Did a nonprofit religious organization have to collect Florida sales tax on its sales of tangible personal property?

Plain-English summary

Florida ruled that the nonprofit religious organization did not have to collect sales tax on its sales of tangible personal property.

The organization was a 501(c)(3), held a valid Florida Consumer's Certificate of Exemption as a religious institution, and regularly conducted worship and religious instruction open to the public at its facilities. Those facts satisfied the Department's definition of a church even though worship was not the sole or dominant use of the buildings.

The exemption did not extend to every transaction. The organization remained responsible for collecting and remitting tax on leases, licenses, or rentals of real property to others.

What this means for you

• A valid exemption certificate and an established place of regular public worship supported church treatment.
• Worship did not have to be the building's sole or dominant use on these facts.
• Tangible-property sales and real-property rentals received different tax treatment.

Common questions

Q: Were the organization's tangible-property sales taxable? A: No.

Q: Did it qualify as a church?
A: Yes, because it regularly conducted public worship and religious instruction at an established physical place and already held the cited exemption certificate.

Q: Did worship have to be the facility's dominant use? A: No, according to this ruling.

Q: Were its real-property leases or rentals exempt? A: No. The ruling said those transactions remained taxable.

Citations and references

• Fla. Stat. § 212.08(7)(o) — religious-institution and church exemptions
• Fla. Admin. Code r. 12A-1.001(3) — churches and exempt organizations
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96A-019

Original ruling text

Mar 04, 1996

Re: Technical Assistance Advisement 96(A)-019 Sales by a Nonprofit Religious Institution Which Holds a Valid Consumer's Certificate of Exemption s. 212.08(7)(o), F.S. Rule 12A-1.001(3), F.A.C. Taxpayer: XXXX FEI#: XXXX Consumer's Certificate of Exemption #: XXXX

Dear :

This response is to your petition of November 27, 1995, requesting the Department's issuance of a Technical Assistance Advisement (TAA) pursuant to s. 213.22, F.S., and Ch. 12-11, F.A.C., regarding the referenced Taxpayer and matter. The Department has carefully examined your request and supporting documents and finds them to be in order. Therefore, the Department is hereby issuing the requested TAA.

DISCUSSION OF FACTS

Your letter and supporting documents impart the following information relevant to the issue under advisement herein:

[Taxpayer] is a Florida corporation not-for-profit, exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code, and exempt from Florida sales and use taxes pursuant to its Consumer['s] Certificate of Exemption (see copy attached as Exhibit 2). The activities of [Taxpayer] include missionary endeavors in numerous countries, the conduct of regular worship services, and other related activities in keeping with its religious purpose. Based on the information submitted with
[Taxpayer's] most recent application for renewal of its Consumer['s] Certificate of Exemption, the Department of Revenue ("the Department") determined that [Taxpayer] is a

religious institution as defined in the Florida sales tax statutes. [Taxpayer] submitted information with its application demonstrating that it qualified as a "religious institution" in that it meets the criteria set forth in Section 212.08(7)(o)2.a., F.S., regarding having a "physical place for worship" at which nonprofit religious services are regularly carried on. (See copy of application materials submitted attached as Exhibit 3.) The conduct of religious worship services is not, however, the sole or dominant use of [Taxpayer's] building facilities.

A description of [Taxpayer's] worship service activities, including locations, is attached as Exhibit 4.

The Articles of Incorporation (adopted in 1978) for [Taxpayer] include the following purpose statement:

The purpose shall be, to propagate the Gospel of the Lord Jesus Christ; to continue religious education and to maintain schools; to send forth missionaries to foreign fields; to publish Christian books, pamphlets and literature and to function as a church.

A written statement regarding worship services included in support of your request provides in part the following:

[Taxpayer] conducts regular worship services at their XXXX location as follows:

Weekly Wednesday morning worship services: 7:45 A.M. 8:15 A.M. These meetings are for worship and Bible instruction and are open to members as well as the general public. Weekly Tuesday evening worship services: 7:00 P.M. to 8:00 P.M. These meeting are held in our 8 stateside locations as well as around the world at all of our locations in the 27 countries in which we work. These meetings are for worship, times of

sharing, bible instruction and showing of slides as missionaries pass through our bases. These meetings are open to the public and in fact members are encouraged to invite the public to these meetings. Weekly Monday, Tuesday, Thursday and Friday: 7:45 A.M. to 8:00 A.M. These meetings are held for prayer time, bible study and sharing of needs. Monthly on the second Tuesday of each month: 7:45 A.M. to 10:00 A.M. Again, these meeting are held in our 8 stateside locations as well as around the world at all of our locations in the 27 countries in which we work. These meetings are for worship, times of sharing, bible instruction and prayer.
...

