New York Codes, Rules and Regulations, Part 529, Section 529.7 - Religious, charitable, scientific, testing for public safety, literary or educational organizations, organizations which foster national or international amateur sports competition, and organizations for the prevention of cruelty to children or animals | New York Codes, Rules and Regulations

(a) General.

(1) Any corporation, association, trust, or community chest, fund or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda or otherwise attempting to influence legislation (except as otherwise provided in subsection [h] of section 501 of the United States Internal Revenue Code of 1986), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of any candidate for public office, which meet the qualifications of this section are exempt from the sales and use tax on any purchases of tangible personal property, services, food and drink, hotel occupancy, or admissions and dues. In addition, such organizations may, except under the circumstances described in subdivision (i) of this section, make sales without collecting the sales or use tax.

(2) An organization is not exempt from tax because it is organized and operated as a nonprofit organization or because it appears to meet the requirements of this section. In order to establish its exempt status, it is necessary to file a completed application as set forth in subdivision (f) of this section and prove that the organization meets the statutory requirements.

(3) Applications for exemption shall be considered solely on an individual organization or unit basis. Organizations qualifying for exemption will be issued an exempt organization certificate as set forth in subdivision (f) of this section. Subordinate units shall not be included in an exemption granted to a central organization and may not use their parents' exemption number to make tax-free purchases. Subordinate units must file their own application for exempt status in accordance with the provisions of subdivision (f) of this section and the determination of the subordinate unit's exempt status will be made solely on the basis of this application and any additional required submissions.

(b) Qualifications.

(1) In order to qualify for exemption, an organization must be formally organized. An organization will not be considered formally organized unless it has an organizing document defining its purposes and activities and a code of regulations describing how it will function and select the officers empowered to act for it. Evidence of a formal organization structure includes:

(i) a certificate of incorporation and bylaws;

(ii) a declaration of trust and bylaws;

(iii) articles of association and bylaws; or

(iv) a constitution and bylaws.

(2) In addition to the formal organization requirement, an organization must prove that it is both organized and operated exclusively for one or more of the purposes specified in subdivision (e) of this section. If an organization fails to meet either the organizational test or the operational test, it is not exempt.

(c) Organizational test.

(1) General.

The organizational test relates solely to the provisions of the organizing documents.

(i) An organization is organized exclusively for one or more exempt purposes only if its organizing documents:

(a) limit the purposes of such organization to one or more exempt purposes; and

(b) do not expressly empower the organization to participate, other than as an insubstantial part of its activities, in activities which in themselves are not in furtherance of one or more exempt purposes.

(ii) In no case will an organization be considered to be organized exclusively for one or more exempt purposes, if, by the terms of its organizing documents, the purposes for which such organization is created are broader than the purposes specified in section 1116(a)(4) of the Tax Law. The fact that the actual operations of such an organization have been exclusively in the furtherance of one or more exempt purposes is not sufficient to permit the organization to meet the organizational test. Similarly, such an organization will not meet the organizational test as a result of statements or other evidence that the members thereof intend to operate only in the furtherance of one or more exempt purposes.

(iii) An organization is not organized exclusively for one or more exempt purposes if its articles expressly empower it to carry on, otherwise than as an insubstantial part of its activities, activities which are not in furtherance of one or more exempt purposes, even though such organization is, by terms of such articles, created for a purpose that is no broader than the purposes specified in section 1116(a)(4) of the Tax Law. Thus an organization that is empowered by its articles to engage in a manufacturing business, or to engage in the operation of a social club, does not meet the organizational test regardless of the fact that its articles may state that such organization is created for charitable purposes within the meaning of section 1116(a)(4) of the Tax Law.

(2) An organization is not organized exclusively for one or more exempt purposes if its organizing documents expressly empower it:

(i) to devote more than an insubstantial part of its activities to attempting to influence legislation by propaganda or otherwise;

(ii) directly or indirectly to participate in or intervene in (including the publishing or distributing of statements), any political campaign on behalf of or in opposition to any candidate for public office; or

(iii) to have objectives and to engage in activities which characterize it as an "action" organization.

