SB 87 amends Section 6018.10 of the California Revenue and Taxation Code to extend a temporary sales and use tax treatment for “all‑volunteer fire departments” so that they are treated as consumers — not retailers — of tangible personal property they sell when profits are used solely for department purposes. The amendment continues special treatment through January 1, 2031, preserves the existing $100,000‑gross‑receipts cutoff (measured over each of the two preceding calendar years), and keeps the statutory definition of an all‑volunteer fire department with its compensation and nonprofit qualification requirements.
The bill also adds explicit legislative findings under Section 41 requiring the California Department of Tax and Fee Administration (CDTFA) to estimate and report annual revenue losses attributable to the exemption beginning January 1, 2026, and it states that the state will not reimburse local agencies for lost local sales tax revenues caused by this exemption. SB 87 takes effect immediately as a tax levy.
At a Glance
What It Does
SB 87 treats qualifying all‑volunteer fire departments as consumers for sales of tangible personal property they make for fundraising so those sales are not treated as taxable retail sales, extends that status until Jan 1, 2031, preserves a $100,000 gross‑receipts disqualifier, and mandates CDTFA revenue‑loss estimates and reporting.
Who It Affects
Local all‑volunteer fire departments that run fundraisers (food, clothing, merchandise) and meet the statute’s nonprofit and compensation rules; counties and cities that collect local sales and use taxes and could lose revenue; and the California Department of Tax and Fee Administration, which must calculate and report revenue impacts.
Why It Matters
The bill locks in a tax treatment that keeps fundraiser proceeds with volunteer departments through 2031 while shifting the fiscal burden for lost local receipts to counties and cities (no state reimbursement). It creates an evidence baseline via annual CDTFA reporting, which could influence future legislative choices about targeted tax expenditures.
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What This Bill Actually Does
SB 87 preserves and extends a narrow sales and use tax accommodation for qualifying all‑volunteer fire departments. Under the amendment, when those departments sell tangible personal property — think pancake breakfasts, branded shirts, or concession‑style food at fundraisers — the organization is treated as the consumer rather than a retailer, provided the profits are used solely and exclusively to advance the department’s purposes.
That means the sale proceeds are not counted as taxable retail sales under the Sales and Use Tax Law for the organization.
The bill keeps the existing statutory guardrails that limit eligibility. To qualify, an organization must not pay regular salaries to members (hourly or per‑incident payments are permitted), must be organized to protect lives and property through firefighting and related services, and must qualify as an exempt organization under specified state or federal nonprofit provisions.
The statute also requires official recognition and at least partial government support from the county, city, or district in which the department operates, and it disqualifies departments that have had $100,000 or more in gross receipts from sales of tangible personal property in each of the two preceding calendar years.SB 87 adds explicit Section 41 findings that state the policy purposes of the tax expenditure — keeping fundraiser proceeds with volunteer departments to buy equipment and sustain operations — and directs CDTFA to estimate the revenue loss annually and report that information to the Legislature beginning in 2026. Crucially, the bill also states, notwithstanding existing law that normally requires reimbursement, that no state appropriation will be made to reimburse local agencies for any lost local sales and use tax revenues caused by this exemption.
The measure takes effect immediately as a tax levy and is set to automatically repeal on January 1, 2031, unless renewed.
The Five Things You Need to Know
The bill extends the special consumer treatment for qualifying all‑volunteer fire departments through January 1, 2031; the provision is repealed automatically on that date.
A department is ineligible for the exemption if, in each of the two preceding calendar years, it had $100,000 or more in gross receipts from sales of tangible personal property.
To qualify, the organization must not pay members regular salaries (hourly or per incident pay is allowed), must be organized for volunteer fire purposes, and must qualify as a tax‑exempt organization under specified state or federal sections.
CDTFA must annually estimate the revenue loss from this tax expenditure and report that estimate to the Legislature beginning on or after January 1, 2026, under Gov. Code Section 9795.
The state will not reimburse counties, cities, or other local agencies for any local sales and use tax revenue lost due to this exemption — the fiscal impact is borne by local governments.
Section-by-Section Breakdown
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Consumer classification for fundraiser sales
This subsection makes an all‑volunteer fire department a consumer — not a retailer — of any tangible personal property it sells when profits are used solely and exclusively to advance the department’s purposes. Practically, that means those sales are treated as nontaxable retail activity for the organization, removing the obligation to remit sales tax on the gross receipts from such fundraising sales.