REQUESTED ADVISEMENT

You request the Department's ruling on the following issue:

The issue in question is whether [Taxpayer] is required to collect from purchasers and remit to the Department sales taxes on sales of tangible personal property made by
[Taxpayer]. The determination of this issue hinges upon whether [Taxpayer] is considered a "church" for sales tax purposes.

DISCUSSION OF LAW

The following statutory, administrative, and case law is relevant to the issue under advisement herein:

Section 212.08(7)(o), F.S.: (o) Religious, charitable, scientific, educational, and veterans' institutions and organizations.

1. There are exempt from the tax imposed by this part
   transactions involving:

a. Sales or leases directly to churches or sales or

leases of tangible personal property by churches;

b. Sales or leases to nonprofit religious, nonprofit charitable, nonprofit scientific, or nonprofit educational institutions when used in carrying on their customary nonprofit religious, nonprofit charitable, nonprofit scientific, or nonprofit educational activities, including church cemeteries;....

2. The provisions of this section authorizing
   exemptions from tax shall be strictly defined, limited, and applied in each category as follows:

a. "Religious institutions" means churches, synagogues, and established physical places for worship at which nonprofit religious services and activities are regularly conducted and carried on. The term "religious institutions" includes nonprofit corporations the sole purpose of which is to provide free transportation services to church members, their families, and other church attendees. The term "religious institutions" also includes state, district, or other governing or administrative offices the function of which is to assist or regulate the customary activities of religious organizations or members. The term "religious institutions" also includes any nonprofit corporation which is qualified as nonprofit pursuant to s. 501(c)(3), United States Internal Revenue Code, 1986, as amended, which owns and operates a Florida television station, at least 90 percent of the programming of which station consists of programs of a religious nature, and the financial support for which, exclusive of receipts for broadcasting from other nonprofit organizations, is predominantly from contributions from the general public. (Emphasis Supplied)

The Department in construing the above statutory exemptions for "churches" and "religious institutions" must adhere to, and be guided by, the long-standing and fundamental precept of

statutory construction, established by the Florida Supreme Court, which mandates that exemptions from, or exceptions to, taxing statutes are special privileges granted by the legislature and must be strictly construed against the taxpayer and in favor of the administering agency. See Asphalt Pavers v. Dept. of Revenue, 584 So.2d 57 (Fla. 1 DCA 1991); Dade Cty. Taxing Auth. v. Cedars of Lebanon, 355 So.2d 1205 (Fla. 1978); Williams v. Jones, 326 So.2d 425 (Fla. 1975); Straughn v. Camp, 293 So.2d 689 (Fla. 1974); United States Gypsum Company v. Green, 110 So.2d 409 (Fla. 1959).

The Department is empowered to promulgate and adopt administrative law to interpret the provisions of the statutes it is charged by the Legislature to administer and enforce. The following rule provisions were promulgated and adopted by the Department to interpret the above statutory exemptions for churches and religious institutions:

Rule 12A-1.001(3), F.A.C., provides: (3) RELIGIOUS, EDUCATIONAL, CHARITABLE, VETERANS' AND SCIENTIFIC ORGANIZATIONS, HOMES FOR THE AGED, NURSING HOMES OR HOSPICES, FEDERAL AND STATE CHARTERED CREDIT UNIONS, FLORIDA RETIRED EDUCATORS ASSOCIATION AND LOCAL CHAPTERS, ORGANIZATIONS PROVIDING SPECIAL EDUCATIONAL AND SOCIAL BENEFITS TO MINORS, STATE THEATER CONTRACT ORGANIZATIONS, MILITARY MUSEUM FUNDRAISERS, COAST GUARD AUXILIARIES, AND CEMETERY ASSOCIATIONS.