The terms used in subparagraphs (i), (ii) and (iii) of this paragraph have the same meanings as defined in paragraph (d)(4) of this section.

(3) Distribution of assets on dissolution.

An organization is not organized exclusively for one or more exempt purposes unless its assets are dedicated to an exempt purpose. An organization's assets will be considered dedicated to an exempt purpose if, upon dissolution such assets would, by reason of a provision in the organization's organizing documents or by operation of law, be distributed for one or more exempt purposes, or to the Federal or a state government or to a local government, for a public purpose. An organization does not meet the organizational test if, by operation of law or through the provisions of its organizing documents, the organization's assets could, upon dissolution, be distributed to its members or shareholders or for a nonexempt purpose.

(d) Operational test.

(1) General.

The operational test relates solely to an organization's activities.

(2) Activities.

An organization will be regarded as "operated exclusively" for one or more exempt purposes only if almost all of its activities accomplish one or more exempt purposes specified in section 1116(a)(4) of the Tax Law and described in subdivision (e) of this section. An organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt purpose.

(3) 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. Private shareholders or individuals refers to persons having a personal and private interest in the activities of the organization.

(4) Action organizations.

An organization is not operated exclusively for one or more exempt purposes if it is an action organization as defined in subparagraphs (i), (ii) or (iii) of this paragraph.

(i) An organization is an action organization if, as a substantial part of its activities, it attempts to influence legislation by propaganda or otherwise. For this purpose an organization will be considered as attempting to influence legislation if it contacts or urges the public to contact, members of a legislative body for the purpose of proposing, supporting, or opposing legislation or if it advocates the adoption or rejection of legislation.

(a) The term legislation as used in this section includes action by the Congress, by any state legislature, by a local legislative council or similar governing body, or by the public in a referendum, initiative, constitutional amendment, or similar procedure.

(b) 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.

(ii) 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.

(a) The term candidate for public office as used in this section means any individual who offers himself or is proposed by others, as a contestant for an elective office, whether such office be national, state or local.

(b) 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 making oral statements on behalf of or in opposition to a candidate.

(iii) An organization is an action organization if it has either of the following two characteristics:

(a) 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; or

(b) it advocates, or campaigns for, the attainment of such main or primary objective or objectives.

(iv) An organization which merely engages in nonpartisan analysis, study of research of candidates or issues, and makes the results thereof available to the public is not an action organization. In determining whether an organization has such characteristics, all the surrounding facts and circumstances, including the organizing documents and all activities of the organization, are to be considered.

(5) Election under 501(h) of the Internal Revenue Code - Organizations that have elected to have the provisions of section 501(h) of the Internal Revenue Code apply to them, and have established exemption under section 501(c)(3) of the Internal Revenue Code and complied with all Federal requirements relating to such section 501(h) for Federal income tax purposes, are entitled to have the 501(h) election determine their compliance with the operational test. Any organization which has not established Federal exemptions under such sections 501(c)(3) and 501(h), will have the extent of its permissible legislative activities determined by all the related facts and circumstances rather than the exclusively monetary limitations provided for in such section 501(h).

(e) Exempt purposes.

(1) In order to be exempt from the sales and use tax as an organization described in section 1116(a)(4) of the Tax Law, an organization must be both organized and operated exclusively for one or more of the purposes listed in this subdivision.

(i) Religious.

