Does a tax-exempt organization have to collect sales tax when it sells books and tapes from a display table at its monthly meetings?

Plain-English summary

Women's Aglow Fellowship – Elmira Chapter, a tax-exempt organization described in § 1116(a)(4), bought books and tapes from its national organization and sold them from a display table at its monthly meetings. It asked whether it must collect sales tax on those sales.

The Department held the sales are taxable.

• Exempt organizations usually don't have to collect tax — but there's an exception. Section § 1116(a) generally relieves an exempt organization like this one from the obligation to collect sales tax. However, § 1116(b) excludes from that relief "retail sales of tangible personal property by any shop or store" the organization operates.
• A regular sales table is a "shop or store." The term "shop or store" includes any place where goods are sold from a display with a degree of regularity and continuity. A table set up at the organization's monthly meetings to offer property for sale fits that definition.
• Result. Because the sales are made through a "shop or store," the proceeds are subject to sales tax, and the organization must collect it.

What this means for you

Being a tax-exempt organization doesn't make your merchandise sales tax-free. The exemption is mainly about your own purchases and certain fundraising — not about running an ongoing sales operation.

Regular, continuous selling from a display triggers the "shop or store" rule. A recurring sales table — even at your own meetings — is enough; you don't need a storefront.

Register and collect if you sell with regularity. If your group sells books, tapes, or other goods on a continuing basis, plan to collect and remit sales tax on those sales.

Common questions

Q: We're a recognized exempt organization. Why do we owe tax on our book table?
A: Because § 1116(b) excludes retail sales through a "shop or store" from the exemption, and a regular display table counts as a shop or store.

Q: It's only once a month at our own meeting. Is that really a "store"?
A: Yes. Selling from a display "with a degree of regularity and continuity" — such as monthly — makes it a shop or store.

Q: Does it matter that we bought the items from our own national organization?
A: No. What matters is that you make retail sales of those goods through a shop or store; the source of the inventory doesn't change the result.

Citations and references

Statutes:

• Tax Law § 1116(a)(4) — exempt organizations
• Tax Law § 1116(a) — general exemption from collecting sales tax
• Tax Law § 1116(b) — exception for retail sales by a shop or store

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_64s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-81 (64) S
Sales Tax
December 22, 1981

Taxpayer Services Division
Technical Services Bureau
STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S811028A

On October 28, 1981, a Petition for Advisory Opinion was received from Women's Aglow
Fellowship - Elmira Chapter, c/o Mrs. Sylvia Hathaway, 2782 Canal St., Box 12, Big Flats, New
York 14814.
The issue raised is whether Petitioner is required to collect sales tax on its sales of books and
tapes.
Petitioner, an exempt organization described in Section 1116(a)(4) of the Tax Law, purchases
books and tapes from its national organization for sale from a display table at its monthly meetings.
Section 1116(a) of the Tax Law provides for a general exemption from the obligation to collect sales
tax in the case of exempt organizations, such as Petitioner, described in paragraph four thereof.
However, Section 1116(b) of the Tax Law excludes from the operation of that exemption "retail
sales of tangible personal property by any shop or store operated by an organization described in
paragraph (4) . . . ." The term "shop or store" includes any place where goods are sold from a display
with a degree of regularity and continuity.
A table set up at a monthly meeting from which tangible personal property is offered for sale
by an organization which has qualified for exemption from sales tax pursuant to Section 1116(a)(4)
constitutes a "shop or store," within the meaning and intent of Section 1116(b) of the Tax Law, and
the proceeds from such sales are accordingly subject to sales tax.

DATED: December 3, 1981

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

s/LOUIS ETLINGER
Deputy Director
Technical Services Bureau

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