Are charges for telephone service at a church parsonage subject to Kansas sales tax?

Plain-English summary

A church asked whether Kansas sales tax applies to telephone charges for its parsonage. The Department pointed to Notice 99-14, Sales Tax Exemptions for Religious Organizations, which explains that utility services provided to a parsonage, rectory, convent, or minister's residence are not exempt — they are not purchases used "exclusively for religious purposes," but purchases for the personal consumption of the ministers, priests, nuns, and other religious personnel who live there.

Although Notice 99-14 does not mention telephones specifically, the Department held that telephone charges are treated the same way as other parsonage utilities and are therefore taxable. Phone service at the residence serves both church and personal use, so it does not meet the "exclusively for religious purposes" test. The same result applies to cell-phone charges for phones used by religious personnel — and the charges remain taxable even when the church pays for them with church funds.

(By contrast, the notice explains that permanent, non-consumable church property — furniture, furnishings, real-property improvements that stay with the church through staff changes — can be exempt when bought with church funds.)

What this means for you

Churches and religious organizations

Utility and telephone service for a parsonage or clergy residence is taxable, even on the church's account and paid from church funds, because it is treated as personal consumption rather than an exclusively religious purpose.

Ministers and clergy households

Phone and cell-phone service at your residence is subject to sales tax like other household utilities, regardless of who is billed.

Common questions

Q: We pay the parsonage phone bill from church funds — is it still taxable?
A: Yes. Paying with church funds does not make it exempt; the exemption is limited to purchases used exclusively for religious purposes.

Q: Do cell phones count?
A: Yes. Cell-phone charges for phones used by ministers and other religious personnel are taxable the same way.

Q: Is anything for the parsonage exempt?
A: Permanent, non-consumable items (furniture, furnishings, real-property improvements) that remain church property can be exempt when paid for with church funds; consumables and utilities are not.

Citations and references

• Notice 99-14, Sales Tax Exemptions for Religious Organizations — the Department quoted that utilities "provided to a parsonage, rectory, convent, minister's house, or similar residence ... are not exempt as purchases that are used exclusively for religious purposes," being "purchases for the personal consumption" of religious personnel, and held that "charges for telephone services for a parsonage are treated the same way as charges for utility services," making them taxable, "even when paid for with the church funds." The ruling cites no specific statute section.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2006-007

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

May 16, 2006

XXXX
XXXX
XXXX

RE: Your e-mail received on April 6, 2006

Dear XXXX:

Thank you for your recent e-mail. You ask whether or not Kansas sales tax applies to charges for telephone services for a church parsonage. The taxability of utility services provided to a parsonage is explained in Notice 99-14, Sales Tax Exemptions for Religious Organizations. It provides:

d) Utility services provided to a parsonage, rectory, convent, minister’s house, or similar residence that is used to house religious leaders are not exempt as purchases that are used exclusively for religious purposes. Similarly, clothing, food and other consumables purchased for such residences are not exempt. These are considered to be purchases for the personal consumption of ministers, priests, nuns, and other religious personnel, rather than purchases that are made “exclusively for religious purposes.” However, exempt sales do include sales of furniture, furnishings, real property improvements, and other non-consumable, permanent items that are used to equip a parish, rectory, convent or minister’s house if ownership of the property will remain with the church through successive employee changes. Such permanent church property is considered to have been purchased for a “religious purpose” when paid for with church funds.

While telephone services are not specifically mentioned in Notice 99-14, charges for telephone services for a parsonage are treated the same way as charges for utility services. This means that telephone charges are taxable. Telephone services are purchased for both church use and for personal use by ministers, priests, nuns, and other religious personnel. The exemption is limited to purchases that are “exclusively for religious purposes.” Telephone charges are taxable even when paid for with the church funds.

Accordingly, charges for telephone services for a parsonage, rectory, convent, minister's house, or similar location are taxable. This same determination applies to cell-phones charges for cell-phones that are used by ministers, priests, and other religious personnel, even when the charges are paid for with church funds.

This is a private letter ruling pursuant to K.A.R. 92-19-59. It is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to an accurate determination by the department, this ruling is null and void. This ruling will be revoked in the future by the operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or published revenue ruling, that materially effects this private letter ruling.

Sincerely,

Thomas E. Hatten
Attorney/Policy & Research

Date Composed: 05/19/2006 Date Modified: 05/19/2006

Table 1

Table 2