(ii) Charitable. The term charitable includes: relief of the poor, distressed, or underprivileged; advancement of religion; advancement of education or science; erection or maintenance of public buildings, monuments, or works; lessening the burdens of government; and promotion of social welfare by organizations designed to accomplish any of the above purposes, or to lessen neighborhood tensions; to eliminate prejudice and discrimination; to defend human and civil rights secured by law; or to combat community deterioration and juvenile delinquency. The fact that an organization which is organized and operated for the relief of indigent persons may receive voluntary contributions from the persons intended to be relieved will not necessarily prevent such organization from being exempt as an organization organized and operated exclusively for charitable purposes. The fact that an organization, in carrying out its primary purpose, advocates social or civic changes or presents opinion on controversial issues with the intention of molding public opinion or creating public sentiment to an acceptance of its views does not preclude such organization from qualifying for exemption under section 1116(a)(4) of the Tax Law, so long as it is not an "action" organization of any type described in subdivision (d) of this section.

(iii) Scientific.

(a) Since an organization may meet the requirements of section 1116(a)(4) of the Tax Law only if it serves a public rather than a private interest, a "scientific" organization must be organized and operated in the public interest. Therefore, the term "scientific" includes the carrying on of scientific research in the public interest. Research when taken alone is a word with various meanings; it is not synonymous with "scientific"; and the nature of particular research depends upon the purpose which it serves. For research to be "scientific", it must be carried on in furtherance of a "scientific" purpose.

(b) Scientific research does not include activities of a type ordinarily carried on as an incident to commercial or industrial operations, as, for example, the ordinary testing or inspection of material or products or the designing or construction of equipment, buildings, etc.

(c) Scientific research will be regarded as carried on in the public interest:

(1) if the results of such research (including any patents, copyrights, processes, or formulae resulting from such research) are made available to the public on a nondiscriminatory basis;

(2) if such research is performed for the United States or any of its agencies or instrumentalities, or for a State or political subdivision thereof; or

(3) if such research is directed toward benefiting the public. The following are examples of scientific research which will be considered as directed toward benefiting the public, and, therefore, which will be regarded as carried on in the public interest:

(i) scientific research carried on for the purpose of aiding in the scientific education of college or university students;

(ii) scientific research carried on for the purpose of obtaining scientific information, which is published in a treatise, thesis, trade publication, or in any other form that is available to the interested public;

(iii) scientific research carried on for the purpose of discovering a cure for disease; or

(iv) scientific research carried on for the purpose of aiding a community or geographical area by attracting new industry to the community or area or by encouraging the development of, or retention of, an industry in the community or area. This type of scientific research will be regarded as carried on in the public interest even though such research is performed pursuant to a contract or agreement under which the sponsor or sponsors of the research have the right to obtain ownership or control of any patents, copyrights, processes, or formulae resulting from such research.

(d) An organization will not be regarded as organized and operated for the purpose of carrying on scientific research in the public interest and, consequently will not qualify under section 1116(a)(4) of the Tax Law as a "scientific" organization, if:

(1) such organization will perform research only for persons which are (directly or indirectly) its creators and which are not described in section 1116(a)(4); or

(2) such organization retains (directly or indirectly) the ownership or control of more than an insubstantial portion of the patents, copyrights, processes, or formulae resulting from its research and does not make such patents, copyrights, processes, or formulae available to the public. A patent, copyright, process or formula will be considered as made available to the public if such patent, copyright, process, or formula is made available to the public on a nondiscriminatory basis. In addition, although one person is granted the exclusive right to the use of patent, copyright, process, or formula, such patent, copyright, process, or formula will be considered as made available to the public if the granting of such exclusive right is the only practicable manner in which the patent, copyright, process, or formula can be utilized to benefit the public. In such a case, however, the research from which the patent, copyright, process, or formula resulted will be regarded as carried on in the public interest (within the meaning of clause [c] of this subparagraph) only if it is carried on for a person described in subclause (c)(2) of this subparagraph or if it is scientific research described in subclause (c)(3) of this subparagraph.

(e) The fact that any organization (including a college, university or hospital) carries on research which is not in furtherance of a exempt purpose described in section 1116(a)(4) of the Tax Law will not preclude such organization from meeting the requirements of section 1116(a)(4) so long as the organization meets the organizational test and is not operated for the primary purpose of carrying on such research.

(iv) Testing for public safety shall include the testing of consumer products, such as electrical products, to determine whether they are safe for use by the general public.

