The Sales and Use Tax Law imposes a tax on the gross receipts from the sale in this state of, or the storage, use, or other consumption in this state of, tangible personal property. That law provides various exemptions from that tax, including an exemption for new children’s clothing, which is sold to a nonprofit organization, as defined, for its distribution, without charge, to elementary schoolchildren.

This bill would, until January 1, 2014, expand this exemption to provide that any new children’s clothing that is sold to a nonprofit organization for its distribution to all children, without charge, are exempt from that tax, and would modify the definition of a nonprofit organization to include other tax exempt organizations, as specified.

Counties and cities are authorized to impose local sales and use taxes in conformity with state sales and use taxes. Exemptions from state sales and use taxes enacted by the Legislature are automatically incorporated into the local taxes.

Section 2230 of the Revenue and Taxation Code provides that the state will reimburse counties and cities for revenue losses caused by the enactment of sales and use tax exemptions.

This bill would provide that no appropriation is made and the state shall not reimburse local agencies for sales and use tax revenues lost by them pursuant to this bill.

This bill would take effect immediately as a tax levy. However, the provisions of this bill would not become operative until January 1, 2008.