
Assembly Bill
No. 1065
Introduced by Assembly Member Ortega(Coauthors: Senators Cortese and Ochoa Bogh)February 20, 2025
Introduced by Assembly Member Ortega(Coauthors: Senators Cortese and Ochoa Bogh)
February 20, 2025
An act to add Division 25.5 (commencing with Section 100050) to the Financial Code, relating to service fees.
LEGISLATIVE COUNSEL'S DIGEST
## LEGISLATIVE COUNSEL'S DIGEST
AB 1065, as introduced, Ortega. Credit card transaction fees: tax payments: Consumer Inflation Reduction and Tax Fairness Act.
Existing law, the Financial Code, provides for the licensure and regulation of various types of financial institutions and transactions. Existing law, the Song-Beverly Credit Card Act of 1971, regulates the issuance, use, and processing of credit cards and credit card transactions. This bill would enact the Consumer Inflation Reduction and Tax Fairness Act, within the Financial Code, to require that the calculation of interchange fees charged by a issuer, a payment card network, an acquirer bank, or a processor not take into account gratuity or certain state and local taxes and fees, as specified. The bill would define various terms for these purposes. The bill would prohibit a payment card network, an acquirer bank, or a processor from altering the computation of interchange fees, either by increasing the rate or the amount of fees applicable, to circumvent the effects of the act. The bill would provide that a violation of these provisions would be subject to a civil penalty of $1,000, and would require that the charges be refunded to the merchant or seller, as provided.
Existing law, the Financial Code, provides for the licensure and regulation of various types of financial institutions and transactions. Existing law, the Song-Beverly Credit Card Act of 1971, regulates the issuance, use, and processing of credit cards and credit card transactions.
This bill would enact the Consumer Inflation Reduction and Tax Fairness Act, within the Financial Code, to require that the calculation of interchange fees charged by a issuer, a payment card network, an acquirer bank, or a processor not take into account gratuity or certain state and local taxes and fees, as specified. The bill would define various terms for these purposes. The bill would prohibit a payment card network, an acquirer bank, or a processor from altering the computation of interchange fees, either by increasing the rate or the amount of fees applicable, to circumvent the effects of the act. The bill would provide that a violation of these provisions would be subject to a civil penalty of $1,000, and would require that the charges be refunded to the merchant or seller, as provided.
## Digest Key
## Bill Text
The people of the State of California do enact as follows:SECTION 1. Division 25.5 (commencing with Section 100050) is added to the Financial Code, to read:DIVISION 25.5. Consumer Inflation Reduction and Tax Fairness Act100050. This division shall be known, and may be cited, as the Consumer Inflation Reduction and Tax Fairness Act.100052. For purposes of this division:(a) Acquirer bank means a member of a payment card network that contracts with a merchant for the settlement of electronic payment transactions. An acquirer bank may contract directly with merchants or indirectly through a processor to process electronic payment transactions. (b) Authorization means the process through which a merchant requests approval for an electronic payment transaction from the issuer. (c) Clearance means the process of transmitting final transaction data from a merchant to an issuer for posting to the cardholders account and the calculation of fees and charges, including interchange fees, that apply to the issuer and the merchant.(d) Credit card has the same meaning as defined in Section 1747.02 of the Civil Code.(e) (1) Debit card has the same meaning as defined in Section 1748.30 of the Civil Code.(2) For purposes of this division, debit card includes a general use prepaid card, as that term is defined in Section 1693l-1 of Title 15 of the United States Code.(3) Debit card shall not include paper checks.(f) Electronic payment transaction means a transaction in which a person uses a debit card, credit card, or other payment code or device, issued or approved through a payment card network to debit a deposit account or use a line of credit, whether authorization is based on a signature, personal identification number, or other means.(g) Gratuity means a voluntary monetary contribution to an employee from a guest, patron, or customer in connection with services rendered.(h) Interchange fee means a fee established, charged, or received by a payment card network for the purpose of compensating the issuer for its involvement in an electronic payment transaction.(i) Issuer means a person issuing a debit card or credit card, or the issuers agent.(j) Merchant means a person that collects and remits a tax.(k) Payment card network means an entity that satisfies both of the following:(1) Directly, or through licensed members, processors, or agents, provides the proprietary services, infrastructure, and software that routes information and data to conduct debit card or credit card transaction authorization, clearance, and settlement.(2) Is used by a merchant or seller in order to accept as a form of payment a brand of debit card, credit card, or other device that may be used to carry out debit or credit transactions.(l) Person means any individual, firm, public or private corporation, government, partnership, association, or any other organization or entity. (m) Processor means an entity that facilitates, services, processes, or manages the debit or credit authorization, billing, transfer, payment procedures, or settlement with respect to any electronic payment transaction. (n) Settlement means the process of transmitting sales information to the issuing bank for collection and reimbursement of funds to the merchant and calculating and reporting the net transaction amount to the issuer and merchant for an electronic payment transaction that is cleared.