BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 598|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
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THIRD READING
Bill No: SB 598
Author: Hill (D)
Amended: 4/15/15
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 4/8/15
AYES: Hertzberg, Nguyen, Bates, Beall, Hernandez, Lara, Pavley
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SUBJECT: Sales and use taxes: consumer designation: all
volunteer fire department
SOURCE: Author
DIGEST: This bill designates volunteer fire departments as
consumers under the Sales and Use Tax Law.
ANALYSIS:
Existing law:
1)Imposes the sales tax on every retailer engaged in business in
this state that sells tangible personal property, and requires
them to collect the appropriate tax from the consumer at
purchase. Sales tax applies whenever a retail sale is made,
unless it is a resale in the regular course of business.
2)Provides that, generally, retailers must obtain a seller's
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permit, and report to the Board of Equalization (BOE) any
sales tax collected from purchasers quarterly on a return.
Nonprofits, public agencies, and charities are generally
treated the same way as any other retailer, and don't have
blanket exemptions from collecting and remitting the tax,
unless otherwise exempted.
3)Designates certain sellers as "consumers," meaning that the
law considers the tax paid when they purchase property, and
the seller neither obtains a permit, nor collects the tax from
the purchaser at sale before remitting to BOE.
4)Specifies that "consumers" include:
Licensed medical and veterinary professionals dispensing
specified products during the course of performing
professional services,
Qualified itinerant vendors,
The Department of Transportation's leases and sales of
automobiles, and
Nonprofit organizations that intermittently or
irregularly sell food, nonalcoholic beverages, and other
property made by the organization's members.
This bill:
1)Designates volunteer fire departments as consumers under the
Sales and Use Tax Law for all its sales of tangible personal
property, so long as its profits are solely and exclusively
used to further the department's purposes.
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2)Requires volunteer fire departments, in order to qualify, to:
a) Pay its members hourly or per incident, not with a
regular salary,
b) Have as its purpose the protection of life, property,
and the environment within a designated geographic area
from fires, disasters, and emergency incidents through
education, prevention, training, and emergency response,
c) Be organized as a tax exempt organization for state and
federal purposes, and
d) Meet the definition of "volunteer fire department," used
in the welfare exemption from property tax.
3)Provides that consumer treatment does not apply to volunteer
fire departments with more than $100,000 in receipts from the
sale of tangible personal property in each of the last two
calendar years.
4)Sunsets on January 1, 2026.
Background
Many parts of California rely on volunteer fire departments to
provide fire prevention and emergency response, especially in
rural areas. These departments are mostly comprised of
residents who voluntarily band together to provide these vital
public services, and many have grown over time into present day
fire districts. A volunteer fire department is currently
eligible for the welfare exemption from property tax for
property it owns that's used for departmental purposes. While
some districts are funded and overseen by counties, many
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districts must solicit donations and sell items at fundraisers.
However, selling property in California requires registering
with BOE, and collecting and remitting a tax, which can be a
burden for districts that must provide services with less
administrative support than larger agencies. Formed in 1950,
the La Honda Volunteer Fire Brigade wants volunteer fire
departments added to the list of "consumers," thereby removing
requirements the Sales and Use Tax Law places on retailers.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified4/29/15)
Ben Lomond Fire Protection District
Butte Valley Fire Protection District
California Fire Chiefs Association
California State Firefighters' Association
County of San Mateo
Fire District Association of California
La Honda Fire Brigade
Pliocene Ridge Community Services District
Wildland Residents Association
OPPOSITION: (Verified4/29/15)
None received
ARGUMENTS IN SUPPORT: According to the author, "All volunteer
fire departments across the state solely rely on fundraisers to
buy lifesaving equipment. The La Honda Fire Brigade in my
district is no different. Their livelihood relies exclusively
on volunteers, from the 14 individuals who serve as
firefighters, to the board members who organize fundraising
efforts like the annual pancake breakfast and crab cioppino
dinner. Unfortunately any fundraisers dealing with selling
hot/prepared food or tangible goods are subject to California
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sales tax. SB 598 would simply exempt All-volunteer fire
departments from having to pay sales tax on their fundraising
efforts. All of the money raised would be able to stay with
them. If they are able to raise $1000 at a pancake breakfast -
they will keep the full $1000 and not have to send $92.50 (San
Mateo County has a sales tax rate of 9.25%) to the State.
Everyday these volunteers put their lives on the line and
provide an important resource to the communities they serve. We
should help them any way we can and allowing them to keep all of
their fundraising dollars is an important first step."
Prepared by:Colin Grinnell / GOV. & F. / (916) 651-4119
4/29/15 16:07:42
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