New Jersey Administrative Code
Title 18 - TREASURY - TAXATION
Chapter 24 - SALES AND USE TAX ACT
Subchapter 9 - REQUIREMENTS RELATING TO EXEMPT PRIVATE ORGANIZATIONS
Section 18:24-9.4 - Operational test
Universal Citation: NJ Admin Code 18:24-9.4
Current through Register Vol. 56, No. 6, March 18, 2024
(a) Primary activities. A nonprofit organization is considered to be operating exclusively for an exempt purpose only if it engages primarily in activities which accomplish one or more of the exempt purposes specified in 54:32B-9(b). An organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt purpose.
(b) Distribution of earnings. An organization is not operated exclusively for one or more exempt purposes if its net earnings inure in whole or in part to the benefit of private shareholders or individuals. (For the definition of the words "private shareholder or individual" see 18:24-8.5 ).
(c) Action organizations are as follows:
1. An organization is not operated exclusively for one or more exempt purposes if it is an action organization as defined in (c)2, 3, or 4 below;
2. An organization is an action organization if a substantial part of its activities is attempting to influence legislation by propaganda or otherwise. For this purpose, an organization will be regarded as attempting to influence legislation if the organization contacts, or urges the public to contact, members of a legislative body for the purpose of proposing, supporting, or opposing legislation; or advocates the adoption or rejection of legislation. The term "legislation," as used in this paragraph, includes action by the Congress, by any state legislature, by any local council or similar governing body, or by the public in referendum, initiative, constitutional amendment, or similar procedure. An organization will not fail to meet the operational test merely because it advocates, as an insubstantial part of its activities, the adoption or rejection of legislation.
3. An organization is an action organization if it participates or intervenes, directly or indirectly, in any political campaign on behalf of or in opposition to any candidate for public office. The term "candidate for public office" means an individual who offers himself or herself, or is proposed by others, as a contestant for an elective public office, whether such office is national, state, or local. Activities which constitute participation or intervention in a political campaign on behalf of or in opposition to a candidate include, but are not limited to, the publication or distribution of written or printed statements or the making of oral statements on behalf of or in opposition to such a candidate.
4. An organization is an action organization if it has the following two characteristics:
i. Its main or primary objective or objectives (as distinguished from its incidental or secondary objectives) may be attained only by legislation or a defeat of proposed legislation; and
ii. It advocates, or campaigns for, the attainment of such main or primary objective or objectives as distinguished from engaging in nonpartisan analysis, study, or research and making the results thereof available to the public. In determining whether an organization has such characteristics, all the surrounding facts and circumstances, including the articles and all activities of the organization, are to be considered.
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