(o) Tax means any state or local tax or fee that is calculated based on an electronic payment transaction amount and is listed separately on the payment invoice or other demand for payment. Tax includes, but is not limited to, the following:(1) Sales and Use Tax Law (Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code).(2) Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code).(3) Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code).(4) Motor Vehicle Fuel Tax Law (Part 2 (commencing with Section 7301) of Division 2 of the Revenue and Taxation Code).(5) Use Fuel Tax Law (Part 3 (commencing with Section 8601) of Division 2 of the Revenue and Taxation Code).(6) Cigarette and Tobacco Products Tax Law (Part 13 (commencing with Section 30001) of Division 2 of the Revenue and Taxation Code).(7) Alcoholic Beverage Tax Law (Part 14 (commencing with Section 32001) of Division 2 of the Revenue and Taxation Code).(8) Cannabis Tax Law (Part 14.5 (commencing with Section 34010) of Division 2 of the Revenue and Taxation Code).(9) Diesel Fuel Tax Law (Part 31 (commencing with Section 60001) of Division 2 of the Revenue and Taxation Code).(p) Tax documentation means documentation sufficient for the payment card network to determine the total amount of the electronic payment transaction and the tax or gratuity amount of the transaction. Tax documentation may be related to a single electronic payment transaction or multiple electronic payment transactions aggregated over a period of time. Examples of tax documentation include, but are not limited to, invoices, receipts, journals, ledgers, and tax returns filed with the Internal Revenue Service, the California Department of Tax and Fee Administration, or any other state or local taxing authority.100054. (a) An issuer, a payment card network, an acquirer bank, or a processor shall not receive or charge a merchant any interchange fee on the tax amount or gratuity of an electronic payment transaction if the merchant informs the acquirer bank or its designee of the tax or gratuity amount as part of the authorization or settlement process for the electronic payment transaction. The merchant shall transmit the tax or gratuity amount data as part of the authorization or settlement process to avoid being charged interchange fees on the tax or gratuity amount of an electronic payment transaction. (b) A merchant that does not transmit the tax or gratuity amount data in accordance with this section may submit tax documentation for the electronic payment transaction to the acquirer bank or its designee no later than 180 days after the date of the electronic payment transaction, and the issuer shall credit to the merchant the amount of interchange fees charged on the tax or gratuity amount of the electronic payment transaction within 30 days after the merchant submits any necessary tax documentation.(c) This section does not create liability for a payment card network regarding the accuracy of the tax or gratuity data reported by the merchant.(d) A payment card network, an acquirer bank, or a processor shall not alter or manipulate the computation and imposition of interchange fees by increasing the rate or amount of the fees applicable to or imposed upon the portion of a credit card or debit card transaction not attributable to taxes or other fees charged to the retailer to circumvent the effects of this section.100056. An issuer, a payment card network, an acquirer bank, a processor, or other designated entity that has received the tax or gratuity amount data and violates the provisions of this division is subject to a civil penalty of one thousand dollars ($1,000) per electronic payment transaction, and the issuer, payment card network, acquirer bank, processor, or designated entity shall refund the merchant that amount of any interchange fee calculated on the tax or gratuity amount of the electronic payment transaction.SEC. 2. The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
The people of the State of California do enact as follows:
## The people of the State of California do enact as follows:
SECTION 1. Division 25.5 (commencing with Section 100050) is added to the Financial Code, to read:DIVISION 25.5. Consumer Inflation Reduction and Tax Fairness Act100050. This division shall be known, and may be cited, as the Consumer Inflation Reduction and Tax Fairness Act.100052. For purposes of this division:(a) Acquirer bank means a member of a payment card network that contracts with a merchant for the settlement of electronic payment transactions. An acquirer bank may contract directly with merchants or indirectly through a processor to process electronic payment transactions. (b) Authorization means the process through which a merchant requests approval for an electronic payment transaction from the issuer. (c) Clearance means the process of transmitting final transaction data from a merchant to an issuer for posting to the cardholders account and the calculation of fees and charges, including interchange fees, that apply to the issuer and the merchant.(d) Credit card has the same meaning as defined in Section 1747.02 of the Civil Code.(e) (1) Debit card has the same meaning as defined in Section 1748.30 of the Civil Code.(2) For purposes of this division, debit card includes a general use prepaid card, as that term is defined in Section 1693l-1 of Title 15 of the United States Code.(3) Debit card shall not include paper checks.