BILL ANALYSIS
SB 765
Page 1
SENATE THIRD READING
SB 765 (Dutton)
As Amended August 31, 2009
Majority vote. Tax levy
SENATE VOTE :39-0
REVENUE & TAXATION 8-0 APPROPRIATIONS 17-0
-----------------------------------------------------------------
|Ayes:|Charles Calderon, Beall, |Ayes:|De Leon, Conway, Ammiano, |
| |Coto, Harkey, Ma, Hagman, | | |
| |Portantino, Saldana | |Charles Calderon, Coto, |
| | | |Davis, |
| | | |Fuentes, Hall, Harkey, |
| | | |Miller, |
| | | |Nielsen, John A. Perez, |
| | | |Skinner, |
| | | |Solorio, Audra |
| | | |Strickland, Torlakson, |
| | | |Hill |
|-----+--------------------------+-----+--------------------------|
| | | | |
| | | | |
-----------------------------------------------------------------
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 "designated entity" that, in partnership with
the United States (U.S.) Department of Defense, provides
financial, educational, and other assistance to members of the
Armed Forces of the U.S., eligible family members, and
survivors in need.
2)Defines "designated entity" as a military welfare society
described in Section 1033 of Chapter 53 of Part II of Subtitle
A of Title 10 of the U.S. Code (10 U.S.C. Section 1033).
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.
SB 765
Page 2
4)Takes immediate effect as a tax levy.
5)Sunsets on January 1, 2014.
EXISTING FEDERAL LAW defines the term "military welfare society"
as any of the following: Army Emergency Relief, Air Force Aid
Society, Inc., Navy-Marine Corps Relief Society, and Coast Guard
Mutual Assistance.
EXISTING STATE LAW : 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 sprinkled with several provisions designed to
assist various types of groups engaged in charitable activities.
FISCAL EFFECT : The Board of Equalization (BOE) estimates that
this measure would result in annual General Fund revenue losses
of roughly $15,000.
COMMENTS : 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."
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.
The Society notes:
SB 765
Page 3
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
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.
Committee staff notes that this bill:
1)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.
2)SB 765 is similar to SB 1450 (Dutton), introduced in the
2007-08 Legislative Session. SB 1450 passed out of the
Assembly Committee on Revenue and Taxation 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.
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098
FN: 0002559