(v) Educational shall mean the instruction or training of the individual for the purpose of improving or developing his capabilities or the instruction of the public on subjects useful to the individual and beneficial to the community. An organization may be educational even though it advocates a particular position or viewpoint so long as it presents a sufficiently full and fair exposition of the pertinent facts as to permit an individual or the public to form an independent opinion or conclusion. On the other hand, an organization is not educational if its principal function is the mere presentation of unsupported opinion. The following are examples of organizations which, if they otherwise meet the requirements of this section, are educational:

Example 1:

An organization, such as a primary or secondary school, a college, or a professional or trade school, which has a regularly scheduled curriculum, a regular faculty, and a regularly enrolled body of students in attendance at a place where the educational activities are regularly carried on.

Example 2:

An organization whose activities consist of presenting public discussion groups, forums, panels, lectures, or other similar programs. Such programs may be on radio or television.

Example 3:

An organization which presents a course of instruction by means of correspondence or through the utilization of television or radio.

Example 4:

Museums, zoos, planetariums, symphony orchestras, and other similar organizations.

(vi) Literary.

(vii) Prevention of cruelty to children or animals.

(viii) Fostering national or international amateur sports competition. Notwithstanding paragraph (a)(1) of this section, an organization that provides athletic facilities or equipment will qualify for exemption as an organization organized and operated exclusively to foster national or international amateur sports competition if it is a qualified amateur sports organization. If an organization is not a qualified amateur sports organization, it will not qualify for exemption as an organization organized and operated exclusively to foster national or international amateur sports competition if it provides athletic facilities or equipment. For purposes of this subparagraph the term qualified amateur sports organization means any organization organized and operated exclusively to foster national or international amateur sports competition and which is also organized and operated primarily to conduct national or international competition in sports or to support and develop amateur athletes for national or international competition in sports. A qualified amateur sports organization shall not fail to meet the requirements of this subdivision merely because its membership is local or regional in nature. An organization provides athletic facilities or equipment if the organization permits the use of athletic facilities or equipment that it owns, or pays for, or otherwise assumes the cost of the use of athletic facilities or equipment owned by any other person, or reimburses amateur athletes for the cost of athletic facilities or equipment. The term foster national or international amateur sports competition refers to organizations that:

(a) prescribe rules and standards for competition in an amateur sport or represent the United States in an international body that prescribes such rules and standards;

(b) sponsor national championships or international competition in an amateur sport;

(c) sponsor local, regional and national competition to select participants in national championships or international competition in an amateur sport;

(d) provide security, ticket sales and similar administrative services at amateur sports competitions described in clauses (b) and (c) of this subparagraph;

(e) provide administrative, coaching and training services to amateur athletes;

(f) provide medical care and insurance to amateur athletes;

(g) conduct equipment research for the benefit of amateur athletes;

(h) disseminate information to amateur athletes; and

(i) provide financial assistance to amateur athletes, but only if such assistance does not affect the amateur status of athletes to whom it is provided.

For purposes of clauses (e), (f) and (h) of this subparagraph, the term amateur athletes refers only to athletes who participate, or reasonably can be expected to participate, in national championships or international competition in an amateur sport.

(2) An organization is not organized or operated for one or more of the above exempt purposes unless it serves the public rather than a private interest. Thus, to meet the requirements of this subdivision, it is necessary for an organization to prove that it is not organized or operated for the benefit of private interests such as designated individuals, the creator or his family, shareholders of the organization, or persons controlled, directly or indirectly, by such private interests.

(3) If an organization is organized and operated exclusively for an exempt purpose or purposes, exemption will be granted to such an organization regardless of which exempt purpose or purposes is specified in its application for exemption. For example, if an organization claims exemption on the ground that it is "educational," exemption will not be denied if, in fact, it is "charitable."

(f) Application for exempt status.

