Which sales and retreat charges of a certified nonprofit religious institution were exempt from Florida sales tax?

Plain-English summary

Florida exempted the religious organization's merchandise sales and qualifying admissions, but not its transient retreat lodging; the source directs readers to revised TAA 96A-048R.

The section 501(c)(3) organization held a current Florida Consumer's Certificate of Exemption, maintained an established place where people regularly assembled for worship, and planned a retreat facility with a chapel and sanctuary. The Department concluded that it met the sales-tax definition of a church.

As a church, its sales of tangible personal property were exempt. Qualifying religious goods and publications were independently exempt under the cited provisions. Admissions were exempt when the organization qualified as the sponsoring organization under the applicable rule.

The church-sales exemption did not extend to sales, leases, or licenses of real property. The organization therefore had to collect tax on transient sleeping accommodations and other real-property rentals unless a different exemption applied.

The retreat was not an exempt church-operated custodial camp because its primary focus was not temporary custodial supervision and instruction of children. The Department also declined to decide whether a lump-sum retreat package qualified as an exempt professional service because the requester had not supplied enough documentation about the services.

What this means for you

Churches and religious organizations

A purchase exemption certificate does not make every receipt exempt. Separate merchandise, admissions, transient lodging, real-property charges, and service components and apply the rule governing each.

Retreat-center operators

Religious programming alone did not turn adult spiritual retreats into custodial camps. Sleeping accommodations remained taxable absent another supported exemption.

Accountants and tax professionals

Document the organization's worship activities, certificate status, sponsorship of admissions, item classifications, lodging charges, and the services included in any lump-sum retreat fee. An issue left undecided for insufficient documentation should remain unresolved.

Common questions

Q: Were the organization's tangible-property sales exempt? A: Yes. The Department found that it qualified as a church under the stated facts.

Q: Were religious publications and qualifying religious goods exempt? A: Yes.

Q: Were event admissions exempt?
A: Yes when the organization met the rule's sponsorship requirements.

Q: Were retreat sleeping accommodations exempt as church sales? A: No. That exemption did not cover leases, licenses, or rentals of real property.

Q: Did the retreats qualify as custodial camps? A: No. Their primary purpose was not custodial supervision and instruction of children.

Q: Did the Department decide the professional-service exemption? A: No. It said the requester supplied insufficient documentation.

Q: Is this the final version of the advice? A: The document directs readers to revised TAA 96A-048R, issued July 1, 1997.

Citations and references

• Fla. Stat. §§ 212.03(1) and 212.04(2) — transient rentals and admissions
• Fla. Stat. § 212.06(9) — religious publications, Bibles, ceremonial robes, and similar goods
• Fla. Stat. § 212.08(7)(o), (v) — religious-institution and service-transaction exemptions
• Fla. Stat. § 409.175(2) — summer camp definitions used in the custodial-camp analysis
• Fla. Admin. Code rr. 12A-1.001(2), (3), 12A-1.005(3)(h), 12A-1.008(12)(b), and 12A-1.061(30) — religious sales, church status, admissions sponsorship, publications, and custodial camps
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96A-048

Original ruling text

Title:

Sales by a Nonprofit Religious Institution Holding a Current Consumer's Certificate of Exemption

Status: See TAA 96A-048R (Revised), issued July 1, 1997

Sep 19, 1996

Re: Technical Assistance Advisement - 96(A)-048 Sales by a Nonprofit Religious Institution Holding a Current Consumer's Certificate of Exemption ss. 212.03(1); 212.04(2); 212.06(9); 212.08(7)(o),(v); 409.175(2), F.S. Rules 12A-1.001(2),(3); 12A-1.008(12)(b); 12A1.061(30),F.A.C. Taxpayer: XXXX FEI#: XXXXX Consumer's Certificate of Exemption #: XXXX

Dear :

This response is to your petition of April 24, 1996, 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. Your letter and supporting documents provided the following pertinent information.

