Must a tax-exempt 501(c)(3) library-support group collect sales tax on its semi-annual used-book sales?

Plain-English summary

The Petitioner is a 501(c)(3) library-support charity (chartered by the NYS Board of Regents; holds a NY Exempt Organization Certificate). It collects donated used books, records, tapes, and media and sells them at a semi-annual sale in its warehouse -- typically spring and fall, over several weekends each. Proceeds fund grants to a county library and a library system. It already collects tax on rare internet/auction-house sales and wondered about the main book sales.

The Office of Counsel concluded the sales are taxable:

• Exempt status has limits. Although sales by exempt organizations can be exempt (section 1116(a)(4)), section 1116(b) says that exemption does not cover retail sales of TPP from a "shop or store," or regular remote sales.
• "Shop or store" = display + regularity/frequency/continuity. A "shop or store" is any place where goods are sold from display with a degree of regularity, frequency, and continuity (20 NYCRR 529.7(i); TSB-A-97(36)S). Truly sporadic/infrequent sales (a few days, no schedule) aren't (TSB-A-13(29)S).
• This qualifies. The sales are from display, at the same warehouse year after year, twice a year over several weekends, and advertised as regular "May and October" sales (e.g., specific announced dates spanning multiple weekends). That's enough regularity, frequency, and continuity -- so the Petitioner is operating a shop or store and must collect State and local tax on the book sales.
• Other sales follow. Because it runs a shop or store, its other retail sales of similar property -- "word of mouth" sales, commercial auction-house sales, and internet/remote sales -- are treated as made from the shop or store and are taxable (20 NYCRR 529.7(i)(2)(ii)). Book-bag sales at the library are taxable too if displayed and available for purchase on a regular, continuous basis.

What this means for you

Nonprofits with recurring sales events

Being a 501(c)(3) with an Exempt Organization Certificate does not let you sell tax-free if you run a "shop or store." A scheduled, repeated sale from display at the same place -- even just twice a year across several weekends -- is a shop or store, and you must collect sales tax.

Truly occasional sales are different

A genuinely sporadic, unscheduled sale (a couple of days, no pattern) generally isn't a shop or store. The markers that made this taxable were regularity, a published schedule, the same location, and repetition year over year.

Once you're a "store," your other sales get swept in

If you operate a shop or store, your word-of-mouth, auction-house, and internet sales of similar items are also taxable as sales from that store. Register, collect, file, and remit.

Common questions

Q: We're a 501(c)(3) -- do we still charge tax on our book sale?
A: Yes, if the sale is from a "shop or store" -- a scheduled, repeated sale from display at the same place. The exempt-organization exemption doesn't cover shop-or-store sales.

Q: It's only twice a year -- isn't that occasional?
A: No. Twice a year over several weekends, same location, on an advertised schedule, is enough regularity/frequency/continuity to be a shop or store.

Q: What about our occasional word-of-mouth, auction, or online sales?
A: Because you operate a shop or store, those related sales are also treated as made from the store and are taxable.

Q: Can I rely on this opinion?
A: It binds the Department only as to the petitioner. Use it as guidance and confirm your own facts.

Citations and references

• Tax Law section 1116(a)(4) (exempt organizations)
• Tax Law section 1116(b) (limits on exemption; shop or store and regular remote sales)
• Tax Law section 1105 (sales tax on tangible personal property)
• 20 NYCRR section 529.7(i) (shop or store; exempt-organization sales)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2015.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a15_8s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-15(8)S
Sales Tax
March 19, 2015

Office of Counsel
Advisory Opinion Unit

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S130716A

The Department of Taxation and Finance received a Petition for Advisory Opinion from
REDACTEDREDACTEDREDACTEDREDACTEDREDACTEDREDACTEDREDACTED
(“Petitioner”). Petitioner asks whether the sale of used books, records, and related media by the
Petitioner at its semi-annual sale is subject to the collection of New York State sales tax.
We conclude that Petitioner’s receipts from its semi-annual sale are subject to sales tax,
and Petitioner must collect sales tax on those sales.

