Saturday, June 1, 2013

California Bill Targeting Sexual Orientation Discrimination by Boy Scouts & Other Youth Groups Advances

According to a Sacramento CBS news report, the California Senate has mustered the two-thirds majority needed for tax increases to pass a bill that would strip state tax-exempt status from any youth group that dsicrminates on the basis of gender identity, race, sexual orientation, nationality, religion or religious affiliation.  The bill, SB323, applies specifically to exemptions from the California's corporate income tax and sales and use tax, but with certain limitations. 

Based on a reading of the bill and the Senate Committee report, the sales and use tax exemption loss applies to the otherwise availalbe exemption from having to collect and pay over to the government sales and use tax on sales by the organization if those sales are irregular or intermittent. While aimed at the Boy Scouts of America, which recently removed its bar on gay youth participating in the Scouts but left in place its bar on gay adult scout leaders, the loss of the sales and use tax exemption applies to any organization with the "primary purpose" of providing "a supervised program of competitive sports for youth, or to promote good citizenship in youth."  The non-discrimination requirement also applies to any youth group sponsored or affiliated with a nonprofit private educational institution at the K through undergraduate level, "including but not limited to any student activity club, athletic group, or musical group."  Finally, the bill applies the non-discrimination requirement to a number of specific organizations, including not only the Boy Scouts but also the Girl Scouts, the YMCA, the YWCA, 4-H Clubs, and many others. 

The loss of corporate income tax exemption for failure to comply with the non-discrimination standard applies to any "public charity youth organization," which is defined as including but not limited to the specifically named organizations.  If the bill becomes law, the California Franchise Tax Board will apparently be responsible for developing a more detailed definition.

The bill does not affect the ability of donors to the covered organizations to take a charitable contribution deduction.  The bill now goes to the state Assembly for consideration, where a two-thirds majority vote is also needed for passage.

Additional coverage:  Huffington Post.

LHM

https://lawprofessors.typepad.com/nonprofit/2013/06/california-bill-targeting-sexual-orientation-discrimination-by-boy-scouts-other-youth-groups-advance.html

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