FACTS PRESENTED

XXXX (Parent) is a worldwide XXX organization. XXX (Group) is a XXXX not-for-profit religious corporation which is a constituent organization of Parent operating in the U.S. Group is exempt from Federal Income taxes under Section 501(c)(3) of the Internal Revenue Code, and exempt from Florida sales and use taxes on purchases pursuant to its Consumer's Certificate of Exemption

Group has a location in XXX with an 80 seat prayer room. Group

is also completing construction of a "spiritual retreat facility" in XXX. The facility will have a sanctuary, conference center, chapel, cafeteria, amphitheater, multipurpose building, four dormitory-style structures, guest house, administrative office space, caretaker's residence, guardhouse and a pump house.

Group will have retreats that are typically a 3 night and 4 day stay at the facility. The retreats are for Parent members. Other events will also be hosted and offered to Parent members and non-members. Fees may be charged for these events. Also, religious publications and goods, commemorative items and other tangible personal property will be available for sale to attendees. The sale of these items would be separate from any fees for the retreat or other events.

REQUESTED ADVISEMENT

The issue in question is whether Group is required to collect from purchasers and remit to the Department sales taxes on monies received by it from persons attending religious retreats and purchasing religious publications and commemorative items at the XXX. A significant portion of the determination of this issue hinges upon whether Group is considered a "church" for sales tax purposes.

RELEVANT AUTHORITIES

Section 212.03(1), F.S., provides in part:

It is hereby declared to be the legislative intent that every person is exercising a taxable privilege who engages in the business of renting, leasing, letting, or granting a license to use any living quarters or sleeping or housekeeping accommodations....

Section 212.04(2)(a)2.a., F.S., provides:

No tax shall be levied on dues, membership fees, and admission charges imposed by not-for-profit sponsoring organizations. To receive the exemption, the sponsoring

organization must qualify as a not-for-profit entity under the provisions of s. 501(c)(3) of the United States Internal Revenue Code of 1954, as amended.

Section 212.06(9), F.S., provides:

The taxes imposed by this chapter do not apply to the use, sale, or distribution of religious publications, bibles, hymn books, prayer books, vestments, altar paraphernalia, sacramental chalices, and like church service and ceremonial raiments and equipment.

Section 212.08(7)(o), F.S., provides in pertinent part:

(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; and
   ...
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.... (Emphasis supplied)

Section 212.08(7)(v)1., F.S., provides:

Also exempted are professional, insurance, or personal service transactions that involve sales as inconsequential elements for which no separate charges are made.

Section 409.175(2)(k) and (l), F.S. (1995), provides:

(k) "Summer day camp" means recreational, educational, and other enrichment programs operated during summer vacations for children who are 5 years of age on or before September 1 and older. (l) "Summer 24-hour camp" means recreational, educational, and other enrichment programs operated during summer vacations for children who are 5 years of age on or before September 1 and older, that are not exclusively educational.

The following rule provisions were promulgated and adopted by the Department to interpret, inter alia, the above statutory exemptions for churches and religious institutions:

Rule 12A-1.001(2)(a), F.A.C., provides:

Bibles, hymn books, prayer books and religious publications similar thereto, altar paraphernalia, sacramental chalices, and like church service and ceremonial raiment and equipment are exempt. (See Rule 12A-1.008[(12)], F.A.C., for the sale or purchase of religious publications.)

Rule 12A-1.001(3), F.A.C., provides in pertinent part:

(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... organizations, for use in the course of their customary nonprofit religious,... activities 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.... (Emphasis supplied)

Rule 12A-1.005(3)(g) and (h), F.A.C., provides in part:

(g)1 .... [N]o tax shall be levied on dues membership fees, and admissions charges imposed by not-for-profit sponsoring organizations.... To receive this exemption, the organization making any such charges must qualify as a not-for-profit entity under the provisions of s. 501(c)(3) of the United States Internal Revenue Code of 1986, as amended.
...
(h) For the purposes of this rule, sponsorship of an event or program is determined by using the following criteria:

1. Active participation by the entity in the planning and
   conduct of the event or program;
2. Assumption by it of responsibility for the safety and
   success of the event or program, such that it will be subject to a suit for damages for alleged negligence in its conduct;
3. Entitlement by it to the gross proceeds from the event
   or program and to the net proceeds after payment of its costs; and
4. Responsibility by it for payment of costs of the event
   or program and for bearing any net loss if the costs exceed gross proceeds.