Facts
Petitioner submits the following facts: The Petitioner is chartered by a grant from the
New York State Board of Regents of the University of the State of New York Education
Department. The charter was granted in 1968. The charter provides that the Petitioner’s
purposes are to: (i) maintain an organization of persons interested in books, libraries, facilities,
and needs; (ii) stimulate gifts and desirable collections; and (iii) enrich the cultural advantages
available to the citizens of REDACTED County. The charter further provides that the Petitioner
shall be operated exclusively for educational purposes and no part of its earnings or net income
shall inure to the benefit of any individual, and no officer, member or employee of the
corporation shall receive or be entitled to receive any pecuniary profit from the operations
thereof. Petitioner has been granted tax exempt status as a 501(c)(3) organization by the Internal
Revenue Service. Petitioner also has an Exempt Organization Certificate from the Tax
Department pursuant to § 529.7(f) of the Sales and Use Tax Regulations.
Petitioner collects used books, records, tapes and other media that are donated and then
sold on a semi-annual basis. All of the used books, records, tapes and other media are donated
by the public and become the property of the Petitioner. The donated items are sorted and stored
through the help of volunteers in a warehouse owned by the Petitioner. In addition to using the
warehouse as a place to accept, sort, arrange and store donated items, the warehouse is used by
Petitioner for its meetings, and printing and occasional computer use. The primary use of the
warehouse is to store donated items and display items during the semi-annual sale.
The items are collected over a 4-6 month period and the sale occurs from Saturday
through Monday, generally for three consecutive weekends, with the possibility of a one-day

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Sales Tax
March 19, 2015

mid-week sale held at one point during that time frame. The sale usually occurs once in the
spring and once in the fall. The exact dates are not pre-set but are chosen each year by the
organization to avoid religious holidays, holiday weekends, or local college graduations and
other yearly specific plans. The operational hours for the sale vary according to what the
customers of the sale prefer and the availability of volunteers running the sale. The sale occurs
in the warehouse, where items are displayed during the sale. After the sale, any unsold items are
offered free to libraries, educational institutions, etc. Left over items are not held over for future
sales. Libraries and non-profit groups are also allowed to take books or other materials at no
charge before and after each sale. Occasionally there is a sale by word of mouth and very
infrequently a commercial auction house is used for a special item. Petitioner recognizes that
sales tax must be collected and paid on the rare occasion of a sale over the internet or by an
auction house. Sporadic sales of book bags also occur at the local library.
The Petitioner uses the funds from the sale to provide yearly grants to the REDACTED
County Public Library (the “Library”) and to the Finger Lakes Library System (the “FL
System”). The FL System is a cooperative library system, chartered in 1958 by New York State,
to serve the public libraries in Cayuga, Cortland, Seneca, Tioga, and Tompkins Counties. To a
lesser extent, occasional grants are made for educational purposes to the Library or the FL
System staff or to provide grants to literacy related purposes of area community organizations or
other grants to other area libraries. Costs associated with the book sales are also paid from the
sale proceeds. The grants to the Library help relieve REDACTED County from the financial
burden of supporting its library and the grants also relieve New York State from the financial
burden of supporting the FL System. In fact, county appropriations for the Library provide no
funds for collection acquisitions, and the book sale proceeds provide almost all of the acquisition
monies available to the Library. Although not appropriated, the book sale proceeds function in
lieu of government appropriations for acquisitions, because the Library could not function
without a collection.

Analysis
Tax Law § 1105 provides that all sales of tangible personal property are subject to sales
tax unless a specific exemption applies. The Tax Law also exempts certain sales by certain
organizations that are exempt from sales tax. See Tax Law § 1116(a)(4); 20 NYCRR § 529.7(e),
However, the sales and use tax exemption for exempt organizations is not without limits.
Tax Law § 1116(b) provides, in part:
(b) Nothing in this section shall exempt:
(1) (i) retail sales of tangible personal property by any shop or store
operated by an organization described in paragraph (4), (5), or (6) of subdivision
(a) of this section; (ii) sales, other than for resale, of services described in
subdivision (b) or paragraph five of subdivision (c) of section eleven hundred five
of this article by that organization whether or not at a shop or store; (iii) retail