(f) Electronic payment transaction means a transaction in which a person uses a debit card, credit card, or other payment code or device, issued or approved through a payment card network to debit a deposit account or use a line of credit, whether authorization is based on a signature, personal identification number, or other means.(g) Gratuity means a voluntary monetary contribution to an employee from a guest, patron, or customer in connection with services rendered.(h) Interchange fee means a fee established, charged, or received by a payment card network for the purpose of compensating the issuer for its involvement in an electronic payment transaction.(i) Issuer means a person issuing a debit card or credit card, or the issuers agent.(j) Merchant means a person that collects and remits a tax.(k) Payment card network means an entity that satisfies both of the following:(1) Directly, or through licensed members, processors, or agents, provides the proprietary services, infrastructure, and software that routes information and data to conduct debit card or credit card transaction authorization, clearance, and settlement.(2) Is used by a merchant or seller in order to accept as a form of payment a brand of debit card, credit card, or other device that may be used to carry out debit or credit transactions.(l) Person means any individual, firm, public or private corporation, government, partnership, association, or any other organization or entity. (m) Processor means an entity that facilitates, services, processes, or manages the debit or credit authorization, billing, transfer, payment procedures, or settlement with respect to any electronic payment transaction. (n) Settlement means the process of transmitting sales information to the issuing bank for collection and reimbursement of funds to the merchant and calculating and reporting the net transaction amount to the issuer and merchant for an electronic payment transaction that is cleared.(o) Tax means any state or local tax or fee that is calculated based on an electronic payment transaction amount and is listed separately on the payment invoice or other demand for payment. Tax includes, but is not limited to, the following:(1) Sales and Use Tax Law (Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code).(2) Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code).(3) Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code).(4) Motor Vehicle Fuel Tax Law (Part 2 (commencing with Section 7301) of Division 2 of the Revenue and Taxation Code).(5) Use Fuel Tax Law (Part 3 (commencing with Section 8601) of Division 2 of the Revenue and Taxation Code).(6) Cigarette and Tobacco Products Tax Law (Part 13 (commencing with Section 30001) of Division 2 of the Revenue and Taxation Code).(7) Alcoholic Beverage Tax Law (Part 14 (commencing with Section 32001) of Division 2 of the Revenue and Taxation Code).(8) Cannabis Tax Law (Part 14.5 (commencing with Section 34010) of Division 2 of the Revenue and Taxation Code).(9) Diesel Fuel Tax Law (Part 31 (commencing with Section 60001) of Division 2 of the Revenue and Taxation Code).(p) Tax documentation means documentation sufficient for the payment card network to determine the total amount of the electronic payment transaction and the tax or gratuity amount of the transaction. Tax documentation may be related to a single electronic payment transaction or multiple electronic payment transactions aggregated over a period of time. Examples of tax documentation include, but are not limited to, invoices, receipts, journals, ledgers, and tax returns filed with the Internal Revenue Service, the California Department of Tax and Fee Administration, or any other state or local taxing authority.100054. (a) An issuer, a payment card network, an acquirer bank, or a processor shall not receive or charge a merchant any interchange fee on the tax amount or gratuity of an electronic payment transaction if the merchant informs the acquirer bank or its designee of the tax or gratuity amount as part of the authorization or settlement process for the electronic payment transaction. The merchant shall transmit the tax or gratuity amount data as part of the authorization or settlement process to avoid being charged interchange fees on the tax or gratuity amount of an electronic payment transaction. (b) A merchant that does not transmit the tax or gratuity amount data in accordance with this section may submit tax documentation for the electronic payment transaction to the acquirer bank or its designee no later than 180 days after the date of the electronic payment transaction, and the issuer shall credit to the merchant the amount of interchange fees charged on the tax or gratuity amount of the electronic payment transaction within 30 days after the merchant submits any necessary tax documentation.(c) This section does not create liability for a payment card network regarding the accuracy of the tax or gratuity data reported by the merchant.(d) A payment card network, an acquirer bank, or a processor shall not alter or manipulate the computation and imposition of interchange fees by increasing the rate or amount of the fees applicable to or imposed upon the portion of a credit card or debit card transaction not attributable to taxes or other fees charged to the retailer to circumvent the effects of this section.100056. An issuer, a payment card network, an acquirer bank, a processor, or other designated entity that has received the tax or gratuity amount data and violates the provisions of this division is subject to a civil penalty of one thousand dollars ($1,000) per electronic payment transaction, and the issuer, payment card network, acquirer bank, processor, or designated entity shall refund the merchant that amount of any interchange fee calculated on the tax or gratuity amount of the electronic payment transaction.
