Were a missionary organization's tangible-property sales exempt when it held a Florida exemption and conducted weekly public worship?

Subject

Sales by a Nonprofit Religious Institution

Plain-English summary

The missionary organization's sales of tangible personal property were exempt from Florida sales and use tax. It held a valid Consumer's Certificate of Exemption as a religious institution and maintained a physical location where it conducted weekly prayer, hymns, and Bible teaching or study open to the public.

The Department concluded that those regularly scheduled public worship services satisfied its definition of a church. Florida's church exemption therefore covered the organization's tangible-property sales.

The exemption was transaction-specific. The ruling expressly said the organization remained responsible for collecting and remitting tax on leases, licenses, or rentals of real property to others.

What this means for you

The ruling relied on both the Florida exemption certificate and the organization's actual use of an established physical place for regular public religious services. A broad religious or charitable mission by itself was not the only fact supporting the result.

Common questions

Q: Did the organization collect sales tax on tangible-property sales? No, under the facts in the ruling.

Q: What made it a church for this purpose? It had an established physical place and conducted weekly public worship and religious instruction there.

Q: Did federal nonprofit status alone decide the result? No. The ruling also relied on its Florida religious-institution exemption and regular public worship activities.

Q: Were the organization's real-property rentals exempt? No. The ruling said those leases, licenses, or rentals remained taxable.

Citations and references

• Fla. Stat. § 212.08(7)(o) — exemptions for qualifying churches and religious institutions
• Fla. Admin. Code r. 12A-1.001(3) — definitions and transaction rules for exempt organizations
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 97A-038

Original ruling text

SUMMARY

The Department ruled that the taxpayer, a missionary
organization which holds a valid Consumer's Certificate of
Exemption as a "religious institution," which conducts
regularly scheduled worship/church services open to the
public, is not required to collect and remit tax on its
sales of tangible personal property.

Jun 2, 1997

Re: Technical Assistance Advisement 97(A)-038
Sales by a Nonprofit Religious Institution Which Holds a
Valid Consumer's Certificate of Exemption
Section 212.08(7)(o), F.S.
Rule 12A-1.001(3), F.A.C.
Taxpayer: XXX ("Taxpayer")
FEI No.: XX
Consumer's Certificate of Exemption No.: XX

Dear :

This response is to your petition of January 31, 1997,
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 the conduct of regular worship
services, the conduct of missionary activities, and the
conduct of 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" by meeting 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 and
activities are regularly conducted and carried on." (See
copy of application materials attached as Exhibit 3.)

Your letter provides a quotation from Taxpayer's By-Laws as
follows:

(The purpose of (Taxpayer) is) to proclaim through all
appropriate means and in harmony with the Holy Bible the
place of Israel in both history and prophecy, and in
concert with that purpose, enter into a program of direct
evangelism to carry out such activities in a gracious
manner to the Jewish people in Israel and throughout the
world. (Your emphasis)

Exhibit 3 of your request contains a copy of Taxpayer's
insurance policy for commercial property coverage of Taxpayer's
physical location. Exhibit 4 of your request and the additional
documentation submitted by facsimile on April 29, 1997, provide
that Taxpayer conducts weekly worship services, consisting of
prayer, hymns, and Bible teaching/study, at the designated
location which are open to the public.

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., 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;....

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 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.
Department of Revenue, 584 So.2d 55, 57 (Fla. 1st DCA 1991);
Dade County Taxing Authorities v. Cedars of Lebanon Hospital
Corporation, Inc., 355 So.2d 1202, 1205 (Fla. 1978), reh. den.
April 5, 1978; Williams v. Jones, 326 So.2d 425, 435 (Fla.
1975), reh. den. March 4, 1976; Straughn v. Camp, 293 So.2d 689,
695 (Fla. 1974); United States Gypsum Company v. Green, 110
So.2d 409, 413 (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, 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, 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 the designated location 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,

Janet L. Young
Tax Law Specialist

JLY/pb
Control No. 27803