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sales of tangible personal property and sales, other than for resale, of those
services by that organization, made with a degree of regularity, frequency, and
continuity by remote means, such as by telephone, the internet, mail or otherwise;
or (iv) retail sales of tangible personal property by lease or rental by that
organization as lessor, whether or not at a shop or store (emphasis added).
See also 20 NYCRR § 529.7(i).
A “shop or store” includes “any place or establishment where goods are sold from display
with a degree of regularity, frequency and continuity . . . .” The sale of tangible personal
property from displays at continuous and scheduled intervals is subject to sales tax, because such
locations would constitute a shop or store. See TSB-A-97(36)S. Sales that are held sporadically
and infrequently (for example, sales held on only a few days over the course of a year, and on no
particular schedule) will not be considered sales from a shop or store. See TSB-A-13(29)S.
Petitioner’s semi-annual books sale at the warehouse offers books for sale from display,
and is conducted with sufficient regularity, frequency and continuity to be a sale from a shop or
store, requiring the collection of sales tax. The sales are conducted at the same location, year
after year. The sales are held twice per year, over the course of several weekends. Although the
petition states that the dates for the sales, as well as hours of operation for the sales, are not preset, its website advertises regular “May and October” book sales. Moreover, the sale dates do
not consist of only a few days during the year. For example, Petitioner’s website lists the
announced dates for the May 2014 sale as beginning “Saturday, May 3, at 8:00 AM, and
continues May 4 & 5, 10-12, and 17-20.” A sale that takes place in the same location for several
weekends in both the Spring and Fall seasons from year to year is conducted with sufficient
regularity, frequency and continuity to constitute a sale from a “shop or store.” Petitioner must,
therefore, collect State and local sales tax on its sales at the semi-annual book sales at the
warehouse.
Petitioner also states that it occasionally makes sales by “word of mouth.” If an exempt
organization operates a shop or store and also makes retail sales of similar tangible personal
property other than at its shop or store, those additional sales are considered to be made from its
shop or store. See 20 NYCRR § 529.7(i)(2)(ii). Because we conclude that Petitioner is
operating a “shop or store” for purposes of its Spring and Fall book sales, its other sales,
including occasional sales advertised by “word of mouth,” would be considered to be made from
a shop or store and, therefore, subject to sales tax. See TSB-M-08(15)S.
Petitioner states that sales tax is collected on its sales from a commercial auction house
and remote sales made over the Internet. As stated above, because Petitioner is operating a shop
or store for purposes of its Spring and Fall book sales, the sales made at a commercial auction
house and over the Internet are also subject to tax. See 20 NYCRR § 529.7(i)(2)(ii). Petitioner
must, therefore, continue to collect tax on these sales. Even if Petitioner’s semi-annual book
sales were not made from a shop or store, the sales made by a commercial auction house would
be subject to tax if those sales are made from display at a temporary shop or store by a person
required to collect tax. See 20 NYCRR § 529.7(i)(2)(i). In addition, retail sales made over the

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Internet or other remote means would be subject to tax if made with a degree of regularity,
frequency and continuity. See Tax Law § 1116(b)(1)(iii).
Finally, Petitioner states that sporadic sales of book bags are made from the local library.
If these items are on display and available for purchase on a regular and continuous basis, (such
as during regular library hours), they would be sales made from a shop or store and, thus, subject
to sales tax.

DATED: March 19, 2015

NOTE:

/S/
DEBORAH R. LIEBMAN
Deputy Counsel

An Advisory Opinion is issued at the request of a person or entity. It is limited to the
facts set forth therein and is binding on the Department only with respect to the
person or entity to whom it is issued and only if the person or entity fully and
accurately describes all relevant facts. An Advisory Opinion is based on the law,
regulations, and Department policies in effect as of the date the Opinion is issued or
for the specific time period at issue in the Opinion. The information provided in this
document does not cover every situation and is not intended to replace the law or
change its meaning.