Does a nonprofit that sells a fundraising cookbook from a temporary sales table set up regularly during its season have to collect sales tax?

Plain-English summary

The Rochester Philharmonic Orchestra, Inc., a § 501(c)(3) organization (though it had not applied for a New York sales-tax exemption), planned a fundraiser: volunteers compiled a cookbook to sell from a temporary sales table set up twice weekly during the fifteen-week performing season, staffed by unpaid volunteers. It asked whether that temporary table is a "shop or store" whose sales are taxable.

The Department held the temporary sales table is a "shop or store," so the cookbook sales are taxable.

• Exempt-organization sales are generally exempt — except through a shop or store. Section § 1116(a) exempts sales by an exempt organization described in § 1116(a)(4), but § 1116(b) provides that nothing in the section exempts "retail sales of tangible personal property by any shop or store" operated by such an organization.
• "Shop or store" means regular, continuous selling from a display. The term is construed as any place where goods are sold from a display with a degree of regularity and continuity.
• A twice-weekly seasonal table qualifies. A temporary sales table set up twice weekly for fifteen weeks to offer property for sale meets that definition, so the proceeds are subject to sales tax.
• Result. The orchestra must collect New York State and local sales tax on the cookbook receipts. (The Department also noted that sales of tangible personal property by non-qualifying organizations are taxable regardless of the sales method used.)

What this means for you

A nonprofit's fundraising merchandise sales usually aren't tax-free. The § 1116(b) "shop or store" exception pulls regular, continuous selling out of the exemption — even a folding table run by volunteers.

"Regularity and continuity" is the test, not permanence. A recurring seasonal sales point — like twice a week for fifteen weeks — is a shop or store even though it's temporary.

Plan to collect and remit on recurring merchandise sales. If your group sells cookbooks, merchandise, or similar goods on an ongoing schedule, register and collect sales tax.

Common questions

Q: We only sell at a temporary table during our season. Is that really a "store"?
A: Yes. Selling from a display "with a degree of regularity and continuity" — such as twice weekly for fifteen weeks — makes it a shop or store under § 1116(b).

Q: Volunteers run it and it's for a good cause. Does that change anything?
A: No. Neither the volunteer staffing nor the charitable purpose exempts sales made through a shop or store.

Q: What if our organization isn't even a qualifying exempt organization?
A: Then all your sales of tangible personal property are taxable regardless of the sales method.

Citations and references

Statutes:

• Tax Law § 1116(a) / § 1116(a)(4) — exempt organizations
• Tax Law § 1116(b) — "shop or store" exception to the exemption

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1981.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a81_56s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-81(56)S
Sales Tax
November 27, 1981

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S810929A

On September 29, 1981, a Petition for Advisory Opinion was received from Rochester
Philharmonic Orchestra, Inc., 20 Grove Place, Rochester, New York 14605.
The issue raised is whether a temporary sales table constitutes a shop or store from which
sales would be subject to sales tax.
The Rochester Philharmonic Orchestra, Inc. is a corporation exempt from federal income
taxation under section 501(a) of the internal Revenue Code as an organization described in section
501(c)(3). The organization has not applied for nor received exemption from New York State sales
tax. The corporation's principal activity is the presentation of concerts and other cultural perfor­
mances by the Rochester Philharmonic Orchestra, a major symphony orchestra of international
reputation, and other groups. In an effort to raise funds for the benefit of the Orchestra, volunteers
have compiled a cookbook to be offered for sale. The corporation will conduct sales of the cookbook
from a temporary sales table set up twice weekly during the fifteen weeks of the Orchestra's
performing season. Those staffing the temporary sales table will be volunteers receiving no
compensation for their efforts.
Section 1116(a) of the Tax Law states:
"Except as otherwise provided in this section, any sale or amusement charge by or to any of
the following or any use or occupancy of the following shall not be subject to the sales and
compensating use taxes imposed under this article: . . . (4) Any corporation, association,
trust, or community chest, fund or foundation, organized and operated exclusively for
religious, charitable, . . . or educational purposes, . . ."
Section 1116(b) of the Tax Law provides:
"Nothing in this section shall exempt (1) retail sales of tangible personal property by any
shop or store operated by an organization described in paragraph (4), . . . of subdivision (a)
of this section, . . ."
The term "shop or store" is construed to be any place where goods are sold from a display
with a degree of regularity and continuity.

JAMES H. TULLY., COMMISSIONER
TP-8 (4/80)

LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

-2­
TSB-A-81(56)S
Sales Tax
November 27, 1981

A temporary sales table set up twice weekly for a fifteen week period from which tangible
personal property is offered for sale by an organization which has qualified for exemption pursuant
to section 1116(a)(4) of the Tax Law constitutes a shop or store within the meaning and intent of
section 1116(b) and the proceeds from such sales are subject to sales tax.
All sales of tangible personal property by non-qualifying organizations are subject to sales
tax, regardless of the sales method used.
Accordingly, Petitioner is required to collect New York State and local sales tax on receipts
from the sale of cookbooks at the temporary sales table.

DATED: November 10, 1981

s/LOUIS ETLINGER
Deputy Director
Technical Services Bureau