Southern California Ass'n of Seventh-Day Adventists v. Franchise Tax Board

Introduction

Plaintiff-Respondent Southern California Association of Seventh-Day Adventists 1 (Association) brought this action for a refund of franchise tax payments paid by it based on the contention that section 23704.5 of the Revenue and Taxation Code 2 is unconstitutional. The trial court agreed with this contention.

Statement of Facts

Association exists for the purpose of owning and operating the facilities of the Seventh-Day Adventist Church within the geographic area assigned to it. As part of the evangelical effort of the Seventh-Day Adventist Church, Association owns and operates Newbury Park Aca *210 demy, a parochial high school. This school owns and operates a laundry which provides laundry services to the public for compensation.

The Legislature of the State of California, during its 1972 regular session, enacted an amendment to section 23704.5 4 which requires the Franchise Tax Board (Board) to revoke Association’s exemption from California franchise tax, to which it is otherwise entitled as a church, if it provides a laundry service to the public for compensation.

The section involved was enacted by the California Legislature as a result of a…