Amended in Senate April 30, 2014

Amended in Senate March 26, 2014

Senate Bill No. 1152

Introduced by Senator Anderson

February 20, 2014

An act to amend Section 215.1 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

SB 1152, as amended, Anderson. Property taxation: exemptions: veterans’ organizations.

Existing property tax law establishes a veterans’ organization exemption under which property is exempt from taxation if, among other things, that property is used exclusively for charitable purposes and is owned by a veterans’ organization.

This bill would provide that property owned by an organization that satisfies the requirements for the veterans’ organization exemption may not be denied the veterans’ organization exemption because the property is occasionally made available for private rentals as a service to the community, under specified conditions.

Section 2229 of the Revenue and Taxation Code requires the Legislature to reimburse local agencies annually for certain property tax revenues lost as a result of any exemption or classification of property for purposes of ad valorem property taxation.

This bill would provide that, notwithstanding Section 2229 of the Revenue and Taxation Code, no appropriation is made and the state shall not reimburse local agencies for property tax revenues lost by them pursuant to the bill.

This bill would take effect immediately as a tax levy.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert begin insert

The Legislature finds and declares all of the
following:

end insert begin insert

(a) Section 501(c)(19) of the United States Internal Revenue
Code and related federal regulations provide for the exemption
for posts or organizations of war veterans, or an auxiliary unit or
society of, or a trust or foundation for, any such post or
organization that, among other attributes, carries on programs to
perpetuate the memory of deceased veterans and members of the
Armed Forces and to comfort their survivors, conducts programs
for religious, charitable, scientific, literary, or educational
purposes, sponsors or participates in activities of a patriotic
nature, and provides social and recreational activities for their
members.

end insert begin insert

(b) Section 215.1 of the Revenue and Taxation Code stipulates
that all buildings, and so much of the real property on which the
buildings are situated as may be required for the convenient use
and occupation of the buildings, used exclusively for charitable
purposes, owned by a veterans’ organization that has been
chartered by the Congress of the United States, organized and
operated for charitable purposes, when the same are used solely
and exclusively for the purpose of the organization, if not
conducted for profit and no part of the net earnings of which
ensures to the benefit of any private individual or member thereof,
are exempt from taxation.

end insert begin insert

(c) The Chief Counsel of the State Board of Equalization
concluded, based on a 1979 appellate court decision, that only
parts of American Legion halls are exempt from property taxation
and that other parts, such as billiard rooms, card rooms, and
similar areas, are not exempt.

end insert begin insert

(d) In a 1994 memorandum, the State Board of Equalization’s
legal division further concluded that the areas normally considered
eligible for exemptions are the office areas used to counsel veterans
and the area used to store veterans’ records, but that the meeting
hall and bar found in most of the facilities are not considered used
for charitable purposes.

end insert begin insert

(e) Tax-exempt status is intended to provide economic incentive
and support to veterans’ organizations to provide for the social
welfare of the community of current and former military personnel.

end insert begin insert

(f) The State Board of Equalization’s constriction of the tax
exemption has resulted in an onerous tax burden on California
veteran service organizations posts or halls, hinders the posts’
ability to provide facilities for veterans, and threatens the economic
viability of many local organizations.

end insert begin insert

(g) The charitable activities of a veteran service organizations
post or hall are much more than the counseling of veterans. The
requirements listed for qualification for the federal tax exemption
clearly dictate a need for more than just an office.

end insert begin insert

(h) Programs to perpetuate the memory of deceased veterans
and members of the Armed Forces and to comfort their survivors
require the use of facilities for funerals and receptions.

end insert begin insert

(i) Programs for religious, charitable, scientific, literary, or
educational purposes require space for more than 50 attendees.

end insert begin insert

(j) Activities of a patriotic nature need facilities to accommodate
hundreds of people.

end insert begin insert

(k) Social and recreational activities for members require
precisely those areas considered “not used for charitable
purposes” by the State Board of Equalization.

end insert begin insert

(l) The State Board of Equalization’s interpretation of the
Revenue and Taxation Code reflects a lack of understanding of
the purpose and programs of the veteran service organizations
posts or halls and is detrimental to the good works performed in
support of our veteran community.

end insert

begin delete SECTION 1. end delete
begin insert SEC. 2. end insert   

Section 215.1 of the Revenue and Taxation Code is
amended to read:

215.1.  

(a) All buildings, and so much of the real property on
which the buildings are situated as may be required for the
convenient use and occupation of the buildings, used exclusively
for charitable purposes, owned by a veterans’ organization that
has been chartered by the Congress of the United States, organized
and operated for charitable purposes, when the same are used solely
and exclusively for the purpose of the organization, if not
conducted for profit and no part of the net earnings of which inures
to the benefit of any private individual or member thereof, shall
be exempt from taxation.

(b) The exemption provided for in this section shall apply to
the property of all organizations meeting the requirements of this
section and subdivision (b) of Section 4 of Article XIII of the
California Constitution and paragraphs (1) to (7), inclusive, of
subdivision (a) of Section 214.

(c) An organization that files a claim for the exemption provided
for in this section shall file with the assessor a valid organizational
clearance certificate issued pursuant to Section 254.6.

(d) (1) This exemption shall be known as the “veterans’
organization exemption.”

(2) Property owned by an organization that satisfies the
requirements of Section 215 or this section shall not be denied the
veterans’ organization exemption because the property is
occasionally made available for private rentals as a service to the
community, provided that the amount of rental fee charged is
limited to that amount necessary to reimburse the veterans’
organization for its costs in making the rental available, and any
proceeds from the rentals are used exclusively for the charitable
purposes of the organization.

begin delete SEC. 2. end delete
begin insert SEC. 3. end insert   

Notwithstanding Section 2229 of the Revenue and
Taxation Code, no appropriation is made by this act and the state
shall not reimburse any local agency for any property tax revenues
lost by it pursuant to this act.

begin delete SEC. 3. end delete
begin insert SEC. 4. end insert   

This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.