Detailed statutory definition and eligibility rules
Subsection (b) enumerates three objective eligibility criteria: (1) members receive no regular salary (hourly or per‑incident pay allowed); (2) the organization’s purpose is firefighting, prevention, and emergency response within a geographic area; and (3) the organization is organized for volunteer fire department purposes and qualifies as an exempt organization under specified state or federal tax code sections and has official recognition and at least partial government support. Those elements create administrable gates but also require documentation of nonprofit status and government recognition for eligibility determinations.
$100,000 gross‑receipts disqualifier
Subsection (c) excludes any all‑volunteer fire department that, in each of the two preceding calendar years, has $100,000 or more in gross receipts from sales of tangible personal property. The clause operates as a bright‑line cap intended to limit the exemption to smaller, fundraiser‑type operations rather than larger, ongoing commercial sellers.
Legislative findings and CDTFA reporting mandate under Section 41
This subsection records the Legislature’s purposes for the tax expenditure (keeping fundraiser proceeds local and supporting equipment purchases), and it mandates that CDTFA annually estimate revenue losses attributable to the exemption and report that information to the Legislature pursuant to Gov. Code Section 9795 beginning in 2026. The reporting requirement creates an evidence stream for evaluating the exemption’s fiscal effects.
No state reimbursement and immediate effect as a tax levy
Section 2 carves out an explicit exception to the usual requirement that the state reimburse local jurisdictions for revenue losses caused by sales tax exemptions, stating no appropriation is made and local agencies will not be reimbursed. Section 3 declares the act a tax levy under the state constitution so it goes into immediate effect, removing the usual delayed operability that some statutory changes receive.
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Who Benefits
- Small all‑volunteer fire departments that run local fundraisers: They can keep gross fundraiser receipts for equipment and operations without treating those sales as taxable retail sales, provided they meet the statutory nonprofit, compensation, and recognition requirements.
- Local communities served by volunteer departments: By preserving more fundraiser revenue for equipment and training, the bill aims to sustain volunteer capacity in areas that rely on these organizations for emergency response.
- Fundraiser volunteers and event organizers: The exemption reduces the administrative burden of collecting and remitting sales tax on small, intermittent sales, simplifying event operations and letting proceeds remain local.
Who Bears the Cost
- Counties and cities that collect local sales and use taxes: The bill explicitly denies state reimbursement for lost local revenue, so local governments face the fiscal impact of reduced sales tax receipts from qualifying fundraiser sales.
- California Department of Tax and Fee Administration (CDTFA): CDTFA must estimate annual revenue losses and report to the Legislature, adding an ongoing administrative and analytic responsibility to its workload.
- Competing small vendors and nonprofits that sell at scale: Organizations that approach or exceed the $100,000 gross‑receipts threshold may lose the exemption and face a sharp compliance cliff, and small for‑profit vendors that sell similar goods at community events may be at a competitive disadvantage.
Key Issues
The Core Tension
SB 87 balances two legitimate goals — preserving small volunteer firefighting capacity by shielding fundraiser proceeds from sales tax, and protecting the fiscal integrity of local governments — but solves one problem by shifting measurable costs to localities and leaving open practical enforcement questions about eligibility, use‑of‑proceeds, and the $100,000 cliff.
The statute relies on a mix of bright‑line and subjective criteria that will complicate administration. Terms like “solely and exclusively” used to describe permitted uses of profits are strict in theory but ambiguous in practice — departments that pay incidental administrative costs or maintain reserves could face disputes about eligibility.
The $100,000 cutoff is a clear numeric threshold but creates a cliff effect: organizations close to the limit may alter fundraising behavior to stay eligible or unexpectedly lose the benefit after a particularly successful year.
The bill shifts the fiscal burden of the exemption to local governments by explicitly denying state reimbursement. That choice simplifies state budgeting but forces counties and cities to absorb recurring revenue losses for prolonged periods through 2031.
The CDTFA reporting requirement will supply annual estimates but the bill does not specify performance metrics or enforcement mechanics for ensuring proceeds are indeed used “solely and exclusively,” leaving questions about audit powers, recordkeeping standards, and corrective remedies. Lastly, automatic incorporation of changes into local Bradley‑Burns and transactions tax regimes preserves conformity but means multiple local taxing entities will experience distributed revenue effects, complicating local budgeting and intergovernmental discussions.
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