Did a church have to collect Florida sales tax on property sold through fundraising for its own private school?

Subject

Sales of Tangible Personal Property by Exempt Entity

Plain-English summary

The church did not have to collect or remit Florida sales tax on tangible property sold through fundraising for its private school. The church maintained a regular physical place of worship, held federal and Florida exemption status, and operated the not-for-profit school under a fictitious name as an activity of the same corporate entity rather than a separate corporation.

The school provided courses for pupils in grades 3K through 12, and the fundraising proceeds supported its operation. Florida construed the church exemption to include operation of the school for satisfying state educational requirements and therefore treated the related sales as exempt sales by the church.

What this means for you

The result depended on organizational identity and activity. A school merely affiliated with a church is not necessarily the same as a school operated by the church itself; corporate records, exemption status, school structure, and fundraising purpose should establish who actually made the sales.

Common questions

Q: Was the school a separate corporation? No. It was an activity and fictitious name of the church's corporate entity.

Q: Were the fundraising items sold only to church members? The ruling described sales to the general public and still found them exempt on these facts.

Q: Did the ruling exempt every sale by any religiously affiliated school? No. It addressed a qualifying church directly operating its own school within the same entity.

Citations and references

• Fla. Stat. §§ 212.05, 212.08(7)(o), 212.21(2) — retail sales and the narrowly construed religious-institution exemption
• Fla. Admin. Code r. 12A-1.001(3)(c) — church as an established physical place of worship
• Asphalt Pavers, Inc. v. Department of Revenue, 584 So. 2d 57 (Fla. 1st DCA 1991)
• Dade County Taxing Authority v. Cedars of Lebanon, 355 So. 2d 1205 (Fla. 1978)
• Williams v. Jones, 326 So. 2d 424 (Fla. 1975)
• Straughn v. Camp, 293 So. 2d 689 (Fla. 1974)
• United States Gypsum Co. v. Green, 110 So. 2d 409 (Fla. 1959)
• Fla. Stat. § 213.22 — Technical Assistance Advisements

OCR citation check: all five case citations in the scanned ruling resolved in the required list-mode verification. The citation strings and operative exemption conclusion were also reread against the official PDF images.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 98A-055

Original ruling text

SUMMARY

The Department held that a church that maintains and
operates a not-for-profit private school, as an activity

of the church and part of the same corporate entity, is not
required to collect and remit sales tax on sales of
tangible personal property made by the church, in

connection with its operation of the school.

Jul 15, 1998

Re: TAA 98A-055
Sales and Use Tax
Sales of Tangible Personal Property by Exempt Entity
Section 212.08, Florida Statutes
Rule 12A-1.001, Florida Administrative Code
XXX (Hereinafter "Church")

Dear:

This response is in reply to your letter dated April 3, 1998, in
which you request the issuance of a Technical Assistance
Advisement pursuant to s. 213.22, F.S. You asked whether the
exemption from sales tax on the sale of tangible personal
property by a church also applies to the sale of tangible
personal property through various fund raising activities of

"XXX" (School), which is maintained and operated by the Church.

On page 2 of your letter, you assert as facts that Church
maintains a physical place for worship at which nonprofit
religious services and activities are regularly conducted and
carried on. Further, you state that the Church is 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.

You also assert that Church maintains and operates a not-for-

profit private school under the fictitious name of School.

Additionally, under the name "School," Church engages in various
fund-raising activities in which items of tangible personal

property are sold to the general public for the purpose of

raising money for Church's operation of the school. You further
assert that the School is an activity of the Church and is part

of the same corporate entity, not a separate corporation, which
constitutes Church. In a recent telephone conversation, it was
disclosed that the School maintains courses of study for pupils

in grades 3K through twelve (12).

Thus you posed, as the issue: "Whether [Church] is required to
collect and remit to the Department sales tax on monies received
by it in connection with sales of tangible personal property

made in connection with its operation of the school."

Citing Section 212.08(7)(0)1.a. and b., F.S., and various
paragraphs of Rule 12A-1.001(3), F.A.C., you opine that,
[Church's] activities qualify it as a church pursuant to the
provisions of Rule 12A-1.001(3)(c),F.A.C. Consequently, you
opine, [Church] is not required to collect from purchasers and
remit to the Department sales tax on monies received by it on
sales of tangible personal property sold in connection with
[Church's] fund-raising activities conducted under the name
[School].

Department Response

Section 212.05, F.S., generally provides that sales tax is
imposed on the sale, at retail, of tangible personal property in
this state. However, Section 212.08(7)(0), F.S., provides a
specific exemption from the tax imposed on sales or leases
directly to churches, or sales or leases of tangible personal
property by churches. The statute also provides for the
exemption from sales tax on sales or leases to nonprofit
religious, nonprofit charitable, nonprofit scientific, or
nonprofit educational institutions when used in carrying on
their customary nonprofit activities. Specifically, paragraph

2., of the statute, provides, in part:

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....

d. "Educational institutions" means state tax-supported or
parochial, church and nonprofit private schools, colleges,
or universities which conduct regular classes and courses

of study required for accreditation by, or membership in,

the Southern Association of Colleges and Schools, the
Department of Education, the Florida Council of Independent
Schools, or the Florida Association of Christian Colleges

and Schools, Inc..... (Emphasis Supplied)

Rule 12A-1.001(3), F.A.C., contains the Department's
interpretation of the statute. Paragraph (c), of the rule
subsection provides: "Church' means a religious institution
having an established physical place of worship where persons
regularly assemble for worship and instruction for religious

purposes...."

The legislature, in addition to granting the Department rule-
making power and expressly requiring compliance with those rules
and regulations, has expressed its intent that any exemptions
granted be subject to conditions pertaining to those exemptions.
See s. 212.21(2), F.S. A long-standing and fundamental precept
of statutory construction, established by the Florida Supreme
Court, 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 424 (Fla. 1975); Straughn v. Camp, 293 So.2d
689 (Fla. 1974); United States Gypsum Company v. Green, 110
So.2d 409 (Fla. 1959).

The exclusion from sales tax by a church found in paragraph

(7)(0) of s. 212.08, F.S., is to be narrowly construed. Such

construction must be reasonable and consistent with the
beneficial purposes behind the excise tax on sales of tangible
personal property. Therefore, the Department concludes that the
exemption from sales tax on the sale or lease of tangible
personal property, contemplates, as contained in Rule 12A-
1.001(3)(c), F.A.C., "an established physical place for worship
where persons regularly assemble for worship and instruction for
religious purposes," which includes the operation of a school

for the purpose of satisfying the state's educational
requirements of pupils in grades 3-K through twelve.
Accordingly, Church is not required to collect and remit

Florida's sales tax on the sale of tangible personal property

sold in connection with the fund raising activities of School.

This response constitutes a Technical Assistance Advisement
under Fla. Stat. s. 213.22, which is binding on the Department
only under the facts and circumstances described in the request
for this advice, as specified in section 213.22. 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, Fla. Stat., which are subject
to disclosure to the public under the conditions of Fla. Stat.

s. 213.22. 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,

Horace Royals

Tax Law Specialist
(850) 922-4842

Control #: 33705