SECTION 1. Division 25.5 (commencing with Section 100050) is added to the Financial Code, to read:
### SECTION 1.
DIVISION 25.5. Consumer Inflation Reduction and Tax Fairness Act100050. This division shall be known, and may be cited, as the Consumer Inflation Reduction and Tax Fairness Act.100052. For purposes of this division:(a) Acquirer bank means a member of a payment card network that contracts with a merchant for the settlement of electronic payment transactions. An acquirer bank may contract directly with merchants or indirectly through a processor to process electronic payment transactions. (b) Authorization means the process through which a merchant requests approval for an electronic payment transaction from the issuer. (c) Clearance means the process of transmitting final transaction data from a merchant to an issuer for posting to the cardholders account and the calculation of fees and charges, including interchange fees, that apply to the issuer and the merchant.(d) Credit card has the same meaning as defined in Section 1747.02 of the Civil Code.(e) (1) Debit card has the same meaning as defined in Section 1748.30 of the Civil Code.(2) For purposes of this division, debit card includes a general use prepaid card, as that term is defined in Section 1693l-1 of Title 15 of the United States Code.(3) Debit card shall not include paper checks.(f) Electronic payment transaction means a transaction in which a person uses a debit card, credit card, or other payment code or device, issued or approved through a payment card network to debit a deposit account or use a line of credit, whether authorization is based on a signature, personal identification number, or other means.(g) Gratuity means a voluntary monetary contribution to an employee from a guest, patron, or customer in connection with services rendered.(h) Interchange fee means a fee established, charged, or received by a payment card network for the purpose of compensating the issuer for its involvement in an electronic payment transaction.(i) Issuer means a person issuing a debit card or credit card, or the issuers agent.(j) Merchant means a person that collects and remits a tax.(k) Payment card network means an entity that satisfies both of the following:(1) Directly, or through licensed members, processors, or agents, provides the proprietary services, infrastructure, and software that routes information and data to conduct debit card or credit card transaction authorization, clearance, and settlement.(2) Is used by a merchant or seller in order to accept as a form of payment a brand of debit card, credit card, or other device that may be used to carry out debit or credit transactions.(l) Person means any individual, firm, public or private corporation, government, partnership, association, or any other organization or entity. (m) Processor means an entity that facilitates, services, processes, or manages the debit or credit authorization, billing, transfer, payment procedures, or settlement with respect to any electronic payment transaction. (n) Settlement means the process of transmitting sales information to the issuing bank for collection and reimbursement of funds to the merchant and calculating and reporting the net transaction amount to the issuer and merchant for an electronic payment transaction that is cleared.(o) Tax means any state or local tax or fee that is calculated based on an electronic payment transaction amount and is listed separately on the payment invoice or other demand for payment. Tax includes, but is not limited to, the following:(1) Sales and Use Tax Law (Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code).(2) Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code).(3) Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code).(4) Motor Vehicle Fuel Tax Law (Part 2 (commencing with Section 7301) of Division 2 of the Revenue and Taxation Code).(5) Use Fuel Tax Law (Part 3 (commencing with Section 8601) of Division 2 of the Revenue and Taxation Code).(6) Cigarette and Tobacco Products Tax Law (Part 13 (commencing with Section 30001) of Division 2 of the Revenue and Taxation Code).(7) Alcoholic Beverage Tax Law (Part 14 (commencing with Section 32001) of Division 2 of the Revenue and Taxation Code).(8) Cannabis Tax Law (Part 14.5 (commencing with Section 34010) of Division 2 of the Revenue and Taxation Code).(9) Diesel Fuel Tax Law (Part 31 (commencing with Section 60001) of Division 2 of the Revenue and Taxation Code).(p) Tax documentation means documentation sufficient for the payment card network to determine the total amount of the electronic payment transaction and the tax or gratuity amount of the transaction. Tax documentation may be related to a single electronic payment transaction or multiple electronic payment transactions aggregated over a period of time. Examples of tax documentation include, but are not limited to, invoices, receipts, journals, ledgers, and tax returns filed with the Internal Revenue Service, the California Department of Tax and Fee Administration, or any other state or local taxing authority.100054. (a) An issuer, a payment card network, an acquirer bank, or a processor shall not receive or charge a merchant any interchange fee on the tax amount or gratuity of an electronic payment transaction if the merchant informs the acquirer bank or its designee of the tax or gratuity amount as part of the authorization or settlement process for the electronic payment transaction. The merchant shall transmit the tax or gratuity amount data as part of the authorization or settlement process to avoid being charged interchange fees on the tax or gratuity amount of an electronic payment transaction. (b) A merchant that does not transmit the tax or gratuity amount data in accordance with this section may submit tax documentation for the electronic payment transaction to the acquirer bank or its designee no later than 180 days after the date of the electronic payment transaction, and the issuer shall credit to the merchant the amount of interchange fees charged on the tax or gratuity amount of the electronic payment transaction within 30 days after the merchant submits any necessary tax documentation.(c) This section does not create liability for a payment card network regarding the accuracy of the tax or gratuity data reported by the merchant.(d) A payment card network, an acquirer bank, or a processor shall not alter or manipulate the computation and imposition of interchange fees by increasing the rate or amount of the fees applicable to or imposed upon the portion of a credit card or debit card transaction not attributable to taxes or other fees charged to the retailer to circumvent the effects of this section.100056. An issuer, a payment card network, an acquirer bank, a processor, or other designated entity that has received the tax or gratuity amount data and violates the provisions of this division is subject to a civil penalty of one thousand dollars ($1,000) per electronic payment transaction, and the issuer, payment card network, acquirer bank, processor, or designated entity shall refund the merchant that amount of any interchange fee calculated on the tax or gratuity amount of the electronic payment transaction.
