Bill Text: CA SB834 | 2021-2022 | Regular Session | Enrolled

California Senate Bill 834 (Prior Session Legislation)

Bill Title: Tax-exempt status: insurrection.

Spectrum: Partisan Bill (Democrat 16-0)

Status: (Vetoed) 2022-09-22 - In Senate. Consideration of Governor's veto pending. [SB834 Detail]

Download: California-2021-SB834-Enrolled.html

Enrolled August 25, 2022

Passed IN Senate August 23, 2022

Passed IN Assembly August 22, 2022

Amended IN Assembly June 30, 2022

Amended IN Senate May 02, 2022

Amended IN Senate April 18, 2022

Amended IN Senate April 06, 2022

Amended IN Senate March 09, 2022

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill

No. 834

Introduced by Senator Wiener
(Principal coauthor: Assembly Member Mullin)
(Coauthors: Senators Becker, Hertzberg, Kamlager, Min, Newman, Portantino, Stern, and Umberg)
(Coauthors: Assembly Members Berman, Cristina Garcia, Ting, Wicks, Haney, and Stone)

January 05, 2022

An act to add Section 23703.6 to the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL'S DIGEST

SB 834, Wiener. Tax-exempt status: insurrection.

The Corporation Tax Law, in modified conformity with federal law, provides an exemption from the taxes imposed by those laws for specified organizations. Existing law provides that tax-exempt status, under certain circumstances, may be suspended or revoked.

Existing federal law defines various crimes against the established republican form of government, including treason, insurrection, and seditious conspiracy, as provided.

This bill would authorize the Attorney General to make a finding that a tax-exempt organization has actively engaged in, or incited the active engagement in, acts or conspiracies defined as criminal under specified federal law, and likely to produce imminent violation of that federal law. The bill would require the Attorney General to notify the Franchise Tax Board of such a finding, and would state the existing authority of the Franchise Tax Board to revoke the tax-exempt status of the organization found to be in violation.

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO

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

SECTION 1.

The Legislature finds and declares the following:

(a) California grants special status to nonprofit charitable organizations so that they may be exempt from paying state taxes. In addition, for certain nonprofit organizations, contributors may make donations that they may deduct for income tax purposes. These tax privileges, for both in-state and foreign nonprofits, are extended by the State of California, at the expense of its taxpayers, to support charitable organizations and the important work they do in our communities.

(b) However, as the United States Supreme Court held in Bob Jones University v. United States (1983) 461 U.S. 574, entitlement to tax exemption depends on meeting certain common-law standards of charity, namely, that a nonprofit organization seeking tax-exempt status must serve a public purpose and not be contrary to established public policy.

(c) The federal government has defined the crimes of treason (Section 2381 of Title 18 of the United States Code), misprision of treason (Section 2382 of Title 18 of the United States Code), insurrection (Section 2383 of Title 18 of the United States Code), seditious conspiracy (Section 2384 of Title 18 of the United States Code), advocating overthrow of the government (Section 2385 of Title 18 of the United States Code), and advocating mutiny by members of the United States military (Section 2387 of Title 18 of the United States Code).

(d) It is the existing policy of the State of California, and within the authority of the Franchise Tax Board, to apply the same common law principles articulated in Bob Jones University v. United States (1983) 461 U.S. 574 to the granting of tax-exempt status under California law.

(e) There is well-established procedure for exercising the authority clarified in this bill, including the procedure for investigating and remedying the misuse of funds by a charitable organization under the Supervision of Trustees and Fundraisers for Charitable Purposes Act at Article 7 (commencing with Section 12580) of Chapter 6 of Part 2 of Division 3 of Title 2 of the Government Code.

(f) Consistent with this policy, the Legislature finds that the Franchise Tax Board has the authority under state law to revoke the exempt status of nonprofit organizations inciting or actively engaged in the offenses listed above in subdivision (c).

SEC. 2.

Section 23703.6 is added to the Revenue and Taxation Code, to read:

23703.6.

(a) If the Attorney General determines that an organization exempt from tax under Section 23701 has actively engaged in, or incited the active engagement in, any of the acts or conspiracies defined as criminal under Section 2381, 2382, 2383, 2384, 2385, or 2387 of Title 18 of the United States Code that is directed to, and likely to produce, imminent violation of one or more of those sections, the Attorney General shall notify the Franchise Tax Board of that determination.

(b) Upon receiving notification from the Attorney General, pursuant to subdivision (a), the Franchise Tax Board has authority under state law to revoke the exemption from tax under Section 23701 for the organization.

(c) The Attorney General and the Franchise Tax Board may prescribe rules, guidelines, procedures, or other guidance to carry out the purposes of this section.

(d) The authority of the Franchise Tax Board to revoke an exemption from tax, as described in subdivision (b), does not constitute a change in, but is declaratory of, existing law.