BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 765|
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THIRD READING
Bill No: SB 765
Author: Dutton (R)
Amended: As introduced
Vote: 21
SENATE REVENUE & TAXATION COMMITTEE : 8-0, 5/13/09
AYES: Wolk, Walters, Alquist, Ashburn, Florez, Padilla,
Runner, Wiggins
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Sales and use taxes: exemptions: thrift
stores: military
installations
SOURCE : State Board of Equalization
DIGEST : This bill grants a sales and use tax exemption
on sales made by a thrift store located on a military
installation.
ANALYSIS : Existing law imposes a sales and use tax on
the gross receipts from the sale of tangible personal
property, unless specifically exempted by statute. Current
law allows for a sales and use tax exemption for sales of
used pieces of clothing, household items, or other retail
items sold by thrift stores operated by nonprofit
organizations provided the purpose of that thrift store is
to obtain revenue for the funding of medical, hospice, or
social services to chronically ill individuals and the
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other requirements of the exemption are met. Additionally,
current law also provides a sales and use tax exemption for
charitable organizations qualifying for the property tax
"welfare exemption," and the sales are made principally as
a matter of assistance to purchasers in distressed
financial conditions.
Existing law treats certain entities as tax-exempt
organizations under Section 23701d of the Revenue and
Taxation code, which is similar to Internal Revenue Code
Section 501 (c)(3). Organizations under Section 23701d
make up the largest category of tax-exempt entities with
approximately 115,000 in California. Exemptions under
Section 23701d are for entities organized and operated for
at least one of the following purposes: (1) charitable,
(2) educational, (3) religious, (4) scientific, (5)
literacy, (6) testing for public safety, (7) fostering
national or international amateur sports competition, and
(8) preventing cruelty to children or animals.
This bill allows for a sales and use tax exemption for
sales of tangible personal property by a nonprofit
organization that operates thrift stores on military
installations, provided the organization is exempt from
taxation under Section 237101d, and its purpose is to
provide financial, educational, and other assistance to
members of the Naval Service of the United States, eligible
family members, and survivors when in need.
The Board of Equalization states this bill helps one
entity, the Navy-Marine Corps Relief Society (NMCRS).
Founded in 1904, the NMCRS is a nonprofit-charitable
organization that provides financial relief through
interest-free loans to members of the Navy, Marine Corps,
and their family. The NMCRS is incorporated in the
District of Columbia, headquartered in Arlington, Virginia,
and operates 28 thrift stores throughout California. The
income realized through the thrift store is allocated to
the NMCRS for use in their financial relief efforts. The
Board of Equalization unanimously voted to support this
legislation.
Prior Legislation
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This bill is identical to SB 1450 (Dutton), which passed
the Senate Floor on 5/8/08 by a vote of 34-0. The Assembly
also had an identical bill, AB 1919 (Silva). Both of these
bills failed passage in Assembly Appropriations last year.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
The Board of Equalization estimates per year state revenue
losses of approximately $21,215.
SUPPORT : (Verified 5/26/09)
State Board of Equalization (source)
California Peace Officers' Association
California Police Chiefs Association
Navy-Marine CorpsRelief Society
San Diego Military Advisory Council
San Diego Regional Chamber of Commerce
ARGUMENTS IN SUPPORT : According to the author's office,
"The purpose of this bill is to amend the tax code in order
to exempt the Navy-Marine Corps Relief Society Thrift
Stores in California from state sales tax. The bill would
allow the NMCRS to be included in a Revenue and Taxation
Code Section 6375 with other nonprofits that operate thrift
stores like the Goodwill and the Salvation Army.
The NMCRS mission statement states that their mission is
"to provide, in partnership with the Navy and Marine Corps,
financial, educational, and other assistance to members of
the Naval Service of the United States, eligible family
members, and survivors when in need; and to receive and
manage funds to administer these programs." The solution
is to add a section (Section 6363.4) to the Revenue and
Taxation Code which would clarify 'nonprofit organization'
to mean 'an organization, exempt from taxation under
Section 23701d, that, in partnership with the Navy and
Marine Corps, provides financial, educational, and other
assistance to members of the Naval Services of the United
States, eligible family members, and survivors that are in
need.'"
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DLW:nl 5/27/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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