Did nonprofit status exempt a proposed youth center from California sales tax or the requirement to hold a seller's permit?

Plain-English summary

A person asked about a proposed nonprofit youth center.

The letter said nonprofit enterprises were not exempt from the Sales and Use Tax Law merely because of their status. The organization or individual operating the center had to obtain a seller's permit and pay sales tax on taxable retail sales of tangible personal property.

For meals, sandwiches, and other foods, the source did not give a transaction-specific result. It referred the operator to Ruling 53 for restaurant, soda-fountain, and similar sales and to Ruling 52 for the definition of food products.

Common questions

Did being nonprofit remove the seller-permit requirement?

No. The letter enclosed an application and directed the operator to a district or branch office.

Did the source say every youth-center food sale was taxable?

No. It said the applicable historical food and restaurant rules governed those sales.

Who was responsible for compliance?

The organization or individual operating the youth center.

Citations and references

• Sales and use tax Ruling 53 (enclosed and cited)
• Sales and use tax Ruling 52 (enclosed and 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/550-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/550-1120.pdf

Original ruling text

550.1120

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

January 17, 1950

Mr. A. L. P--B--California
Dear Sir:
In answer to your inquiry of January 12 you are advised that the State Sales and Use Tax Law does not exempt non-profit enterprises from its operation. Accordingly, the organization or individual operating the Youth Center to be established in B---, California, will be required to hold a seller’s permit issued by this Board and to pay the State sales tax with respect to its sales of tangible personal property at retail. The application of the tax to sales of meals, sandwiches, and other foods by restaurants, soda fountains, and similar establishments is governed by Sales and Use Tax Ruling 53, copy enclosed. Ruling 52, copy enclosed, defines food products, for the purposes of the sales tax. We are also enclosing an application for a seller’s permit. This application should be presented to our district office, 1747 Yuba Street, Redding or any other of our branch offices which are located at: 506 Walnut Street, Mt. Shasta 416 Pine Street, Red Bluff Suite 7, Knoch Annex, Susanville. A member of the staff of any of the foregoing offices will be pleased to advise you with respect to the computation of the tax and the filing of returns. Very truly yours,

Robert H. Anderson
Associate Tax Counsel
RGH:HB
cc:

C. D. Roach