A03271 Summary:

BILL NOA03271A
 
SAME ASSAME AS S01320-A
 
SPONSORMcDonald
 
COSPNSRMosley, Crespo, Raia, Steck, Lawrence
 
MLTSPNSRHooper, Perry, Ramos
 
Amd 1116, Tax L
 
Exempts certain senior citizen organizations from paying sales and compensating use taxes.
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A03271 Actions:

BILL NOA03271A
 
01/22/2015referred to ways and means
01/06/2016referred to ways and means
01/19/2016amend and recommit to ways and means
01/19/2016print number 3271a
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A03271 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A3271A
 
SPONSOR: McDonald
  TITLE OF BILL: An act to amend the tax law, in relation to exempting certain senior citizen organizations from paying sales and compensating use taxes   PURPOSE: To specifically provide that not-for profit Senior Citizen organizations are exempt from paying sales and compensating use taxes.   SUMMARY OF PROVISIONS: Sections 1 and 2 amend Subdivision (a) and (g) of section 1116 of the Tax Law to specifically include not-for-profit senior citizen organiza- tions which limit membership to members fifty and older, and which are organized for pleasure, social, educational, recreational and/or other nonprofit purposes, in the list of organizations which are exempt from paying sales and compensating use taxes. These organizations are exempt provided that no part of net earnings benefit any private share holder or individual and the organizations' substantial part of activities is not carrying propaganda, attempting to influence legislation or campaigning on behalf of any candidate for public office. The exemption applies to purchases made by the organization itself and not for purposes of its members individually. Section 3 provides that the Commissioner of Taxation and Finance is authorized to include senior citizen organizations on Form ST-119.2 , the "Application for an Exempt Organization Certificate." Section 4 states the effective date is January 1, 2017.   EXISTING LAW: Senior citizen organizations are not explicitly named as tax-exempt.   JUSTIFICATION: Senior citizen organizations have an easier time under federal law attaining a tax exempt status than under New York State Law. New York Tax Law Section 1116(a) (4) of Article 28 language mirrors the language of Internal Revenue Code 501(c)(3). Organizations qualifying under 501(c)(3) of the Internal Revenue Code are exempt from Federal income tax and may use their exempt status to receive automatic exemption from New York Sales and Use Tax. The language providing exemption both feder- ally and in New York is "Any corporation, Association, trust or communi- ty chest, fund or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purpose. or to foster national or international sports competition or for the prevention of the cruelty of animals...." The problem for senior citizen organizations is that unless they are organ- ized and operated exclusively for any of these purposes, it cannot attain tax exempt status. Senior citizen organizations attempt to claim tax exempt status by stating that they are educational. The Division of Tax Appeals in New York has determined that unless the senior organiza- tion was organized and operated exclusively for educational purposes, it is not exempt. In such a determination the appellate court looks at the organization's purposes as defined by its organizing documents. If the court finds that the purposes are broader than the educational purpose specified in Section 1116(a), the organizational test is not met and there is no grant of tax-exempt status. The court also looks at the operational activities of the organization to see that all of its activ- ities accomplish one or more of the exempt purposes. Unfortunately for the senior citizen organizations, it has been determined that in most instances a substantial part of the organizations' functions are social and recreational, and the educational activities appear to be secondary. Furthermore, the recreational trips taken by senior citizen organiza- tions, though seemingly educational to the seniors, is considered recre- ational to the Court. The Federal law on the other hand is able to grant tax exempt status to senior citizen organizations if not by 501(c)(3), but by 501(c)(7) as a social club. New York Tax Law has no such provision. By specifically identifying Senior Citizen Organizations as tax-exempt in New York Tax Law, it shall be clear cut that these organ- izations may be educational and/or social in nature. This status would help these organizations to save money that would normally go towards the payment of sales tax, for the operation of their organizations. Such monetary relief to our senior citizen organizations would go a long way into ensuring that these organizations thrive for the benefit of New York's senior population.   LEGISLATIVE HISTORY: A.8391/S.6200 of 2014   FISCAL IMPLICATIONS: To be determined, but expected to be minimal.   EFFECTIVE DATE: January 1, 2017
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A03271 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         3271--A
 
                               2015-2016 Regular Sessions
 
                   IN ASSEMBLY
 
                                    January 22, 2015
                                       ___________
 
        Introduced  by  M. of A. McDONALD, MOSLEY, CRESPO, RAIA, STECK, LAWRENCE
          -- Multi-Sponsored by -- M. of A. HOOPER, PERRY, RAMOS  --  read  once
          and  referred to the Committee on Ways and Means -- recommitted to the
          Committee on Ways and Means in accordance with Assembly Rule 3, sec. 2
          -- committee discharged, bill amended, ordered  reprinted  as  amended
          and recommitted to said committee
 
        AN  ACT  to  amend  the tax law, in relation to exempting certain senior
          citizen organizations from paying sales and compensating use taxes
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1. Subdivision (a) of section 1116 of the tax law, as amended
     2  by chapter 530 of the laws of 1976, paragraph 4 as  amended  by  chapter
     3  270  of  the  laws of 2001, paragraph 5 as amended by chapter 366 of the
     4  laws of 1983, subparagraph (B) of paragraph 5 as amended by chapter  418
     5  of the laws of 2004, subparagraph (C) of paragraph 5 as amended by chap-
     6  ter  296 of the laws of 2006, paragraph 7 as added by chapter 903 of the
     7  laws of 1980, paragraph 8 as added by chapter 888 of the laws  of  1983,
     8  paragraph 9 as amended by chapter 591 of the laws of 2005, is amended to
     9  read as follows:
    10    (a)  Except  as otherwise provided in this section, any sale or amuse-
    11  ment charge by or to any of the following or any use or occupancy by any
    12  of the following shall not be subject to the sales and compensating  use
    13  taxes imposed under this article:
    14    (1)  The state of New York, or any of its agencies, instrumentalities,
    15  public corporations (including a public corporation created pursuant  to
    16  agreement or compact with another state or Canada) or political subdivi-
    17  sions  where  it  is  the  purchaser, user or consumer, or where it is a
    18  vendor of services or property of a kind not ordinarily sold by  private
    19  persons[;].
    20    (2)  The United States of America, and any of its agencies and instru-
    21  mentalities, insofar as it is immune  from  taxation  where  it  is  the

