Were churches and religious organizations generally exempt from California sales or use tax on property they purchased?

Plain-English summary

Churches and religious organizations were not generally immune from California sales and use taxes.

For sales tax, the letter emphasized that the legal incidence fell on the retailer. A buyer-side exemption would therefore not remove tax from a retail sale unless a provision expressly exempted the transaction.

For property purchased from an out-of-state seller and used in California, the church or religious organization had to pay use tax. The letter treated use tax as an excise tax rather than a property tax, so Article XIII's property-tax provisions did not apply.

Common questions

Did religious status alone exempt a retail purchase?

No. The letter required an express transaction exemption for a different result.

Who bore the legal incidence of California sales tax?

The retailer, according to the letter.

Why did the property-tax constitution not prevent use tax?

Because the letter characterized use tax as an excise tax, not a property tax.

Citations and references

• California Constitution, article XIII — property-tax provisions found inapplicable to use tax
• Douglas Aircraft Co. v. Johnson (1939) 13 Cal.2d 545 — excise-tax characterization cited

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/165-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/165-0014.pdf

Original ruling text

165.0014
STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
(916) 445-3723

July 22, 1980
REDACTED TEXT
San Jose, CA 95113
Dear Mr. REDACTED TEXT:
This is in response to your letter of July 17, 1980, which was addressed to Mr. James J. Delaney. Your letter was referred to the undersigned for reply. The California sales tax is an excise tax, the legal incidence of which falls upon the retailer of tangible personal property. Thus even if churches and religious organizations were exempt from such a tax, tax would nevertheless apply to a sale of tangible personal property to these organizations (absent a provision expressly exempting such transactions from the tax). That is, the sales tax is on the seller, and any exemption for the buyer does not benefit the seller. It is our opinion, however, that sales and use taxes may legally be imposed upon churches and religious organizations. Thus, where churches and religious organizations purchase tangible personal property from out-of-state sellers for use in this state, the churches and religious organizations are required to pay use tax. The use tax is an excise tax and not a property tax, and therefore the provisions of Article XIII of the State Constitution have no application with respect to it. Douglas Aircraft Co., Inc. v. Johnson, 13 Cal. 2d 545. It has been the position of the Board that the sales tax applies to churches and religious organizations since the inception of the tax in 1933 and that the use tax applies to such organizations since the inception of that tax in 1935. Very truly yours, Gary J. Jugum Assistant Chief Counsel cc:

Mr. J. J. Delaney