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MARVIN MANDEL, Governor 3867
religious, charitable, or educational organizations.
Sales to persons who operate these types of
organizations are currently exempt from the State sales
tax. House Bill 531 clarifies the availability of this
exemption for the institution or organization itself,
rather than for the person who operates the organization.
Secondly, the bill requires the organization to apply for
the exemption. Finally, the bill attempts to bring a
certain needed consistency to the law by providing that
the Comptroller may treat an organization's exemption
under § 501(c)(3) of the Internal Revenue Code as
evidence of its qualification for the exemption from the
State sales tax.
House Bill 531, as introduced, addressed itself only
to the third objective mentioned above. As amended,
however, the bill substantially broadens its scope by
exempting not only a religious, charitable, or
educational organization, exempt under IRC §501(c)(3),
but also nonprofit civic leagues or organizations, the
earnings of which are devoted to charitable, educational,
or recreational purposes which are exempt from income
taxes under IRC §501(c)(4), but are not presently exempt
from the State sales tax.
This extension of the sales tax exemption to civic
organizations and recreational programs, according to the
Retail Sales Tax Division, would result in a possible
less of approximately $500,000 in sales tax revenue.
House Bill 531 was intended to clarify a provision
of the sales tax law which in the past has caused
interpretive and administrative problems for the
Comptroller's office. However, as presented to me, the
bill extends the sales tax exemption far beyond the
sponsor's intentions and the State's ability to absorb.
For the reasons stated, and at the request of the
Comptroller's office, I have decided to veto House Bill
531.
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Sincerely,
Marvin Mandel
Governor
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House Bill No. 539 - Subpoena Powers - Country
Club Lands
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