Senate Bill No. 2

Introduced by Senators Anderson and Vidak

(Coauthors: Senators Gaines and Nielsen)

(Coauthors: Assembly Members Achadjian, Travis Allen, Bigelow, Brown, Beth Gaines, Grove, Linder, Melendez, and Wilk)

December 1, 2014

An act to amend Section 215.1 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

SB 2, as introduced, Anderson. Property taxation: exemptions: veterans’ organizations.

Existing property tax law establishes a veterans’ organization exemption under which property is exempt from taxation if, among other things, that property is used exclusively for charitable purposes and is owned by a veterans’ organization.

This bill would provide that the veterans’ organization exemption shall not be denied to a property on the basis that the property is used for fraternal, lodge, or social club purposes, and would make specific findings and declarations in that regard. The bill would also provide that the exemption shall not apply to any portion of a property that consists of a bar where alcoholic beverages are served.

Section 2229 of the Revenue and Taxation Code requires the Legislature to reimburse local agencies annually for certain property tax revenues lost as a result of any exemption or classification of property for purposes of ad valorem property taxation.

This bill would provide that, notwithstanding Section 2229 of the Revenue and Taxation Code, no appropriation is made and the state shall not reimburse local agencies for property tax revenues lost by them pursuant to the bill.

This bill would take effect immediately as a tax levy.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 215.1 of the Revenue and Taxation Code
is amended to read:

215.1.  

(a) All buildings, and so much of the real property on
which the buildings are situated as may be required for the
convenient use and occupation of the buildings, used exclusively
for charitable purposes, owned by a veterans’ organization begin delete which end delete
begin insert that end insert has been chartered by the Congress of the United States,
organized and operated for charitable purposes, begin insert and exempt from
federal income tax as an organization described in Section
501(c)(19) of the Internal Revenue Code end insert when the same are used
solely and exclusively for the purpose of the organization, if not
conducted for profit and no part of the net earnings of which inures
to the benefit of any private individual or member thereof, shall
be exempt from taxation.

(b) The exemption provided for in this section shall apply to
the property of all organizations meeting the requirements of this
begin delete section and end delete begin insert section, end insert subdivision (b) of Section 4 of Article XIII of
the California begin delete Constitution end delete begin insert Constitution, end insert and paragraphs (1) to begin delete (7),
inclusive, end delete begin insert (4), inclusive, (6), and (7) end insert of subdivision (a) of Section
214.

begin insert

(c) (1) The exemption specified by subdivision (a) shall not be
denied to a property on the basis that the property is used for
fraternal, lodge, or social club purposes.

end insert begin insert

(2) With regard to this subdivision, the Legislature finds and
declares all of the following:

end insert begin insert

(A) The exempt activities of a veterans’ organization as
described in subdivision (a) qualitatively differ from the exempt
activities of other nonprofit entities that use property for fraternal,
lodge, or social club purposes in that the exempt purpose of the
veterans’ organization is to conduct programs to perpetuate the
memory of deceased veterans and members of the Armed Forces
and to comfort their survivors, to conduct programs for religious,
charitable, scientific, literary, or educational purposes, to sponsor
or participate in activities of a patriotic nature, and to provide
social and recreational activities for their members.

end insert begin insert

(B) In light of this distinction, the use of real property by a
veterans’ organization as described in subdivision (a), for
fraternal, lodge, or social club purposes is central to that
organization’s exempt purposes and activities.

end insert begin insert

(C) In light of the factors set forth in subparagraphs (A) and
(B), the use of real property by a veterans’ organization as
described in subdivision (a) for fraternal, lodge, or social club
purposes, constitutes the exclusive use of that property for a
charitable purpose within the meaning of subdivision (b) of Section
4 of Article XIII of the California Constitution.

end insert begin insert

(d) The exemption provided for in this section shall not apply
to any portion of a property that consists of a bar where alcoholic
beverages are served. The portion of the property ineligible for
the veterans’ organization exemption shall be that area used
primarily to prepare and serve alcoholic beverages.

end insert begin delete

(c)

end delete

begin insert (e) end insert  An organization that files a claim for the exemption provided
for in this section shall file with the assessor a valid organizational
clearance certificate issued pursuant to Section 254.6.

begin delete

(d)

end delete

begin insert (f) end insert  This exemption shall be known as the “veterans’ organization
exemption.”

SEC. 2.  

Notwithstanding Section 2229 of the Revenue and
Taxation Code, no appropriation is made by this act and the state
shall not reimburse any local agency for any property tax revenues
lost by it pursuant to this act.

SEC. 3.  

This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.