(1) An organization in order to establish its status as an organization exempt from the sales and use tax must submit to the Tax payer Assistance Bureau, W.A. Harriman Campus, Albany, NY 12227, for review, a completed application for an exempt organization certificate.

(2)

(i) Generally, in addition to the application, the organization must also submit the following documents which will be retained as part of the application:

(a) If incorporated, a copy of the articles of incorporation and a filing receipt from an appropriate governmental entity, or if not incorporated, the articles of association, declaration of trust, or constitution with a copy of any amendments thereto.

(b) A copy of the bylaws or other similar code of regulations, with a copy of any amendments.

(c) A statement of activities. This statement must fully describe the organization's current and proposed activities.

(d) A statement of receipts and expenditures for the most recent fiscal year of operation, or for the period for which the organization was in existence, if less than a year. This statement should clearly reflect the nature and amount of receipts and the purpose and amount of expenditures.

(e) A statement of assets and liabilities as of the end of the most recent fiscal year of operation, or as of the date of the filing of an application, if the organization was in existence for less than a year.

(ii) Applicants which have established exemption with the Federal Government under section 501(c)(3) of the Internal Revenue Code, including subordinate units that are included in the section 501(c)(3) group Federal exemption of a central organization, will not be required to submit the documents set forth in subparagraph (i) of this paragraph unless the department determines that such documents are necessary for a proper determination of whether the applicant qualifies as an exempt organization under section 1116(a)(4) of the Tax Law. Subordinate units must, however, include with their application a recent letter from the central organization certifying to the affiliation of the subordinate unit with the central organization. A current directory of subordinate units included in the group exemption may be submitted in lieu of a letter from the central organization.

(3) If an applicant has received a Federal ruling on its claim for exemption, it must submit a copy of the determination letter or ruling. When the applicant is a subordinate unit included in a group Federal exemption, the applicant must also submit a copy of the group ruling or determination letter issued to the central organization.

(4) In addition to the information specifically called for by this section, the department may require any additional information deemed necessary for a proper determination of whether an organization is exempt under section 1116(a)(4) of the Tax Law and may prescribe the form in which the proof of exemption is to be furnished.

(5) The application, of which all supporting documents are a part, must contain or be verified by a written declaration that it is understood that any willfully false representation may be subject to the criminal penalties prescribed by section 1817 of the Tax Law and the Penal Law.

(6) Upon the approval of the application by the Taxpayer Assistance Bureau, the bureau will issue to the applicant a numbered exempt organization certificate.

Cross-reference:

For applicable general regulations, including denials, see subdivision (j) of section 529.1 of this Part.

(g) Amendments and revocation.

(1) The exempt organization certificate must be returned to the Sales Tax Exempt Organization Section, Taxpayer Assistance Bureau, W.A. Harriman Campus, Albany, NY 12227, if the organization changes its purposes, activities, or organizational structure. A reappraisal of the organization's exempt status will be made provided it submits a copy of the applicable amended organizing document or statement of activities.

(2) An organization which changes its structural form (e.g., an association reorganizes as a corporation) must file an application and supporting documents for an exempt organization certificate in order to establish the new entity's status for sales tax exemption.

(3) An exempt organization certificate may be revoked for any reason constituting misuse of the exemption granted, or if it is discovered that the organization's application contained misleading or deceptive information, or if the organization has changed its purposes, activities, or organizational structure without notifying the bureau as provided by this subdivision. Where the Department of Taxation and Finance determines it to be appropriate, for example in the case of fraud, intentional misuse and other similar misuses, such revocation may be effective retroactively to the date of such misuse or deception.

Cross-reference:

For misuse and revocation, see subdivision (j) of section 529.1 of this Part.

(h) Sales to exempt organizations.

(1) Any sale or amusement charge to or any use or occupancy by an exempt organization to which an exempt organization certificate has been issued is exempt from sales and use tax.