DIVISION 25.5. Consumer Inflation Reduction and Tax Fairness Act100050. This division shall be known, and may be cited, as the Consumer Inflation Reduction and Tax Fairness Act.100052. For purposes of this division:(a) Acquirer bank means a member of a payment card network that contracts with a merchant for the settlement of electronic payment transactions. An acquirer bank may contract directly with merchants or indirectly through a processor to process electronic payment transactions. (b) Authorization means the process through which a merchant requests approval for an electronic payment transaction from the issuer. (c) Clearance means the process of transmitting final transaction data from a merchant to an issuer for posting to the cardholders account and the calculation of fees and charges, including interchange fees, that apply to the issuer and the merchant.(d) Credit card has the same meaning as defined in Section 1747.02 of the Civil Code.(e) (1) Debit card has the same meaning as defined in Section 1748.30 of the Civil Code.(2) For purposes of this division, debit card includes a general use prepaid card, as that term is defined in Section 1693l-1 of Title 15 of the United States Code.(3) Debit card shall not include paper checks.(f) Electronic payment transaction means a transaction in which a person uses a debit card, credit card, or other payment code or device, issued or approved through a payment card network to debit a deposit account or use a line of credit, whether authorization is based on a signature, personal identification number, or other means.(g) Gratuity means a voluntary monetary contribution to an employee from a guest, patron, or customer in connection with services rendered.(h) Interchange fee means a fee established, charged, or received by a payment card network for the purpose of compensating the issuer for its involvement in an electronic payment transaction.(i) Issuer means a person issuing a debit card or credit card, or the issuers agent.(j) Merchant means a person that collects and remits a tax.(k) Payment card network means an entity that satisfies both of the following:(1) Directly, or through licensed members, processors, or agents, provides the proprietary services, infrastructure, and software that routes information and data to conduct debit card or credit card transaction authorization, clearance, and settlement.(2) Is used by a merchant or seller in order to accept as a form of payment a brand of debit card, credit card, or other device that may be used to carry out debit or credit transactions.(l) Person means any individual, firm, public or private corporation, government, partnership, association, or any other organization or entity. (m) Processor means an entity that facilitates, services, processes, or manages the debit or credit authorization, billing, transfer, payment procedures, or settlement with respect to any electronic payment transaction. (n) Settlement means the process of transmitting sales information to the issuing bank for collection and reimbursement of funds to the merchant and calculating and reporting the net transaction amount to the issuer and merchant for an electronic payment transaction that is cleared.(o) Tax means any state or local tax or fee that is calculated based on an electronic payment transaction amount and is listed separately on the payment invoice or other demand for payment. Tax includes, but is not limited to, the following:(1) Sales and Use Tax Law (Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code).(2) Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code).(3) Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code).(4) Motor Vehicle Fuel Tax Law (Part 2 (commencing with Section 7301) of Division 2 of the Revenue and Taxation Code).(5) Use Fuel Tax Law (Part 3 (commencing with Section 8601) of Division 2 of the Revenue and Taxation Code).(6) Cigarette and Tobacco Products Tax Law (Part 13 (commencing with Section 30001) of Division 2 of the Revenue and Taxation Code).(7) Alcoholic Beverage Tax Law (Part 14 (commencing with Section 32001) of Division 2 of the Revenue and Taxation Code).(8) Cannabis Tax Law (Part 14.5 (commencing with Section 34010) of Division 2 of the Revenue and Taxation Code).(9) Diesel Fuel Tax Law (Part 31 (commencing with Section 60001) of Division 2 of the Revenue and Taxation Code).(p) Tax documentation means documentation sufficient for the payment card network to determine the total amount of the electronic payment transaction and the tax or gratuity amount of the transaction. Tax documentation may be related to a single electronic payment transaction or multiple electronic payment transactions aggregated over a period of time. Examples of tax documentation include, but are not limited to, invoices, receipts, journals, ledgers, and tax returns filed with the Internal Revenue Service, the California Department of Tax and Fee Administration, or any other state or local taxing authority.100054. (a) An issuer, a payment card network, an acquirer bank, or a processor shall not receive or charge a merchant any interchange fee on the tax amount or gratuity of an electronic payment transaction if the merchant informs the acquirer bank or its designee of the tax or gratuity amount as part of the authorization or settlement process for the electronic payment transaction. The merchant shall transmit the tax or gratuity amount data as part of the authorization or settlement process to avoid being charged interchange fees on the tax or gratuity amount of an electronic payment transaction. (b) A merchant that does not transmit the tax or gratuity amount data in accordance with this section may submit tax documentation for the electronic payment transaction to the acquirer bank or its designee no later than 180 days after the date of the electronic payment transaction, and the issuer shall credit to the merchant the amount of interchange fees charged on the tax or gratuity amount of the electronic payment transaction within 30 days after the merchant submits any necessary tax documentation.