Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2012
 

Sales And Use Tax Law

CHAPTER 4. EXEMPTIONS

Article 1. General Exemptions

Section 6375.5

6375.5. Sales of new children's clothing to a nonprofit organization. (a) There are exempted from the taxes imposed by this part the gross receipts from the sale of, and the storage, use, or other consumption in this state of, new children's clothing that is sold to a nonprofit organization for its distribution without charge to individuals under 18 years of age.

(b) For purposes of this section, "nonprofit organization" means an organization which meets all of the following criteria:

(1) Is organized and operated for charitable purposes.

(2) Has exempt status under Section 23701d or 23701f.

(3) Furnishes new children's clothing principally as a matter of assistance to recipients in distressed financial conditions.

(c) This section shall remain in effect only until January 1, 2014, and as of that date is repealed.

History.—Added by Stats. 1982, Ch. 708, in effect September 8, 1982, operative January 1, 1983. Stats. 2007, Ch. 317 (AB 538), in effect January 1, 2008, added subdivision letter designation "(a)" before first paragraph, substituted "that" for "which" after "children's clothing", and substituted "individuals . . . of age" for "elementary school children" after "charge to" therein; added subdivision letter designation (b) before former second paragraph; renumbered former subdivisions (a), (b), and (c) as (1), (2), and (3); deleted "Is engaged in the relief of poverty and distress." from former subdivision (c); deleted subdivision letter designation (d); substituted "Furnishes" for "Distributes" in former subdivision (d); and added new subdivision (c).

Text of section operative January 1, 2014

6375.5. Sales of new children's clothing to a nonprofit organization. (a) There are exempted from the taxes imposed by this part the gross receipts from the sale of, and the storage, use, or other consumption in this state of, new children's clothing that is sold to a nonprofit organization for its distribution without charge to elementary schoolchildren.

(b) For purposes of this section, "nonprofit organization" means an organization that meets all of the following requirements:

(1) Is organized and operated for charitable purposes.

(2) Has exempt status under Section 23701d.

(3) Is engaged in the relief of poverty and distress.

(4) Distributes new children's clothing principally as a matter of assistance to recipients in distressed financial conditions.

(c) This section shall become operative on January 1, 2014.

History.—Added by Stats. 2007, Ch. 317 (AB 538), in effect January 1, 2008.

6376. Construction contracts. [Repealed by Stats. 1968, p. 2602, in effect August 15, 1968, as affected by Stats. 1971, p. 2783, operative July 1, 1972; and by Stats. 1972, Ch. 1406, effective December 26, 1972.]

Note.—See note following Section 6051.

No Exemption for Equipment and Supplies Used In Construction Contract Entered Into for Fixed Price Prior to August 1, 1967.—Plaintiff was awarded a lump-sum fixed price contract with the State Department of Water Resources for the construction of a dam. Subsequent thereto, the state Legislature increased the sales and use tax rate by 1 percent, effective August 1, 1967, and also added Section 6376 to the law providing an exemption from the increase for the sale and use of material and fixtures obligated pursuant to an engineering construction contract entered into for a fixed price prior to the effective date of the rate increase. The Board took the position that the exemption was applicable only to "materials" and "fixtures" as those terms had previously been defined in the Board's Ruling 11 "Construction Contractors." This interpretation excluded from the exemption other tangible personal property such as construction equipment and supplies. Plaintiff sought declaratory relief that the Section 6376 exemption covered equipment and supplies and other alternative relief against the state as a party to the contract. Plaintiff subsequently paid approximately $102,000 in additional taxes, unsuccessfully sought a refund from the Board, and filed a suit for refund. In the consolidated actions, the trial court found that Section 6376 did not exempt the transactions in dispute and denied plaintiff relief against the state as a party to the contract. In affirming the judgment of the lower court denying plaintiff's claim for refund of tax, the court held that the words "materials and fixtures" did not include construction equipment and supplies. The court found that it was reasonable to assume that the Legislature used the words "material and fixtures" advisedly and in the sense which had been given them by long standing administrative ruling and by judicial decision. Even without reference to the administrative ruling, the court observed, by no stretch of the imagination could construction equipment and supplies be considered either "fixtures" or "materials." Further, both the language of Section 6376 and the post enactment history of the section strongly supported the interpretation urged by the Board. The court further held that the construction contract did not provide for additional compensation on account of the increased tax burden, and that plaintiff was not subject to any unconstitutional impairment of its contract with the Department of Water Resources as a result of any additional burden falling on it by virtue of the increased tax. Western Contracting Corp. v. State Board of Equalization (1974) 39 Cal.App.3d 341.