Did Friends of SCICON qualify as an organization equivalent to a PTA under section 6370?

Plain-English summary

The program manager for a redacted organization asked California to treat it as an organization equivalent to a parent-teacher association under section 6370. The request included its Articles of Incorporation and By-Laws, but those documents are not in the published PDF.

The associated public school, funded and operated with county public-school money, provided a one-week sixth-grade class emphasizing outdoor science, nature study, conservation, and environmental education. The nonprofit included parents, ranchers, businesspeople, county and school-district board members, administrators, and teachers. Its purpose was to enhance education for the county's general school population by involving its members in the school's academic and financial operation.

Section 6370, as quoted in the opinion, applied to California Congress of P.T.A.-chartered nonprofit PTAs and equivalent organizations performing the same type of service for public or private schools and authorized by the school's governing authority to operate within the school. Such an organization was a consumer rather than a retailer of tangible personal property it sold, provided its profits were used exclusively to further its purposes.

Tax Counsel Robert J. Stipe compared the organization with California PTA objectives and services. The cited PTA bylaws promoted child and youth welfare, closer home-school cooperation, educational advantages, programs for parents, teachers, and the public, and work with schools while recognizing boards of education as the legal decision-makers.

Equivalency did not require identical objectives or every PTA service. At minimum, counsel required a nonprofit that included parents and whose objectives involved coordinated educational programs or projects among parents, students, school authorities, and the public. The described organization included those constituencies and coordinated promotion of the school's academic programs, so it substantially met that minimum and qualified as equivalent under section 6370.

Source and live-annotation limits

The official PDF does not include the February 10 request, Articles of Incorporation, organization By-Laws, California PTA bylaws, incorporation or nonprofit-status records, school funding or operation records, sixth-grade class or curriculum records, membership records, programs or projects, authorization from the school's governing authority, property, sellers, buyers, sales, profit-use records, invoices, returns, exemption documentation, tax calculations or payments, audit, assessment, claim, appeal, or later outcome. The requester, organization, school, county, members, students, customers, transactions, quantities, prices, profits, and tax amounts are redacted or unidentified in that source.

The live annotation supplies the names Friends of SCICON and Clemmie Gill School of Outdoor Science and Conservation Education and invokes Regulation 1597(e). The supporting opinion redacts both names and does not cite that regulation. The live annotation preserves the nonprofit's parent, teacher, school-authority, and public membership, coordinated academic-program purpose, date, and equivalency result. It omits the request and counsel, public funding, one-week sixth-grade class and subjects, ranchers, businesspeople and board members, financial-operation purpose, section 6370 and its sales, authorization, and profit-use conditions, PTA bylaws and comparison, minimum-equivalency reasoning, absent records, redactions, and absent outcome.

What this means for you

School-support nonprofits, sellers, and tax professionals

Preserve governing and nonprofit records, the school's written operating authorization, membership and program records, each product and sale, invoices, returns, exemption documentation, and proof that every profit dollar was used exclusively for organizational purposes. Compare actual objectives and services with current PTA-equivalency law rather than assuming nonprofit or school-support status is enough.

Common questions

Did Friends of SCICON have to copy every PTA objective?

No.

What facts supported equivalency?

Its nonprofit status, parent participation, membership spanning teachers, school authorities, and the public, and coordinated promotion of the school's academic programs.

Was the outdoor school publicly operated?

Yes. The opinion described it as operated and maintained with county public-school funds.

What tax treatment did quoted section 6370 provide?

It treated a qualifying organization as consumer rather than retailer of the tangible personal property it sold, if profits were used exclusively to further its purposes.

Did the opinion document a particular sale or exclusive use of profits?

No.

Did the supporting opinion cite Regulation 1597(e)?

No. That citation appears on the current live annotation.

What did the school teach?

The described one-week sixth-grade class emphasized outdoor science, nature study, conservation, and environmental education.

Citations and references

• California Revenue and Taxation Code § 6370
• California Code of Regulations, title 18, § 1597(e) — cited by the live annotation, not the supporting opinion
• February 10 request; organization Articles of Incorporation and By-Laws; California PTA bylaws; school authorization, sales, profit-use, and tax records; and outcome — described or implicated but not documented

Verbatim support

From the official Tax Counsel opinion:

However, at the very least it should be a nonprofit organization which includes parents and whose objectives include some coordinated promotion of educational programs or projects among parents, students, school authorities and the general public.