Rule 12A-1.008(12)(b), F.A.C., provides:

Religious publications are exempt. For purposes of this exemption, "religious publications" are defined as publications, except those referred to in paragraph (a), that are used, sold, or distributed by a church, or religious institution, holding an exemption certificate based on its exemption under s. 212.08(7)(o), F.S.

Rule 12A-1.061(30), F.A.C., provides in part:

Day Nurseries, kindergartens, church-operated and other custodial camps which primarily provide supervisory and instructional services which are professional and personal, are exempt and are not required to collect tax on fees charged for admissions, participation in sports or recreation, or for food, lodging, or other similar accommodations, services or privileges.... (Emphasis supplied)

ADVISEMENT

As you have concluded in your TAA request, the sale of certain items of a religious nature is specifically exempt by statute, and the sale of religious publications is also exempt when sold by a religious institution holding an exemption certificate pursuant to s. 212.08(7)(o), F.S. In addition, admissions sold by an I.R.C. Section 501(c)(3) organization are exempt when the sponsorship requirements outlined in Rule 12A-1.005(3)(h), F.A.C., are met. Therefore, religious items sold by Group which meet the requirements of s. 212.06(9), F.S. and Rules 12A1.001(2) and 12A-1.008(12), F.A.C., are exempt. Because Group qualifies as an I.R.C. Section 501(c)(3) organization, admissions sold by group will be exempt in those instances in which the Group is deemed to be a "sponsoring" organization pursuant to Rule 12A-1.005(3)(h), F.A.C.

Group already holds a valid Consumer's Certificate of Exemption as a "religious institution" pursuant to s. 212.08(7)(o)2.a., F.S. Group currently has an established physical place of worship where persons regularly assemble for worship, and will have a chapel and sanctuary at the XXXX that will serve to satisfy the definition of "church" 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., as a sale by a church. Therefore, Group bears no obligation to charge and collect sales tax on its sales of tangible personal property.

The tax exemption for sales provided to churches under s.

212.08(7)(o)1.a., F.S., does not apply to sales, leases or licenses of real property. Thus, this particular statutory section would not provide Group with an exemption from collecting and remitting tax on its transient rentals (i.e., rental of sleeping accommodations at the retreat). Thus, Group will be liable for collecting and remitting tax on transient rentals, as well as on any other leases, licenses, or rentals of real property it makes to others, if no other exemption is found.

In your letter, you argue the applicability of the exemption for church-operated custodial camps, provided by Rule 12A-1.061(30), F.A.C. However, this rule is not applicable to the circumstances of this situation.

Subsection (30) of Rule 12A-1.061, F.A.C., specifically exempts "[d]ay nurseries, kindergartens, church-operated and other custodial camps which primarily provide supervisory and instructional services". The construction of the sentence in the referenced rule indicates that a church-operated camp entitled to the exemption would have to be a "custodial camp".

The rule does not provide a definition of "custodial camp". Thus we must look to other sources to define this term. Webster's Dictionary defines "custodial" as relating to guardianship. Webster's also defines "camp" as being "a place provided with tents or cabins... designed for rest or recreation, especially for children in the summer". The terms "summer day camp" and "summer 24-hour camp" are defined in Section 409.175(2), F.S. Both of these definitions specify that they are offered for children during summer vacation.

Thus, relying on these sources and the doctrine of "plain and ordinary meaning", we must conclude that a "custodial camp" is a program for children which is of temporary or limited duration conducted during a period when school is not normally being attended. The spiritual retreats being offered at the XXXX would not qualify as a "custodial camp". The primary focus of the retreats is not custodial supervision and instruction of children.

You also argue in your letter that the exemption in s. 212.08(7)(v), F.S., applies to the retreat (and consequently to the dormitory rooms because they are included as part the retreat for a lump sum fee). You state the religious retreat provides worship and instruction for religious purposes and is a non-taxable service pursuant to s. 212.08(7)(v), F.S. However, sufficient documentation of the professional services provided by the retreat has not been provided for the Department to make a determination on the applicability of s. 212.08(7)(v), F.S. 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,

Edith Sapp
Tax Law Specialist
Tax Policy and Dispute Resolution

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