(a) A sale or lease directly to or sales or leases of tangible personal property by churches, or a sale or lease directly to nonprofit religious, nonprofit educational, nonprofit charitable institutions, and veterans' organizations, for use in the course of their customary nonprofit religious, nonprofit educational, nonprofit charitable activities, and for use by veterans' organizations, including church cemeteries, are exempt from the tax imposed by Part I, Chapter 212, F.S.... However, such institutions or organizations desiring to qualify for the exemption must obtain from the Department of Revenue a consumer's certificate of exemption, and payment must

be made directly to the dealer by the exempt entity. See subparagraph (9)(d)2. of this rule for a suggested document to be provided the dealer by an employee who has been authorized to make purchases on behalf of a nonprofit organization when payments are made directly to the dealer by the exempt entity. This exemption shall not inure to any transaction otherwise taxable when payment is made by an exempt entity's employee by any means, including but not limited to, cash, check, or credit card, when that employee is subsequently reimbursed by the exempt entity. See Rules 12A-1.038 and 12A-1.039, F.A.C.

(b) Sales or rentals of tangible personal property, rentals or leases of transient rental accommodations, rentals or leases of real property, rentals or leases of parking, docking, or tie down spaces, admissions, or other transactions subject to the tax imposed by Part I, Chapter 212, F.S., made by exempt entities, with the exception of sales or leases of tangible personal property by churches, are taxable. Such entities are required to register in the same manner as other dealers and collect and remit tax on transactions which are subject to the tax imposed by Part I, Chapter 212, F.S. For admission charges imposed by not-for-profit sponsoring organizations qualifying under the provisions of s. 501(c)(3) of the U.S. Internal Revenue Code, see Rule 12A-1.005(3)(g), F.A.C.

(c) "Church" means a religious institution having an established physical place of worship where persons regularly assemble for worship and instruction for religious purposes. Religious organizations whose functions are radio or television broadcasting or those organizations conducting services for short periods of time at temporary locations, and religious associations that provide administrative functions only, are not considered to be churches.

(d) "Religious institutions" means churches,

synagogues, and established physical places for worship at which nonprofit religious services and activities are regularly conducted and carried on....

Agencies are afforded wide discretion in the interpretation of statutes which they administer, and such interpretation will not be overturned on appeal unless clearly erroneous; reviewing court will defer to any interpretation within the range of possible interpretations by the administering agency. Dyer v. Department of Ins. and Treasurer, 585 So.2d 1009 (Fla. 1 DCA 1991); Natelson v. Department of Ins., 454 So.2d 31 (Fla. 1 DCA 1984), reh. den. Sept. 6, 1984.

Administrative rules interpreting sales and use tax statute are accorded considerable persuasive force and court would not depart from such constructions unless clearly erroneous or unauthorized. State Ex Rel. Szabo Food Serv., Inc. of N.C. v. Dickinson, 286 So.2d 529 (Fla. 1973), reh. den. Jan. 9, 1974.

The practical construction placed upon a statute by an administrative department of state government, when not in conflict with the constitution or the plain intent of the legislative act especially when established by long usage, is entitled to great persuasive force and efficacy, and the court will not depart from such construction except for the most cogent reasons. Green v. Hood, 120 So.2d 223 (Fla. 2 DCA 1960).

CONCLUSIONS OF LAW

The Taxpayer already holds a valid Consumer's Certificate of Exemption as a "religious institution" pursuant to s. 212.08(7)(o)2.a., F.S. The Taxpayer's activity of conducting regularly scheduled worship/church services open to the public at its facilities serves to satisfy the definition found in Rule 12A-1.001(3)(c), F.A.C. Accordingly, sales of tangible personal property by the Taxpayer qualify as exempt from sales and use tax pursuant to s. 212.08(7)(o)1.a., F.S. Therefore, the Taxpayer bears no obligation to charge and collect sales tax on its sales of tangible personal property. However, please be alerted to the fact that the Taxpayer is and remains liable to collect and remit tax on any leases, licenses, or rental by it

to others of real property.

This response constitutes a Technical Assistance Advisement under s. 213.22, F.S., which is binding on the Department only under the facts and circumstances described in the request for this advice as specified in s. 213.22, F.S. Our response is predicated on those facts and the specific situation summarized above. You are advised that subsequent statutory or administrative rule changes or judicial interpretations of the statutes or rules upon which this advice is based may subject similar future transactions to a different treatment than expressed in this response.

You are further advised that this response and your request are public records under Chapter 119, F.S., which are subject to disclosure to the public under the conditions of s. 213.22, F.S. Your name, address, and any other details which might lead to identification of the taxpayer must be deleted by the Department before disclosure. In an effort to protect confidential information, we request you notify the undersigned in writing within 15 days of any deletions you wish made to the request or this response.

Sincerely,

Daniel M. Wagner, Jr.
Tax Law Specialist

Control No. 24168