(2) In order to exercise its right to exemption the organization must be the direct purchaser, occupant or patron of record. It must also be the direct payer of record and must furnish its vendors with a properly completed exempt organization certification. Direct purchaser, occupant or patron as used in this paragraph includes any agent or employee authorized by the organization to act on its behalf in making such purchases, provided the organization and its agent or employee are both identified on any bill or invoice. An organization is the direct payer of record where direct payment is made by the organization or from its funds directly to the vendor.

(3) An exempt organization certification is deemed to be properly completed when it contains the:

(i) name and address of the vendor;

(ii) name and address of the exempt organization;

(iii) number assigned to the exempt organization certificate;

(iv) signature of a responsible officer of the exempt organization; and

(v) date the certification was executed.

(4) Sales to any member, officer or employee of an exempt organization are subject to the sales and use tax when the sales are for the personal use of the purchaser rather than the organization.

Cross-reference:

Sales by Contractors, see sections 528.16 and 528.17 and Part 541 of this Title.

(i) Sales by exempt organizations.

(1) Except as provided in section 1116 of the Tax Law or other law, sales of tangible personal property and services by exempt organizations are exempt from the sales and use tax.

(2)

(i) Retail sales of tangible personal property made by any shop or store operated by an exempt organization described in section 1116(a)(4), (5) or (6) are subject to the sales and use tax. A shop or store as used in this section includes any place or establishment where goods are sold from display with a degree of regularity, frequency and continuity as well as any place where sales are made through a temporary shop or store located on the same premises as persons required to collect tax. Vending machines alone do not constitute a shop or store. However, where vending machines are located in a defined area devoted to selling tangible personal property, then sales from such vending machines constitute sales from a shop or store.

Example 1:

An exempt organization owns a fleet of automobiles. It sells a number of the automobiles at auction. The organization conducts one auction each calendar year, and it is held in its parking lot. The automobiles sold at the auction are not sold from a shop or store and are not subject to sales or use tax. See subparagraph (vi) of this paragraph for rules concerning auctions of this nature.

Example 2:

An exempt organization operates a gift shop and book store. Sales made by such shop or store are taxable.

Example 3:

A counter is placed in an enclosed area at the back of a church for the purpose of displaying religious articles for sale. The counter is open for business each week for two hours on a specific day at which times a clerk is present. The counter is in a separate area used solely to display tangible personal property for sale and, thus, is a shop or store.

Example 4:

An exempt organization operates coin-operated vending machines for the sale of candy, cigarettes, gum and other tangible personal property. The vending machines are placed in hallways, corridors, recesses or alcoves in college buildings. These vending machine sales do not constitute sales from a shop or store and are not subject to the tax.

Example 5:

An exempt organization operates coin-operated vending machines for the sale of candy, cigarettes, gum or other tangible personal property. The vending machines are placed in a room other than a hallway or corridor. The room is only used to make sales from these machines. These vending machine sales constitute sales from a shop or store and are subject to the tax.

Assume the facts in the immediately preceding paragraph except that the machines are located in a gift shop and bookstore operated by the exempt organization. These vending machine sales constitute sale from a shop or store and are subject to tax.

Example 6:

An exempt organization operates coin-operated vending machines for the sale of candy, cigarettes, gum or other tangible personal property. The vending machines are located in a student lounge which also contains a pool table, sofas and chairs. These vending machine sales do not constitute sales from a shop or a store.

(ii) If an exempt organization described in section 1116(a)(4), (5), or (6) of the Tax Law operates a shop or store and also makes retail sales of similar (though not necessarily identical) items of tangible personal property by any means other than at its shop or store (such as by remote means or at an auction), those additional sales are considered to be made from its shop or store.

