Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2012
 

Revenue and Taxation Code

Property Taxation

Part 2. Assessment

CHAPTER 1. Taxation Base

Article 1. Taxable and Exempt Property

Section 214.14

214.14. Welfare exemption; museums. (a) Property used exclusively for the charitable purposes of museums and owned and operated by a religious, hospital, scientific, or charitable fund, foundation, limited liability company, or corporation which meets all the requirements of subdivision (a) of Section 214 shall be deemed to be within the exemption provided by Sections 4 and 5 of Article XIII of the California Constitution and Section 214.

(b) For purposes of this section:

(1) Property used exclusively for the charitable purposes of museums shall include property used for activities and facilities related to the primary charitable purposes of museums and reasonably necessary and incidental to those purposes.

(2) Property used exclusively for the charitable purposes of museums shall not be required to be indispensable to the primary charitable purposes of museums.

(3) Property used exclusively for the charitable purposes of museums shall not include property used for activities and facilities not related to the primary charitable purposes of museums and not reasonably necessary or incidental to those purposes.

(4) Property used exclusively for the charitable purposes of museums shall include property owned by a nonprofit association or organization performing auxiliary services to any city or county museum in the state and used for the storage of items donated for an annual rummage sale, the proceeds of which, after taking into account the expenses of the nonprofit association or organization, are used to provide support to those museums. For purposes of this subdivision, "storage of items donated for an annual rummage sale" shall not be considered a "fundraising activity," as that term is used in paragraph (3) of subdivision (a) of Section 214.

(c) The amendments made by the act adding this subdivision shall apply with respect to lien dates occurring on and after January 1, 2005.

History.—Added by Stats. 1989, Ch. 912, in effect January 1, 1990. Stats. 1996, Ch. 897, in effect September 25, 1996, added "the" before "charitable" in the first sentence of the first paragraph, and in subdivisions (b) and (c); substituted "reasonably" for "reasonable" after "not" in subdivision (c);and added subdivision (d). Stats. 2004, Ch. 354 (AB 3073), in effect August 30, 2004, designated the former first paragraph as subdivision (a) and added "limited liability company," after "fund, foundation" therein; created the first sentence of new subdivision (b) with the former second sentence of subdivision (a), designated former subdivisions (a), (b), (c) and (d) as new paragraphs (1), (2), (3) and (4), respectively, added "the" after "exclusively for" in the first sentence of paragraph (1), (2) and (3) of new subdivision (b); and added new subdivision (c).

Note.—Section 1 of Stats. 1989, Ch. 912 provided that the Legislature finds and declares:

(a) It is the public policy of this state to encourage the operation of museums for public and charitable purposes, and for the cultural and educational benefits museums provide.

(b) It has consistently been the intent of the Legislature, and so interpreted by the courts, that property owned and operated for charitable purposes of a museum by a tax exempt organization qualifies for the welfare exemption under Section 214 of the Revenue and Taxation Code.

(c) It has never been the intent of the Legislature to disqualify from the welfare exemption those properties used for activities or facilities reasonably necessary and incidental to the charitable purposes of museums, including restaurants, cafes, bars, or other food service facilities, and bookstore/giftshops selling primarily educational materials, for the convenience of museum visitors and staff.

(d) Rising costs of administration and operation, dwindling federal and state funding, and declining tax incentives for private donations have made it extremely difficult for museums to secure adequate funding.

(e) It is essential to maintain and enhance the three main funding avenues currently available to museums: tax exemptions, private contributions, and earned income.

(f) To require museums to pay property taxes, in whole or in part, on the basis of traditional activities incidental to or reasonably necessary for the advancement of museum purposes, would seriously hamper the ability of museums to function effectively and would cause them to divert funds that otherwise would be available to provide greater cultural, historical, and educational benefits to the entire state.

(g) The provisions of this act serve the public purpose of encouraging museum operations and thereby advance cultural and educational progress in furtherance of declared state policy.

Sec. 3 thereof stated that the addition of this section made at the 1989–90 Regular Session of the Legislature does not constitute a change in, but is declaratory of, existing law. Sec. 4 thereof provided that nothing in this act shall be construed as an admission on the part of the State Board of Equalization or an expression of opinion by the Legislature that the interpretations or applications of the welfare exemption by the board for prior years were in any way incorrect or invalid.