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S.F. No. 1922 - Sales Tax Exemption for City Celebrations; Amnesty for Qualifying Nonprofit Organizations (as proposed by the A-1 amendment)
 
Author: Senator Bruce D. Anderson
 
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
 
Date: April 14, 2015



 

This bill provides a sales tax exemption for certain designated annual city celebrations, effective for sales and purchases made after June 30, 2015. The bill also provides amnesty for qualifying nonprofit organizations that organized and operated a city celebration on behalf of a group of nonprofit organizations, effective the day following final enactment.      

Section

Provision

1

Exempts goods and services sold at and admissions to a city designated annual city celebration. The exemption includes sales of prepared food, candy, soft drinks, and alcoholic beverages. The celebration must be designated by the governing board of the city with a population of less than 10,000 as the single annual event qualifying for the exemption. The following requirements apply:

  • The event must be held on five or fewer consecutive days;
  • The event must be run by the city or a city-designated nonprofit organization;
  • The gross receipts of the event must be recorded in the books of the city or nonprofit organization in accordance with generally accepted accounting practices; and
  • The event net proceeds must be distributed for charitable, educational, civic, or governmental purposes to the city’s general fund or a nonprofit organization to promote its mission, provided that the proceeds are not used for lobbying or political activities.

The exemption does not apply to admission charges to events or for use of an amusement device involving bingo or other gambling activities. The gross receipts from the celebration are taxable if all event proceeds are not used solely and exclusively for charitable, educational, civic, or governmental purposes. The exemption also does not apply unless the city or nonprofit organization keeps a separate accounting record for all activities included in the celebration.

Defines “nonprofit organization” and “city celebration.” A celebration does not qualify for the exemption if it includes the operation of a regular business or regularly scheduled activities carried out in the normal course of business.
 

2

Provides tax amnesty for a nonprofit organization that ran and organized a city celebration held before January 1, 2015, all of the net proceeds of which were distributed to 501(c)(3) and 501(c)(4) organizations for charitable, educational, civic, or governmental purposes. The amnesty does not apply to sales and use taxes already paid, remitted, or collected, and does not apply to the audit of an organization if the audit has been finally resolved.

 

 

 
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