(iii) Sales, other than for resale, of the services described in section 1105(b) or section 1105(c)(5) of the Tax Law by an exempt organization described in section 1116(a)(4), (5), or (6) of the Tax Law are subject to tax, whether or not made at a shop or store. These services include the sales of:

(a) gas, electricity, refrigeration, and steam, and gas, electric, refrigeration, and steam services of whatever nature (see section 1105[b][1] of the Tax Law and section 527.2 of this Title);

(b) telephony, telegraphy, and telephone and telegraph services of whatever nature, except sales of interstate and international telephony, telegraphy, and telephone and telegraph services (see section 1105[b][1] of the Tax Law and section 527.2 of this Title);

(c) telephone answering services (see sections 1101[b][13] and 1105[b][1] of the Tax Law);

(d) prepaid telephone calling services (see sections 1101[b][22] and 1105[b][1] of the Tax Law);

(e) mobile telecommunications services (see sections 1101[b][24] and 1105[b][2] and [3] of the Tax Law); and

(f) maintaining, servicing, or repairing real property, property, or land (see section 1105[c][5] of the Tax Law and section 527.7 of this Title).

(iv) Retail sales of tangible personal property by an exempt organization described in section 1116(a)(4), (5), or (6) of the Tax Law are subject to tax if the sales are made with a degree of regularity, frequency, and continuity by remote means. Sales by remote means include, but are not limited to, sales made by telephone, over the Internet, and by mail order.

(v) Retail sales of tangible personal property by lease or rental by an exempt organization described in section 1116(a)(4), (5), or (6) of the Tax Law are subject to tax, whether or not made at a shop or store.

(vi) For calendar years beginning on or after January 1, 2009, the following provisions apply to sales made at auction events other than by remote means i.e. , bidders or their representatives are physically present at the auction event).

(a) For purposes of subparagraph (i) of this paragraph, if an exempt organization described in section 1116(a)(4), (5), or (6) of the Tax Law conducts no more than two auction events during a calendar year, then sales made at these events are not considered to be made with a degree of regularity, frequency, and continuity from a shop or store and are not subject to tax provided:

(1) the exempt organization does not otherwise make sales of similar (though not necessarily identical) items of tangible personal property at a shop or store; and

(2) the auction events are not conducted on the premises of a commercial auction house or on any premises where an auctioneer is conducting other auction sales.

(b) An auction event is any day or portion of a day during which auction sales take place. Accordingly, if an exempt organization conducts only one or two one-day auctions during a calendar year or only one auction over a two-day period during a calendar year (as described in clause [a] of this subparagraph), the sales made at any of these auction events are not taxable. Auctions conducted by different auctioneers or auction services constitute separate auction events.

(c) If an exempt organization conducts, or schedules or otherwise intends to conduct, three or more auction events during a calendar year, sales made at these events are considered to be made with a degree of regularity, frequency, and continuity from a shop or store, and it must collect tax on all taxable sales commencing with the first event. However, if an exempt organization does not schedule or otherwise intend to conduct more than two auction events during a calendar year, but in fact conducts more than two auction events that year, it does not have to collect tax on sales made at the first two auction events provided they meet the requirements described in clause (a) of this subparagraph. But it must collect tax on all taxable sales made at the third and any subsequent auction events.

(vii) For calendar years beginning on or after January 1, 2009, the following provisions apply to sales made at auction events by remote means i.e. , bidders or their representatives are not physically present at the auction event).

(a) For purposes of subparagraph (iv) of this paragraph, if an exempt organization described in section 1116(a)(4), (5), or (6) of the Tax Law conducts no more than two auction events during a calendar year by remote means, then sales made at these events are not considered to be made with a degree of regularity, frequency, and continuity and are not subject to tax provided the exempt organization does not otherwise make sales of similar (though not necessarily identical) items of tangible personal property at a shop or store or by remote means.

(b) An auction event by remote means is an auction conducted for a period of time beginning with a common date and closing on a common date during which one or more taxable items of tangible personal property are offered for sale to the highest bidder. Generally, each item must be offered for sale for the entire duration of the event for it to be considered a single auction event; however, the occasional late addition of an item or items after the start of the event, to end on the common closing date, will not be considered a new auction event. In addition, if items are offered for bid and bidding for those items ends on the same day, that day will be considered one auction event. Auctions conducted by different auctioneers or auction services constitute separate auction events. Accordingly, if an exempt organization has only one or two auction events during a calendar year by remote means (as described in clause [a] of this subparagraph), the sales made at either of these auction events are not taxable.

