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:
The Legislature finds and declares all of the
2following:
3(a) Section 501(c)(19) of the United States Internal Revenue
4Code and related federal regulations provide for the exemption for
5posts or organizations of war veterans, or an auxiliary unit or
6society of, or a trust or foundation for, any such post or
7organization that, among other attributes, carries on programs to
8perpetuate the memory of deceased veterans and members of the
9Armed Forces and to comfort their survivors, conducts programs
10for religious, charitable, scientific, literary, or educational purposes,
11sponsors or participates in activities of a patriotic nature, and
12provides
social and recreational activities for their members.
13(b) Section 215.1 of the Revenue and Taxation Code stipulates
14that all buildings, and so much of the real property on which the
15buildings are situated as may be required for the convenient use
16and occupation of the buildings, used exclusively for charitable
17purposes, owned by a veterans’ organization that has been chartered
18by the Congress of the United States, organized and operated for
19charitable purposes, when the same are used solely and exclusively
20for the purpose of the organization, if not conducted for profit and
21no part of the net earnings of which ensures to the benefit of any
22private individual or member thereof, are exempt from taxation.
23(c) The Chief Counsel of the State Board of Equalization
24concluded,
based on a 1979 appellate court decision, that only
25parts of American Legion halls are exempt from property taxation
26and that other parts, such as billiard rooms, card rooms, and similar
27areas, are not exempt.
28(d) In a 1994 memorandum, the State Board of Equalization’s
29legal division further concluded that the areas normally considered
30eligible for exemptions are the office areas used to counsel veterans
31and the area used to store veterans’ records, but that the meeting
P3 1hall and bar found in most of the facilities are not considered used
2for charitable purposes.
3(e) Tax-exempt status is intended to provide economic incentive
4and support to veterans’ organizations to provide for the social
5welfare of the community of current and former military personnel.
6(f) The State Board of Equalization’s constriction of the tax
7exemption has resulted in an onerous tax burden on California
8veteran service organizations posts or halls, hinders the posts’
9ability to provide facilities for veterans, and threatens the economic
10viability of many local organizations.
11(g) The charitable activities of a veteran service organizations
12post or hall are much more than the counseling of veterans. The
13requirements listed for qualification for the federal tax exemption
14clearly dictate a need for more than just an office.
15(h) Programs to perpetuate the memory of deceased veterans
16and members of the Armed Forces and to comfort their survivors
17require the use of facilities for funerals and receptions.
18(i) Programs for religious, charitable, scientific, literary, or
19educational purposes require space for more than 50 attendees.
20(j) Activities of a patriotic nature need facilities to accommodate
21hundreds of people.
22(k) Social and recreational activities for members require
23precisely those areas considered “not used for charitable purposes”
24by the State Board of Equalization.
25(l) The State Board of Equalization’s interpretation of the
26Revenue and Taxation Code reflects a lack of understanding of
27the purpose and programs of the veteran service organizations
28posts or halls and is detrimental to the good works performed in
29support of our veteran
community.
Section 215.1 of the Revenue and Taxation Code
32 is amended to read:
(a) All buildings, and so much of the real property on
34which the buildings are situated as may be required for the
35convenient use and occupation of the buildings, used exclusively
36for charitable purposes, owned by a veterans’ organization that
37has been chartered by the Congress of the United States, organized
38and operated for charitable purposes, when the same are used solely
39and exclusively for the purpose of the organization, if not
40conducted for profit and no part of the net earnings of which inures
P4 1to the benefit of any private individual or member thereof, shall
2be exempt from taxation.
3(b) The exemption provided for in this section shall
apply to
4the property of all organizations meeting the requirements of this
5section and subdivision (b) of Section 4 of Article XIII of the
6California Constitution and paragraphs (1) tobegin delete (7),end deletebegin insert (4),end insert inclusive,
7begin insert (6), and (7)end insert of subdivision (a) of Section 214.
8(c) (1) The exemption specified by subdivision (a) shall not be
9denied to a property on the basis that the property is used for
10fraternal, lodge, or social club purposes.
11(2) With regard to this
subdivision, the Legislature finds and
12declares all of the following:
13(A) The exempt activities of a veterans’ organization as
14described in subdivision (a) qualitatively differ from the exempt
15activities of other nonprofit entities that use property for fraternal,
16lodge, or social club purposes in that the exempt purpose of the
17veterans’ organization is to conduct programs to perpetuate the
18memory of deceased veterans and members of the Armed Forces
19and to comfort their survivors, to conduct programs for religious,
20charitable, scientific, literary, or educational purposes, to sponsor
21or participate in activities of a patriotic nature, and to provide
22social and recreational activities for their members.
23(B) In light of this distinction, the use of real property by a
24veterans’ organization as described in subdivision (a), for
25fraternal, lodge, or social club purposes is central to
that
26organization’s exempt purposes and activities.
27(C) In light of the factors set forth in subparagraphs (A) and
28(B), the use of real property by a veterans’ organization as
29described in subdivision (a) for fraternal, lodge, or social club
30purposes, constitutes the exclusive use of that property for a
31charitable purpose within the meaning of subdivision (b) of Section
324 of Article XIII of the California Constitution.
33(d) Property owned by an organization that satisfies the
34requirements of Section 215 or this section shall not be denied the
35veterans’ organization exemption because the property is
36occasionally made available for private rentals as a service to the
37community, provided that the amount of rental fee charged is
38limited to that amount necessary to reimburse the veterans’
39organization for its costs in making the rental available, and any
P5 1proceeds from the rentals are
used exclusively for the charitable
2purposes of the organization.
3(c)
end delete
4begin insert(e)end insert An organization that files a claim for the exemption provided
5for in this section shall file with the assessor a valid organizational
6clearance certificate issued pursuant to Section 254.6.
7(d) (1)
end delete
8begin insert(f)end insert This exemption shall be known as the “veterans’ organization
9exemption.”
10(2) Property owned by an organization that satisfies the
11requirements of Section 215 or this section shall not be denied the
12veterans’ organization exemption because the property is
13occasionally made available for private rentals as a service to the
14community, provided that the amount of rental fee charged is
15limited to that amount necessary to reimburse the veterans’
16organization for its
costs in making the rental available, and any
17proceeds from the rentals are used exclusively for the charitable
18purposes of the organization.
Notwithstanding Section 2229 of the Revenue and
21Taxation Code, no appropriation is made by this act and the state
22shall not reimburse any local agency for any property tax revenues
23lost by it pursuant to this act.
This act provides for a tax levy within the meaning of
26Article IV of the Constitution and shall go into immediate effect.
O
96