Private Letter Ruling
Kansas Retailers' Sales Tax
Church purchases of furniture, fixtures, equipment and utilities for a reading room.
Office of Policy & Research
March 10, 1999
I have been asked to respond to your letter received in December. I apologize for my delay in preparing this response. The XXXXX Church Operates its church in XXXX. In addition, the church operates a reading room at XXXX. The reading room offer the public a place to read the religious publications of the church. The church also uses the reading room to sell religious books, literature, and supplies to the public. You ask whether or not the new sales tax exemption for religious organizations applies to exempt the church’s purchases of furniture, fixtures, equipment, utilities and various other things for the reading room.
The exemption for religious organizations was enacted last year and is codified at K.S.A. 79-3606(aaa) It exempts:
all sales of tangible personal property and services purchased by a religious organization which is exempt from federal income taxation pursuant to section 501(c)(3) of the federal internal revenue code, and used exclusively for religious purposes.
For exemption, this law requires the religious organization: (1) to qualify as a nonprofit 501(c)(3) organization under the IRC Code, and (2) to use the item or service being purchased “exclusively for religious purposes.”
To implement the new law, the department issued Notice 98-05. Paragraph III construes the term “used exclusively for religious purposes.” It states:
Tangible personal property and services that are considered to be used exclusively for religious purposes include, but are not limited to, personal property and services:
used exclusively in, or to facilitate, religious worship services by a congregation or church membership while meeting together at a single location.
used exclusively in, or to facilitate, religious ceremonies.
used exclusively in, or to facilitate, carrying out the religious work of the organization.
used to construct, furnish, equip, remodel, or maintain a facility used exclusively for religious objectives including, but not limited to, a church, church grounds, a church administration building, a church camp, a parsonage, rectory, or convent. Such property must be purchased directly by the religious organization and not through a contractor.
See Kansas City Dist. Advisory Bd. v. Board of Johnson Country Comm’rs,
5 Kan App. 2d 538, 542 (1980).
used exclusively to administer, manage, or operate religious facilities or to administer religious activities.
Because the reading room is used as a retail store, it is not being “used exclusively for religious purposes.” Even if these retail sales were not taking place there, the reading room would probably not qualify for exemption under the guidelines set out in Notice 98-05. Accordingly, the sales tax exemption for religious organizations does not apply to purchases made for the reading room.
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 by operation of law without further department action if there is a change in the controlling statutes, administrative regulations, revenue rulings or case law that materially effects this determination.
Thomas E. Hatten
Attorney/Policy & Research
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