BILL ANALYSIS Ó
SB 598
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Date of Hearing: July 8, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 598
(Hill) - As Amended June 29, 2015
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|Policy |Revenue and Taxation |Vote:|9 - 0 |
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Urgency: Yes State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill designates, until January 1, 2021, all-volunteer fire
departments as consumers, and not retailers, under the Sales and
Use Tax Law, of tangible personal property they sell if the
profits are used solely and exclusively in furtherance of the
fire departments' purposes. The bill stipulates the
preferential tax status shall not apply if the all-volunteer
fire department has gross receipts from the sale of tangible
personal property of $100,000 or more in each of the two
preceding calendar years. The bill further specifies it shall
become operative on the first day of the first calendar quarter
commencing more than 90 days after the bill's effective date.
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FISCAL EFFECT:
1)Minor and absorbable costs to the Board of Equalization (BOE)
to administer the changes to procedures and systems, and
notify affected fire departments and other persons.
2)Estimated revenue decreases for the state and local
jurisdictions of approximately $42,000 per year, approximately
half of which is from the General Fund.
COMMENTS:
1)Purpose. According to the author, all-volunteer fire
departments often rely on fundraisers to purchase equipment
and pay for station maintenance and operational expenses.
Many of these fundraisers involve selling hot food and
beverages, such as pancake breakfasts and barbeques, and/or
tangible goods such as t-shirts. Currently, the sale of these
items attracts sales and use tax, requiring the fire
departments to collect and remit taxes to the BOE. SB 598
would relieve all-volunteer fire departments from this burden,
saving on administrative costs.
2)Nonprofit Sales Tax. In general, nonprofits are required to
collect and remit sales and use tax to the same extent as any
other retailer. As a result, nonprofits, including charities,
engaged in selling tangible personal property must obtain
sellers' permits and report sales and use tax to the BOE.
California law does, however, designate certain nonprofit and
charitable organizations as consumers, rather than retailers,
under the sales and use tax law. This is done on a
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case-by-case basis through statute, and current consumer
designees include certain nonprofit veterans' organizations,
nonprofit youth organizations, parent teacher associations,
and schools and school districts. According to the BOE,
statutory consumer status is usually conferred to minimize
reporting burdens for the specified organizations and minimize
revenue losses associated with a complete SUT exemption.
3)Spartoli Voluntarii. All-volunteer fire departments protect
lives and property within defined geographical areas from
fires, disasters, and other emergency incidents through
education, prevention, training, and emergency response.
According to the California State Firefighters' Association,
the state has approximately 250 all-volunteer departments
served by approximately 25,000 volunteer firefighters.
Volunteers are not paid a regular wage but may be compensated
on an hourly or per-incident basis.
The all-volunteer fire departments primarily serve rural areas
and often operate on limited budgets funded through public
finances, grants, and charitable fundraising activities. The
BOE indicates it seldom audits these fire departments due to
their low sales volume and lack of complexity.
Analysis Prepared by:Joel Tashjian / APPR. / (916)
319-2081
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