(c) This section does not create liability for a payment card network regarding the accuracy of the tax or gratuity data reported by the merchant.(d) A payment card network, an acquirer bank, or a processor shall not alter or manipulate the computation and imposition of interchange fees by increasing the rate or amount of the fees applicable to or imposed upon the portion of a credit card or debit card transaction not attributable to taxes or other fees charged to the retailer to circumvent the effects of this section.100056. An issuer, a payment card network, an acquirer bank, a processor, or other designated entity that has received the tax or gratuity amount data and violates the provisions of this division is subject to a civil penalty of one thousand dollars ($1,000) per electronic payment transaction, and the issuer, payment card network, acquirer bank, processor, or designated entity shall refund the merchant that amount of any interchange fee calculated on the tax or gratuity amount of the electronic payment transaction.
DIVISION 25.5. Consumer Inflation Reduction and Tax Fairness Act
DIVISION 25.5. Consumer Inflation Reduction and Tax Fairness Act
100050. This division shall be known, and may be cited, as the Consumer Inflation Reduction and Tax Fairness Act.
100050. This division shall be known, and may be cited, as the Consumer Inflation Reduction and Tax Fairness Act.
100052. For purposes of this division:(a) Acquirer bank means a member of a payment card network that contracts with a merchant for the settlement of electronic payment transactions. An acquirer bank may contract directly with merchants or indirectly through a processor to process electronic payment transactions. (b) Authorization means the process through which a merchant requests approval for an electronic payment transaction from the issuer. (c) Clearance means the process of transmitting final transaction data from a merchant to an issuer for posting to the cardholders account and the calculation of fees and charges, including interchange fees, that apply to the issuer and the merchant.(d) Credit card has the same meaning as defined in Section 1747.02 of the Civil Code.(e) (1) Debit card has the same meaning as defined in Section 1748.30 of the Civil Code.(2) For purposes of this division, debit card includes a general use prepaid card, as that term is defined in Section 1693l-1 of Title 15 of the United States Code.(3) Debit card shall not include paper checks.(f) Electronic payment transaction means a transaction in which a person uses a debit card, credit card, or other payment code or device, issued or approved through a payment card network to debit a deposit account or use a line of credit, whether authorization is based on a signature, personal identification number, or other means.(g) Gratuity means a voluntary monetary contribution to an employee from a guest, patron, or customer in connection with services rendered.(h) Interchange fee means a fee established, charged, or received by a payment card network for the purpose of compensating the issuer for its involvement in an electronic payment transaction.(i) Issuer means a person issuing a debit card or credit card, or the issuers agent.(j) Merchant means a person that collects and remits a tax.(k) Payment card network means an entity that satisfies both of the following:(1) Directly, or through licensed members, processors, or agents, provides the proprietary services, infrastructure, and software that routes information and data to conduct debit card or credit card transaction authorization, clearance, and settlement.(2) Is used by a merchant or seller in order to accept as a form of payment a brand of debit card, credit card, or other device that may be used to carry out debit or credit transactions.(l) Person means any individual, firm, public or private corporation, government, partnership, association, or any other organization or entity. (m) Processor means an entity that facilitates, services, processes, or manages the debit or credit authorization, billing, transfer, payment procedures, or settlement with respect to any electronic payment transaction. (n) Settlement means the process of transmitting sales information to the issuing bank for collection and reimbursement of funds to the merchant and calculating and reporting the net transaction amount to the issuer and merchant for an electronic payment transaction that is cleared.