We are of the opinion, therefore, that the “F--- of S---” qualifies as an “equivalent organization” under Revenue and Taxation Code section 6370 since the organization substantially meets the minimum requirements outlined above.

From the live annotation:

The "Friends of SCICON" qualifies as an equivalent organization under Regulation 1597(e).

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/390-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/390-0081.pdf

Original ruling text

390.0081

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 322-3684

April 15, 1986

Mr. N--- W. B--Program Manager
F--- of S--Education Building
County Civic Center
---, CA XXXXX
Dear Mr. B---:
Your February 10, 1986 letter to Mr. Douglas Carroll has been referred to me for a response. You request that the organization called “F--- of S---” be formally considered as an “equivalent organization” under Revenue and Taxation Code section 6370. Attached to your letter is a copy of the organization’s Articles of Incorporation and By-Laws. Your letter indicates that the C--- G--- S--- of O--- S--- and C--- E--- (S---) is a public school operated and maintained by --- County public school funds. The school provides a one week class for sixth grade students in --- County that emphasizes outdoor science (nature study), conservation and environmental education. The “F--- of S---” is a nonprofit organization consisting of parents, ranchers, community business people, county and school district board of education members, school administrators and teachers. The purpose of the “F--- of S---” is to enhance the education of the general school population of --- County by involving the organization’s members in the academic and financial operation of the S--- school. Revenue and Taxation Code section 6370 provides in pertinent part: “(a)

This section applies to:
“(1)” Nonprofit parent-teacher associations chartered by the California Congress of P.T.A., Incorporated, and equivalent organizations performing the same type of service for public or private schools and authorized to operate within the school by governing authority of the school.
*

*

*

Mr. N--- W. B---

-2-

“(b)

April 15, 1986
390.0081

An organization described in subdivision (a) is a consumer of, and shall not be considered a retailer within the provisions of this part with respect to, tangible personal property which it sells; provided, the profits are used exclusively in furtherance of the purposes of the organization.”

In order to determine whether the “F--- of S---” would be considered an “equivalent organization” it is helpful to compare the objectives and services of that organization with the objectives and services offered by the PTA. The California PTA’s bylaws, Article II, Section I, list the objectives of the PTA as follows: “a.

To promote the welfare of children and youth in home,
school, church and community.

“b.

To raise the standards of home life.

“c.

To secure adequate laws for the care and protection of
children and youth.

“d.

To bring into closer relation the home and school, that
parents and teachers may cooperate intelligently in the
education of children and youth.

“e.

To develop between educators and the general public such
united efforts as will secure for all children and youth the highest advantages in physical, mental, social, and spiritual education.”

Article II, Section 2, indicates that the objectives will be promoted by the following: “The objects of the National PTA and the California State PTA are promoted through an educational program directed towards parents, teachers, and the general public; are developed through conferences, committees, projects and programs; and are governed and qualified by the basic policies set forth in Article III.” Insofar as is pertinent here, Article III provides: “a.

The organization shall work with the schools to provide
quality education for all children and youth and shall seek to participate in the decision-making process establishing school policy, recognizing that the legal responsibility to

Mr. N--- W. B---

-3-

April 15, 1986
390.0081

make decisions has been delegated by the people to boards
of education.”
In our view, it is not necessary that an organization have identical objectives and provide all of the services outlined above in order to be “equivalent” to the PTA. However, at the very least it should be a nonprofit organization which includes parents and whose objectives include some coordinated promotion of educational programs or projects among parents, students, school authorities and the general public. The “F--- of S---”, as described, is a nonprofit organization which includes parents, teachers, school authorities and the general public and whose objectives include a coordinated promotion of academic programs for the S--- school. We are of the opinion, therefore, that the “F--- of S---” qualifies as an “equivalent organization” under Revenue and Taxation Code section 6370 since the organization substantially meets the minimum requirements outlined above. We hope the above information is helpful. If you have any further questions on this topic, please do not hesitate to write this office. Very truly yours,

Robert J. Stipe
Tax Counsel

RJS:sr
cc:

Mr. Douglas Carroll
--- Branch Office
--- – Compliance