BILL ANALYSIS
SB 765
Page 1
Date of Hearing: July 6, 2009
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Charles M. Calderon, Chair
SB 765 (Dutton) - As Amended: June 29, 2009
Majority vote. Tax levy. Fiscal committee.
SENATE VOTE : 39-0
SUBJECT : Sales and use taxes: exemptions: military thrift
stores
SUMMARY : Provides a sales and use tax (SUT) exemption for
property sold by a thrift store located on a military
installation, as specified. Specifically, this bill :
1)Provides a SUT exemption for tangible personal property (TPP)
sold by a thrift store located on a military installation and
operated by a "nonprofit organization".
2)Defines "nonprofit organization" as an organization that:
a) Is exempt from taxation under Revenue and Taxation Code
(R&TC) Section 23701d; and,
b) 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.
3)Provides that, notwithstanding existing law, the state shall
not reimburse any local agency for any SUT revenues lost as a
result of this act.
4)Takes immediate effect as a tax levy.
5)Sunsets on January 1, 2014.
EXISTING LAW :
1)Taxes the sale or use of TPP in California, absent a specific
exemption. The SUT Law does not provide a general exemption
for charitable organizations. Nevertheless, existing law is
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sprinkled with several provisions designed to assist various
types of nonprofit groups engaged in charitable activities.
2)Provides for various nonprofit classifications. For example,
R&TC Section 23701d grants a state income tax exemption to
nonprofit organizations operated for religious, charitable,
scientific, literary or educational purposes. [Internal
Revenue Code Section 501(c)(3) provides an exemption from
federal income tax for similarly described nonprofit
organizations.]
FISCAL EFFECT : The Board of Equalization (BOE) estimates that
this measure would result in annual General Fund revenue losses
of roughly $15,000.
COMMENTS :
1)The author states, "This bill, sponsored by the State Board of
Equalization, adds thrift stores operated by the Navy-Marine
Core Relief Society to the list of stores exempt from paying
sales tax." The author goes on to note, "The Relief Society
provides emergency assistance to the brave men and women who
proudly serve our country."
2)BOE notes that this bill would essentially only apply to the
thrift stores operated by the Navy-Marine Corps Relief Society
(Society). The Society is a nonprofit, charitable
organization that provides financial and educational
assistance to members of the Naval Services. The Society,
working in partnership with the Navy and Marine Corps, also
operates 25 thrift stores, seven of which are located at naval
or marine bases in California. These thrift stores sell used
clothing, uniforms, and household items to service members and
their families. The income realized from these stores is
returned to the Navy and Marine Corp community in the form of
relief services. Because BOE believes that the price of the
goods sold by the Society's thrift stores should not be
increased by the addition of sales tax, BOE voted to sponsor
this measure.
3)The Society notes:
The Society serves as the primary source of emergency
financial assistance for Sailors, Marines and their
families. Overall, the Society saw a 34% increase in
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casework clients in 2008 - nearly a 50% increase in the
last two years. In 2008, our 3,600 trained volunteers,
supported by fewer than 250 paid employees, serving at
nearly 250 offices around the world, disbursed $44.2
million in interest-free loans and grants in 77,754
financial relief cases - the most clients and the greatest
amount of financial support in 15 years. This relief
assistance was required for basic food and shelter, vehicle
repairs, household set up, medical and dental, funeral
expenses, natural disasters, such as the California forest
fires, emergency transportation and assistance to
casualties of the on-going wars in Iraq and Afghanistan.
4)Committee staff notes that this bill:
a) Uses a number of undefined terms like "thrift store" and
"military installation". The author may wish to amend this
bill to provide greater definitional precision.
b) Is nearly identical to SB 1450 (Dutton), introduced in
the 2007-08 Legislative Session. SB 1450 passed out of
this committee by a vote of 9 to 0, after being amended to
include a sunset date. SB 1450 was then held in the
Assembly Appropriations Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
Board of Equalization (sponsor)
California State Controller John Chiang
Navy-Marine Corps Relief Society
San Diego Military Advisory Council
San Diego Regional Chamber of Commerce
Opposition
None on file
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098