Boy Scouts May Lose Tax Breaks if California Senate Bill Passes

By Jason Bramwell
California lawmakers are expected to vote this week on California Senate Bill (SB) 323, which would deny state tax breaks to youth groups, such as the Boy Scouts of America, that discriminate on the basis of sexual orientation, gender identity, or religious affiliation.
The legislation is one of several California Assembly and Senate bills that must pass out of their first chamber by May 31 to have a chance of reaching the governor's desk by the September 13 deadline.
After reviewing its membership policy for the past several months and soliciting public feedback, the Boy Scouts of America on May 23 lifted a 103-year-old ban that prevented openly gay youths from joining Boy Scouts. However, gay adults are still barred from becoming Boy Scout leaders.
Senator Ricardo Lara (D-CA) – who introduced SB323, also known as the Youth Equality Act, in February – said in a written statement on May 23 that the decision made by the Boy Scouts of America to lift its ban on gay youth is a step in the right direction. But, he added, because the decision did not include adults, it falls short of being a truly inclusive policy.
"As such, the Youth Equality Act will continue to move forward to ensure that discrimination in any form does not exist  not in our state, not on our dime," said Lara, who is openly gay.
If approved, the bill would require those youth organizations to pay corporate taxes on donations, membership dues, camp fees, and other sources of income, as well as to obtain sellers' permits and pay sales taxes on food, beverages, and homemade items sold at fundraisers.
Because all tax returns are private in California, supporters don't know how big a tax hit the Boy Scouts would take if the proposal passes.
The California Senate Governance and Finance Committee voted five to two in favor of the Youth Equality Act on April 10. Rick Cronk, a former president of the Boy Scouts of America, appeared before the committee and told members that scouting has had a positive impact on the state and that being taxed on fundraising sales would hurt local troops, the Associated Press reported
To become law, SB 323 requires a two-thirds vote from both houses of the California legislature and the signature of Governor Jerry Brown.
In a statement to AccountingWEB on May 27, the Boy Scouts of America said, "Through twenty-three local councils, the Boy Scouts of America is focused on serving 180,000 youth in California and on instilling the values of the Scout Oath and Law, which help develop character, citizenship, and fitness. Last month, Rick Cronk, the volunteer past national president of the Boy Scouts of America, shared the organization's thoughts about this bill with the Senate committee. Beyond that, we don't have anything else to add about this bill at this time."
By a vote of 61 to 39 percent, the Boy Scouts National Council, the organization's ruling body, approved a resolution last week that allows openly gay youths between the ages of eleven and eighteen to join Scout troops. The new rule takes effect January 1, 2014.
After years of controversy within the organization and intense pressure from the outside, the Boy Scouts National Executive Committee in Dallas proposed in April that "no youth may be denied membership in the Boy Scouts of America on the basis of sexual orientation or preference alone," CNN reported. That recommendation was sent for a vote to the National Council, which is made up of 1,400 volunteer Scout leaders who oversee 2.6 million youth members across the country.
According to the Boy Scouts of America, a change to the current membership policy for adult leaders wasn't under consideration; thus, the policy for adults remains in place.
"The Boy Scouts of America will not sacrifice its mission, or the youth served by the movement, by allowing the organization to be consumed by a single, divisive, and unresolved societal issue," the Boy Scouts of America states on its website. "As the National Executive Committee just completed a lengthy review process, there are no plans for further review on this matter."

You may like these other stories...

IRS chief: New rule on the way for tax-exempt groupsIRS Commissioner John Koskinen told the USA Today on Monday that the agency will likely rewrite a proposed rule regulating the political activities of nonprofit groups to...
With tomorrow being Tax Day, you might see some procrastinators at your office filling out forms, printing out paperwork, or getting last-minute tax advice from their accountant so they can meet the IRS’s filing...
The IRS has launched 295 new identity theft and refund fraud investigations during this tax-filing season, bringing the number of active cases to nearly 1,900, the agency announced last week.The coast-to-coast enforcement...

Upcoming CPE Webinars

Apr 17
In this exciting presentation Excel expert David H. Ringstrom, CPA shares tricks that you can use with pivot tables every day. Remember, either you work Excel, or it works you!
Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.