(c) If an exempt organization conducts, or schedules or otherwise intends to conduct, three or more auction events during a calendar year by remote means, sales made at these events are considered to be made with a degree of regularity, frequency, and continuity, and it must collect tax on all taxable sales commencing with the first event. However, if an exempt organization does not schedule or otherwise intend to conduct more than two auction events by remote means during a calendar year, but in fact conducts more than two auction event by remote means that year, it does not have to collect tax on sales made at the first two auction events provided they meet the requirements described in clause (a) of this subparagraph. But it must collect tax on all taxable sales made at the third and any subsequent auction events.

(3) Sales of food or drink in or by a restaurant, tavern, or other establishment operated by an exempt organization are subject to the sales tax, other than the sales exempt under section 1105(d)(ii) of the Tax Law described in subdivision (h) of section 527.8 of this Title, or where the purchaser is a person or organization exempt under this Part. A restaurant, tavern, or other establishment as used in this section includes any dining room, bar and barroom, or concession stand operated with a degree of regularity, frequency and continuity as well as any place where sales are made through a temporary restaurant, tavern, or other establishment located on the same premises as persons required to collect tax. It is immaterial whether or not the restaurant, tavern, or other establishment is located on the premises of the exempt organization or whether or not the use of such facilities is restricted to the members of the organization. (See section 527.8 of this Title for the application of tax on sales of food and drink.) Vending machine sales of food or drink are considered to be in or by a restaurant, tavern or other establishment when the machines are located in a defined area devoted to this purpose and there are other furnishings or fixtures present which are commonly associated with a restaurant or similar establishment, like tables or chairs.

Example 7:

An exempt organization occasionally holds a covered dish supper in its hall. The food is prepared and donated by the organization's members. The organization charges $2 for tickets to the supper. The $2 charge is not taxable.

Example 8:

An exempt organization maintains a bar and dining room from which it sells food and drink. Such sales of food and drink are taxable.

Example 9:

An exempt organization operates a concession stand at a weekly bingo night. Sales made at the concession stand are taxable.

Example 10:

An exempt organization operates a hot dog stand at a county fair. Sales made at the stand are taxable because the organization is operating on the same premises as persons required to collect tax.

Example 11:

An exempt organization caters weddings and other banquets. Such catering is subject to tax.

Example 12:

An exempt organization holds a monthly supper. The suppers are subject to tax.

Example 13:

An exempt organization has several vending machines that dispense coffee, tea, soup, and other food items. The machines are located in a room which also contains tables and chairs in the area of the machines. The sales through the vending machines constitute sales by a restaurant, tavern or other establishment. (See section 527.8 of this Title for the application of sales tax on food and drink.)

(4) Sales of the service of providing parking, garaging or storing for motor vehicles (other than a garage which is part of the premises occupied solely as a private one- or two-family dwelling) are subject to the tax when such services are provided by organizations described under section 1116(a)(4) of the Tax Law.

(i) If a facility for parking, garaging or storing motor vehicles is operated within the counties of Bronx, Kings, Queens or Richmond, the effective rate of tax to be collected on such services is 10¼ percent.

(ii) If a facility for parking, garaging or storing motor vehicles is operated within Manhattan (New York County), the effective rate of tax to be collected on such services is 18¼ percent.

(5) Where an exempt organization carries on its activities in furtherance of the purpose for which it was organized, in premises in which, as part of its activities, it operates a hotel, occupancy of rooms in the premises and rents therefrom received by such organization will not be subject to tax.

Cross-reference:

Hotel Occupancy, see section 527.9 of this Title.

(6) An exempt organization making taxable sales is required to register as a vendor, collect the appropriate tax, and file timely sales returns.

Cross-reference:

For the application of tax on admissions, see section 527.10 of this Title.