California – Introduced Bill Would Revoke Tax Exempt Status for Organizations that Discriminate

SALT Report 2864 – The California State Legislature introduced a Bill that, if passed, would revoke the tax exempt status of any public charity youth organization that discriminates on the basis of gender identity, race, sexual orientation, nationality, religion, or religious affiliation.

Specifically, Senate Bill 323 provides that these organizations would no longer be eligible to purchase food products, nonalcoholic beverages and other tangible property exempt from sales and use taxes. In addition, organizations that discriminate would be considered retailers, not consumers, for sales and use tax purposes.  This would require the organization to obtain seller’s permits, and collect and remit sales and use tax on its sales and purchases of tangible personal property.

The Bill also provides that the Franchise Tax Board would be required to confirm that an organization is in compliance with these provisions prior to issuing any tax-exempt certificates.

Because this Bill includes changes that would result in a taxpayer paying a higher tax, it requires the approval of 2/3 of each house of the Legislature as required by Section 3 of Article XIIIA of the California Constitution.  However, if passed, the provisions in Senate Bill 323 would become effective January 1, 2014

For Further Information

California State Legislature – Senate Bill 323