(o) Tax means any state or local tax or fee that is calculated based on an electronic payment transaction amount and is listed separately on the payment invoice or other demand for payment. Tax includes, but is not limited to, the following:(1) Sales and Use Tax Law (Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code).(2) Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code).(3) Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code).(4) Motor Vehicle Fuel Tax Law (Part 2 (commencing with Section 7301) of Division 2 of the Revenue and Taxation Code).(5) Use Fuel Tax Law (Part 3 (commencing with Section 8601) of Division 2 of the Revenue and Taxation Code).(6) Cigarette and Tobacco Products Tax Law (Part 13 (commencing with Section 30001) of Division 2 of the Revenue and Taxation Code).(7) Alcoholic Beverage Tax Law (Part 14 (commencing with Section 32001) of Division 2 of the Revenue and Taxation Code).(8) Cannabis Tax Law (Part 14.5 (commencing with Section 34010) of Division 2 of the Revenue and Taxation Code).(9) Diesel Fuel Tax Law (Part 31 (commencing with Section 60001) of Division 2 of the Revenue and Taxation Code).(p) Tax documentation means documentation sufficient for the payment card network to determine the total amount of the electronic payment transaction and the tax or gratuity amount of the transaction. Tax documentation may be related to a single electronic payment transaction or multiple electronic payment transactions aggregated over a period of time. Examples of tax documentation include, but are not limited to, invoices, receipts, journals, ledgers, and tax returns filed with the Internal Revenue Service, the California Department of Tax and Fee Administration, or any other state or local taxing authority.
100052. For purposes of this division:
(a) Acquirer bank means a member of a payment card network that contracts with a merchant for the settlement of electronic payment transactions. An acquirer bank may contract directly with merchants or indirectly through a processor to process electronic payment transactions.
(b) Authorization means the process through which a merchant requests approval for an electronic payment transaction from the issuer.
(c) Clearance means the process of transmitting final transaction data from a merchant to an issuer for posting to the cardholders account and the calculation of fees and charges, including interchange fees, that apply to the issuer and the merchant.
(d) Credit card has the same meaning as defined in Section 1747.02 of the Civil Code.
(e) (1) Debit card has the same meaning as defined in Section 1748.30 of the Civil Code.
(2) For purposes of this division, debit card includes a general use prepaid card, as that term is defined in Section 1693l-1 of Title 15 of the United States Code.
(3) Debit card shall not include paper checks.
(f) Electronic payment transaction means a transaction in which a person uses a debit card, credit card, or other payment code or device, issued or approved through a payment card network to debit a deposit account or use a line of credit, whether authorization is based on a signature, personal identification number, or other means.
(g) Gratuity means a voluntary monetary contribution to an employee from a guest, patron, or customer in connection with services rendered.
(h) Interchange fee means a fee established, charged, or received by a payment card network for the purpose of compensating the issuer for its involvement in an electronic payment transaction.
(i) Issuer means a person issuing a debit card or credit card, or the issuers agent.
(j) Merchant means a person that collects and remits a tax.
(k) Payment card network means an entity that satisfies both of the following:
(1) Directly, or through licensed members, processors, or agents, provides the proprietary services, infrastructure, and software that routes information and data to conduct debit card or credit card transaction authorization, clearance, and settlement.
(2) Is used by a merchant or seller in order to accept as a form of payment a brand of debit card, credit card, or other device that may be used to carry out debit or credit transactions.
(l) Person means any individual, firm, public or private corporation, government, partnership, association, or any other organization or entity.
(m) Processor means an entity that facilitates, services, processes, or manages the debit or credit authorization, billing, transfer, payment procedures, or settlement with respect to any electronic payment transaction.
(n) Settlement means the process of transmitting sales information to the issuing bank for collection and reimbursement of funds to the merchant and calculating and reporting the net transaction amount to the issuer and merchant for an electronic payment transaction that is cleared.
(o) Tax means any state or local tax or fee that is calculated based on an electronic payment transaction amount and is listed separately on the payment invoice or other demand for payment. Tax includes, but is not limited to, the following:
(1) Sales and Use Tax Law (Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code).
(2) Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code).
(3) Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code).
(4) Motor Vehicle Fuel Tax Law (Part 2 (commencing with Section 7301) of Division 2 of the Revenue and Taxation Code).
