Current through September 18, 2024
Authority: IC 6-8.1-3-3
Affected: IC 6-2.5
Sec. 55.
(a) Sales to
a qualified not-for-profit organization of tangible personal property or
services used primarily in carrying out the not-for-profit purpose of the
organization or in raising money for carrying on such purposes are exempt from
the gross retail tax.
(b) In order
to qualify for the sales tax exemption on purchases, as a qualified
not-for-profit organization, the following conditions must prevail:
(1) The organization must be qualified by
being named or described in IC 6-2.1-3-20, IC 6-2.1-3-21, or IC 6-2.1-3-22
which deals with fraternities, sororities, student cooperative housing
organizations, etc. This includes not-for-profit organizations organized and
operated exclusively for one (1) or more of the following purposes:
(A) Religious.
(B) Charitable.
(C) Scientific.
(D) Fraternal.
(E) Educational.
(F) Literary.
(G) Civic.
(2) Also included are the following
specifically named not-for-profit organizations:
(A) Labor unions.
(B) Licensed hospitals.
(C) Churches.
(D) Monasteries.
(E) Convents.
(F) Cemetery associations.
(G) Public schools.
(H) Parochial schools.
(I) Pension trust.
(J) Business leagues.
(3) The organization is not operated
predominantly for social purposes. The article purchased must be used for the
same purpose as that for which the organization is being exempted. Purchases
for the private benefit of any member of the organization or for any other
individual, such as meals or lodging, are not eligible for exemption. Purchases
used for social purposes are never exempt.
(4) The fact that an organization is being
exempted by the federal government or by the state of Indiana for income tax
purposes does not necessarily mean that a purchase made by the not-for-profit
organization is exempt.
(c) Purchases of tangible personal property
by a qualified not-for-profit organization used to raise funds to further the
exempt purpose of the organization are exempt even if the resale of such
property is not subject to tax. The following are examples:
(1) A qualified religious organization
purchases envelopes which are distributed to members for use in making weekly
contributions to the church. The purchase of the envelopes by the church is
exempt because the envelopes will be used to raise funds for the qualified
not-for-profit organization.
(2) A
qualified hospital purchases advertising posters to be used in a fundraising
drive for the hospital. The purchase of the posters is exempt from the state
gross retail tax because the posters will be used to raise funds for the
qualified not-for-profit organization.
(d) Purchases of tangible personal property
or services used primarily in carrying out the not-for-profit purpose of the
qualified organization are exempt from tax. This exemption will not apply if
such property is primarily used for a purpose other than the not-for-profit
purpose of the organization. As used in this section, "primarily used in
carrying out the not-for-profit purpose" means that the item or service is used
more than fifty percent (50%) of the time to further the organization's
not-for-profit purpose. The following are examples:
(1) A religious organization acquired
building materials to construct a new church. The purchase of such materials by
the church is exempt since the new church will further the not-for-profit
purpose of the organization. The fact that the church basement will
occasionally be used for social events does not subject the purchase of
construction materials to tax.
(2)
A church sponsors a ski club for its teenage membership. The ski club purchases
skis, boots, and poles to be used by the church ski club members on ski trips.
These purchases are taxable because the skis, boots, and poles are used
primarily to further the social purposes of the ski group and not the exempt
purpose of the church.
(3) A
fraternal lodge operated a golf club, a bowling alley, and a lounge where
liquor is served. Purchases of property used in these facilities are taxable
because the property is used for a purpose other than the not-for-profit
fraternal purpose of the lodge. However, the purchase of ceremonial robes for
use in fraternal meetings is exempt because the robes are used to further the
not-for-profit purpose of the organization.
(4) Sales of meals at medical society
meetings are taxable because the meals are provided for the convenience of the
organization and its members. Such sales are taxable even when served in
conjunction with a meeting which is furthering their not-for-profit
purpose.
(e) A social
organization will be deemed to exist for predominantly social purposes if more
than fifty percent (50%) of its expenditures are for, or related to, social
activities. Social activities include the following:
(1) Food and beverage services.
(2) Furnishing of sleeping rooms.
(3) Club rooms.
(4) Lounges.
(5) Recreational activities.
(6) Any other social activities.
