Could a church obtain a general California sales-tax exemption because it was nonprofit or income-tax exempt?
Apply this to your situation
This page answers the general question as of 1994. Ask about yours and see what current California tax law says, with citations.
Plain-English summary
Nonprofit status or exemption from federal income tax did not create a general California sales-tax exemption for the church.
Retail sales of tangible personal property by the church were generally taxable, and retail sales to the church were generally taxable as well. A specific statutory exemption had to apply to the particular transaction for different treatment.
The retailer owed sales tax but could collect contractual reimbursement from the customer under the rule described in the letter.
Common questions
Did income-tax exemption carry over to sales tax?
No. The letter treated the tax systems separately.
Were both purchases and sales covered?
Yes. The general rule applied to retail transactions both by and to the church.
Could a specific church transaction still qualify?
Yes, if a separate California sales-and-use-tax exemption applied.
Citations and references
- California Revenue and Taxation Code section 6051 — general sales-tax rule applied
- California Revenue and Taxation Code section 6007 — retail-sale definition applied
- California Civil Code section 1656.1 and Regulation 1700 — tax-reimbursement rule referenced
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/165-0138.pdf
Original ruling text
165.0138
STATE OF CALIFORNIA
STATE BOARD OF EQUALIZATION
MEMBER
First District
1020 N STREET, SACRAMENTO, CALIFORNIA
PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001
TELEPHONE (916) 920 - 7445
BRAD SHERMAN
Second District, Los Angeles
ERNEST J. DRONENBURG, JR.
Third District, San Diego
February 11, 1994
REDACTED TEXT
MATTHEW K. FONG
Fourth District, Los Angeles
GRAY DAVIS
Controller, Sacramento
BURTON W. OLIVER
Executive Director
Dear REDACTED TEXT,
This is in response to your letter dated December 3, 1993, in which you ask if it is possible for a church to obtain an exemption from sales taxes. A sales tax is imposed on all retailers measured by their gross receipts from retail sales of tangible personal property in this state. (Rev. & Tax. Code §6051.) A retail sale is a sale for any purpose other than resale in the regular course of business. (Rev. & Tax. Code §6007.) There are no sales tax exemptions for churches arising from their non-profit status or because they are exempt from income taxation under the Internal Revenue Code. Retail sales of tangible personal property by a non-profit organization in California are subject to sales tax. Retail sales of tangible personal property to a nonprofit organization in California are also subject to sales tax. Therefore, retail sales of tangible personal property to and by your church are generally subject to tax. Although sales tax is imposed on the retailer, the retailer may collect sales tax reimbursement from his or her customer if the contract of sale so provides. (Civil Code §1656.1) A copy of Regulation 1700 is enclosed for your information. If you have further questions, feel free to write again. Sincerely, Pat Hildebrand Staff Counsel PH:cl
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