(5) Use Fuel Tax Law (Part 3 (commencing with Section 8601) of Division 2 of the Revenue and Taxation Code).
(6) Cigarette and Tobacco Products Tax Law (Part 13 (commencing with Section 30001) of Division 2 of the Revenue and Taxation Code).
(7) Alcoholic Beverage Tax Law (Part 14 (commencing with Section 32001) of Division 2 of the Revenue and Taxation Code).
(8) Cannabis Tax Law (Part 14.5 (commencing with Section 34010) of Division 2 of the Revenue and Taxation Code).
(9) Diesel Fuel Tax Law (Part 31 (commencing with Section 60001) of Division 2 of the Revenue and Taxation Code).
(p) Tax documentation means documentation sufficient for the payment card network to determine the total amount of the electronic payment transaction and the tax or gratuity amount of the transaction. Tax documentation may be related to a single electronic payment transaction or multiple electronic payment transactions aggregated over a period of time. Examples of tax documentation include, but are not limited to, invoices, receipts, journals, ledgers, and tax returns filed with the Internal Revenue Service, the California Department of Tax and Fee Administration, or any other state or local taxing authority.
100054. (a) An issuer, a payment card network, an acquirer bank, or a processor shall not receive or charge a merchant any interchange fee on the tax amount or gratuity of an electronic payment transaction if the merchant informs the acquirer bank or its designee of the tax or gratuity amount as part of the authorization or settlement process for the electronic payment transaction. The merchant shall transmit the tax or gratuity amount data as part of the authorization or settlement process to avoid being charged interchange fees on the tax or gratuity amount of an electronic payment transaction. (b) A merchant that does not transmit the tax or gratuity amount data in accordance with this section may submit tax documentation for the electronic payment transaction to the acquirer bank or its designee no later than 180 days after the date of the electronic payment transaction, and the issuer shall credit to the merchant the amount of interchange fees charged on the tax or gratuity amount of the electronic payment transaction within 30 days after the merchant submits any necessary tax documentation.(c) This section does not create liability for a payment card network regarding the accuracy of the tax or gratuity data reported by the merchant.(d) A payment card network, an acquirer bank, or a processor shall not alter or manipulate the computation and imposition of interchange fees by increasing the rate or amount of the fees applicable to or imposed upon the portion of a credit card or debit card transaction not attributable to taxes or other fees charged to the retailer to circumvent the effects of this section.
100054. (a) An issuer, a payment card network, an acquirer bank, or a processor shall not receive or charge a merchant any interchange fee on the tax amount or gratuity of an electronic payment transaction if the merchant informs the acquirer bank or its designee of the tax or gratuity amount as part of the authorization or settlement process for the electronic payment transaction. The merchant shall transmit the tax or gratuity amount data as part of the authorization or settlement process to avoid being charged interchange fees on the tax or gratuity amount of an electronic payment transaction.
(b) A merchant that does not transmit the tax or gratuity amount data in accordance with this section may submit tax documentation for the electronic payment transaction to the acquirer bank or its designee no later than 180 days after the date of the electronic payment transaction, and the issuer shall credit to the merchant the amount of interchange fees charged on the tax or gratuity amount of the electronic payment transaction within 30 days after the merchant submits any necessary tax documentation.
(c) This section does not create liability for a payment card network regarding the accuracy of the tax or gratuity data reported by the merchant.
(d) A payment card network, an acquirer bank, or a processor shall not alter or manipulate the computation and imposition of interchange fees by increasing the rate or amount of the fees applicable to or imposed upon the portion of a credit card or debit card transaction not attributable to taxes or other fees charged to the retailer to circumvent the effects of this section.
100056. An issuer, a payment card network, an acquirer bank, a processor, or other designated entity that has received the tax or gratuity amount data and violates the provisions of this division is subject to a civil penalty of one thousand dollars ($1,000) per electronic payment transaction, and the issuer, payment card network, acquirer bank, processor, or designated entity shall refund the merchant that amount of any interchange fee calculated on the tax or gratuity amount of the electronic payment transaction.
100056. An issuer, a payment card network, an acquirer bank, a processor, or other designated entity that has received the tax or gratuity amount data and violates the provisions of this division is subject to a civil penalty of one thousand dollars ($1,000) per electronic payment transaction, and the issuer, payment card network, acquirer bank, processor, or designated entity shall refund the merchant that amount of any interchange fee calculated on the tax or gratuity amount of the electronic payment transaction.
SEC. 2. The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
SEC. 2. The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
SEC. 2. The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
### SEC. 2.