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD02571-03-6

        A. 3271--A                          2
 
     1  purchaser, user or consumer, or where it sells services or property of a
     2  kind not ordinarily sold by private persons[;].
     3    (3)  The United Nations or any international organization of which the
     4  United States of America is a member where it is the purchaser, user  or
     5  consumer,  or where it sells services or property of a kind not ordinar-
     6  ily sold by private persons[;].
     7    (4) Any corporation, association, trust,  or  community  chest,  fund,
     8  foundation,  or limited liability company, organized and operated exclu-
     9  sively for religious, charitable, scientific, testing for public safety,
    10  literary or educational purposes, or to foster national or international
    11  amateur sports competition (but  only  if  no  part  of  its  activities
    12  involve  the  provision of athletic facilities or equipment), or for the
    13  prevention of cruelty to children or animals, no part of the  net  earn-
    14  ings  of which inures to the benefit of any private shareholder or indi-
    15  vidual, no substantial part of the activities of which  is  carrying  on
    16  propaganda, or otherwise attempting to influence legislation, (except as
    17  otherwise  provided in subsection (h) of section five hundred one of the
    18  United States internal revenue code of nineteen hundred  fifty-four,  as
    19  amended),  and which does not participate in, or intervene in (including
    20  the publishing or distributing of statements), any political campaign on
    21  behalf of any candidate for public office[;].
    22    (5) A post or organization of past or present  members  of  the  armed
    23  forces  of  the  United States, or an auxiliary unit or society of, or a
    24  trust or foundation for, any such post or organization:
    25    (A) organized in this state,
    26    (B) at least seventy-five percent of the members of which are past  or
    27  present  members  of the armed forces of the United States as defined in
    28  section thirteen-a of the general construction law and substantially all
    29  of the other members of which are individuals  who  are  cadets  or  are
    30  spouses,  widows,  widowers, ancestors, or lineal descendants of past or
    31  present members of the armed forces of the United States or  of  cadets,
    32  and
    33    (C)  no part of the net earnings of which inures to the benefit of any
    34  private shareholder or individual.
    35    (6) The following Indian nations or tribes residing in New York state:
    36  Cayuga, Oneida, Onondaga, Poospatuck, Saint Regis Mohawk, Seneca,  Shin-
    37  necock,  Tonawanda  and  Tuscarora,  where  it is the purchaser, user or
    38  consumer.
    39    (7) A not-for-profit corporation operating  as  a  health  maintenance
    40  organization  subject  to  the  provisions  of article forty-four of the
    41  public health law.
    42    (8) Cooperative and foreign corporations doing business in this  state
    43  pursuant to the rural electric cooperative law.
    44    (9)  A  credit union, as defined in subdivision nine of section two of
    45  the banking law, where it is the purchaser, user, or consumer, or  where
    46  it  is a vendor of services or property of a kind not ordinarily sold by
    47  private persons.
    48    (10)  Senior  citizen  organizations  organized  pursuant  to  section
    49  501(c)(3)  or  section 501(c)(7) of the Internal Revenue Code (26 U.S.C.
    50  §501) which limit membership to members age fifty and older,  and  which
    51  are  organized  for  pleasure,  social, educational, recreational and/or
    52  other non-profit purposes, provided:
    53    (A) no part of the net earnings of which inure to the benefit  of  any
    54  private shareholder or individual;
    55    (B)  no  substantial  part  of  the activities of which is carrying on
    56  propaganda, or otherwise attempting to influence legislation, (except as

        A. 3271--A                          3
 
     1  otherwise provided in subsection (h) of section five hundred one of  the
     2  United  States  internal revenue code of nineteen hundred fifty-four, as
     3  amended), and which does not participate in, or intervene in  (including
     4  the publishing or distributing of statements), any political campaign on
     5  behalf of any candidate for public office; and
     6    (C)  the  exemption  applies  only  to  purchases that are made by the
     7  organization itself and not for purchases by any of its members individ-
     8  ually.
     9    § 2. Subdivision (g) of section 1116 of the tax  law,  as  amended  by
    10  chapter 3 of the laws of 2004, is amended to read as follows:
    11    (g) For purposes of [paragraph] paragraphs five and ten of subdivision
    12  (a) of this section, duly authorized representatives of any such post or
    13  organization, while acting on behalf of such post or organization, shall
    14  not be subject to the tax imposed under subdivision (e) of section elev-
    15  en  hundred  five or the unit fee imposed by section eleven hundred four
    16  of this article, provided that such representatives  provide  an  exempt
    17  organization  certificate from such post or organization certifying that
    18  such representative is acting on its behalf.
    19    § 3. The commissioner  of  taxation  and  finance  is  authorized  and
    20  directed to develop and place into effect all rules and regulations, and
    21  take  all  other measures necessary, to implement the provisions of this
    22  act on or before its effective  date,  including,  but  not  limited  to
    23  making all necessary changes to the "Application for an Exempt Organiza-
    24  tion  Certificate"  (Form ST-119.2) and any other forms utilized by tax-
    25  exempt entities.
    26    § 4. This act shall take effect January 1, 2017.
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