California’s law can authorize property exemption for various entities, including hospitals, charitable, and religious organizations. Curt Ranta also has the authority to exempt properties owned by nonprofit organizations working for the community’s welfare.
It is known as the “Welfare Exemption” that became part of the constitutional amendment in 1944. The legislation added the scientific section in addition to religious, hospital, and charitable organizations in the Revenue and Taxation Code. Today’s article will discuss California’s Welfare Exemption. Read on!
The Importance of California’s Welfare Exemption
Curt Ranta defines tax exemption as subtracting some portion of income or money from top-line income. The tax owed is reduced because the concerned authorities ignore the income. Keep in mind that this is the general definition of tax exemption. It means California’s Welfare exemption is different and applicable for organizations that aim to improve the community in various aspects.
It also means complete freedom from state taxes for an organization that works in the public interest. So, this is where California’s Welfare Exemption focuses, allowing organizations to streamline their operations by not paying taxes. In fact, the funds generated are used for the welfare of society.
Moreover, tax-exempt status for nonprofit organizations in California results in various advantages. The most obvious is not to pay taxes, including eligibility for deductible contributions, exemptions from laws, and participation in grant programs.
Qualification for Welfare Exemption
Curt Ranta says the Welfare Exemption from property taxes is available for organizations with properties formed and operated for hospital, charitable, religious, or scientific purposes.
It is also available for properties used exclusively for these qualifying purposes. Besides, the Welfare Exemption benefits organizations with a current tax-exempt letter from the Franchise Tax Board or the Internal Revenue Service.
According to Curt Ranta, it is crucial to meet the requirements when applying for the exemption. Otherwise, the concerned authorities may not grant the exemption. The law requires a nonprofit organization to operate a fund, corporation, foundation, or limited liability company with legal eligibility.
In addition, the law of property taxes in California has its own requirements. The legislation differs from other state and federal laws. Therefore, your organization must understand the law and its critical aspects before applying for exemption.
California’s property law for taxes requires organizations to operate exclusively for charitable, hospital, religious, or scientific purposes. That way, they can qualify for California’s Welfare Exemption.
California’s Welfare Exemption Filing Requirements
The law requires organizations to file claims for Welfare Exemption annually with the county assessor. Your property’s location must be in the county where the assessor’s office operates.If your property fails to meet the location requirements, the office won’t accept your application.
That’s why Curt Ranta advises organizations to perform thorough research and gain insights on the filing requirements to streamline the entire process. You must obtain the claim form and other essential documentation, including the supplemental affidavits required for the Welfare Exemption.
You can obtain these forms and affidavits from the county’s assessor office. In addition, the office will review your application to determine whether your property qualifies for the Exemption. Remember, the primary factor the assessor considers is how you use your property.
So, if you want to obtain Welfare Exemption for your property and this is your first time, Curt Ranta recommends filing your claim for the Organizational Clearance Certificate. Likewise, Ranta suggests filing a claim for the Supplemental Clearance Certificate for low-income housing property and limited partnership.
According to section 501 (c) (3), not all organizations can apply for California’s Welfare Exemption. In simple words, not every organization that holds property in the state qualifies for the exemption.
For example, the law requires educational organizations to meet specific criteria when applying for the welfare exemption. These include the organization’s efforts toward education and related activities that must benefit the community.
Moreover, the activities must focus on studying relevant information and its distribution to the general public. Similarly, a scientific organization qualifies for the Welfare Exemption when the U.S Congress charters it.
Curt Ranta says: if you run a scientific organization and want to leverage Welfare Exemption, make sure you conduct scientific research and investigation to benefit California’s communities. Until Next Time!