The California Self Storage Association (CSSA), with support from the national Self Storage Association (SSA), has hired a lobbying firm to fight a proposed sales tax on self-storage services in California. The associations argue that self-storage is a rental of real property, not a service.

The proposed tax, being considering during the spring legislative session, would be applied to the sale of personal property sold at retail in the state or on storage, use or consumption in the state. The excise tax would be 7.5 percent of the sales price. If passed, the tax will go into affect on Jan. 1, 2013. 

One of the four bills introduced this legislative session purposed to impose taxes on services, Assembly Bill 2540 specifically applies a tax to self-storage agreements. A two-thirds vote is required in both houses for the sales to be applied to some or all services. Awaiting the vote on the bill, the CSSA and SSA will keep their members informed on its status.

California is not the only state that has been threatened by a sales tax in the self-storage industry. Senate Bill 142, introduced in South Dakota in January, would impose a 4 percent sales tax on the gross receipts derived from self-storage unit rentals, and a 4 percent privilege-use tax on the rental payments for use of the property.

If either bill passes, it will be the first tax law inflicted on the self-storage industry since New Jersey raised its sales tax from 6 percent to 7 percent in 2006. However, this year N.J. lawmakers have presented a bill that would lower the tax back to 6 percent.

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