BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 765|
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UNFINISHED BUSINESS
Bill No: SB 765
Author: Dutton (R)
Amended: 8/31/09
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
SENATE FLOOR : 39-0, 6/2/09 (Consent)
AYES: Aanestad, Alquist, Ashburn, Benoit, Calderon,
Cedillo, Cogdill, Corbett, Correa, Cox, Denham,
DeSaulnier, Ducheny, Dutton, Florez, Hancock, Harman,
Hollingsworth, Huff, Kehoe, Leno, Liu, Lowenthal,
Maldonado, Negrete McLeod, Oropeza, Padilla, Pavley,
Romero, Runner, Simitian, Steinberg, Strickland, Walters,
Wiggins, Wolk, Wright, Wyland, Yee
ASSEMBLY FLOOR : 76-0, 9/2/09 - See last page for vote
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
CONTINUED
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installation, until January 1, 2014, as specified.
Assembly Amendments added a sunset date of January 1, 2014
and expanded the organizations to be granted the exemption
from the Navy to the Armed Forces of the United States.
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
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:
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.
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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.
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.
Prior Legislation
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
BOE estimates that this bill would result in annual General
Fund revenue losses of roughly $15,000.
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
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to exempt the Navy-Marine Corps Relief Society (NMCRS)
Thrift Stores in California from state sales tax. 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 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 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."
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Caballero, Charles Calderon, Carter, Chesbro,
Conway, Cook, Coto, Davis, De La Torre, De Leon, DeVore,
Duvall, Emmerson, Eng, Evans, Feuer, Fletcher, Fong,
Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick,
Gilmore, Hagman, Harkey, Hayashi, Hernandez, Hill, Huber,
Huffman, Jeffries, Jones, Knight, Krekorian, Lieu, Logue,
Bonnie Lowenthal, Ma, Mendoza, Miller, Nava, Nestande,
Niello, Nielsen, John A. Perez, V. Manuel Perez,
Portantino, Ruskin, Salas, Saldana, Silva, Skinner,
Smyth, Solorio, Audra Strickland, Swanson, Torlakson,
Torres, Torrico, Tran, Villines, Yamada, Bass
NO VOTE RECORDED: Buchanan, Hall, Monning
DLW:nl 9/2/09 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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