Current through Register Vol. 46, No. 12, March 20, 2024
Tax Law, § 1116(a)(5), (g)
(a)
General.
(1) Posts or organizations of past or present
members of the Armed Forces of the United States, or auxiliary units or
societies of, or trusts or foundations for, such posts or organizations may be
exempt from the sales and use tax on purchases of tangible personal property,
services, food and drink, hotel occupancy, or admissions and dues. In addition,
such organizations may, 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 an application form as set forth in
subdivision (g) of this section.
(3) Applications for exemption are determined
solely on an individual organization or unit basis. Organizations qualifying
for exemption will be issued an exempt organization certificate as set forth in
subdivision (g) of this section. Subordinate units are not to be included in an
exemption granted to a central organization and they may not use their parents'
exemption number to make tax-free purchases.
(b)
Definitions.
(1)
Post as used in this
section means a chartered subordinate unit of an organization of past or
present members of the Armed Forces of the United States.
(2)
Auxiliary units or
societies means a unit or society of a post or organization
described in section
1116(a)(5) of the Tax Law,
if the unit or society is affiliated with and organized in accordance with the
bylaws and regulations formulated by such post or organization.
(c)
Organizational
requirements.
In order to qualify for exemption, a post or organization
must establish that it is organized in this State.
(1) An organization must be formally
organized. An organization is formally organized if 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 is:
(i) a certificate of incorporation and
bylaws; or
(ii) a declaration of
trusts and bylaws; or
(iii)
articles of association and bylaws; or
(iv) a constitution and bylaws.
(2)
Organized in this
State means that (i) the organization is incorporated under the laws
of New York State or, if unincorporated, it is created under a formal
organizing document, and (ii) is physically located in this State.
(d)
Membership requirements
of posts or organizations.
In order to be exempt a post or organization must meet the
membership requirements of section
1116(a)(5)(B) of the Tax
Law and of this subdivision as follows:
(1) at least 75 percent of the members of the
post or organization must be past or present members of the Armed Forces of the
United States; and
(2) 90 percent
of the remaining 25 percent of the post's or organization's members must be in
one or more of the following categories:
(i)
cadets (including only students in college or university ROTC programs or at
armed services academies); or
(ii)
spouses, widows, widowers, ancestors, or lineal descendants of the individuals
referred to in paragraph (1) and subparagraph (2)(i) of this
subdivision.
(3)
Auxiliary units or societies of organizations or posts are not required to meet
the membership requirements but must establish their affiliation with an
organization or post which has qualified for exemption under section
1116(a)(5) of the Tax
Law.
(e)
Non-inurement requirement.
A post or organization is not exempt from sales tax if any
part of its net earnings, income, or assets inures in whole or part to the
benefit of private shareholders or individuals. The term private
shareholders or individuals as used in this section refers to persons
having a personal and private interest in the activities of the
organization.
(f)
Exempt purposes.
In addition to the requirements of subdivisions (c), (d)
and (e) of this section, in order to be an exempt post or organization, the
post or organization must be operated exclusively for one or more of the
following purposes:
(1) to promote the
social welfare of the community;
(2) to assist disabled and needy past or
present members of the United States Armed Forces and their dependents, and the
widows and orphans of deceased members;
(3) to provide entertainment, care and
assistance to hospitalized past or present members of the Armed Forces of the
United States;
(4) to carry on
programs to perpetuate the memory of deceased members of the Armed Forces and
to comfort their survivors;
(5) to
conduct programs for religious, charitable, scientific, literary or educational
purposes;
(6) to sponsor or
participate in activities of a patriotic nature;
(7) to provide insurance benefits for their
members or dependents of their members or both; or
(8) to provide social and recreational
activities for their members.
(g)
Trust or foundation.
A trust or foundation may be exempt as an organization
described in subdivision (a) of this section and section
1116(a)(5) of the Tax Law
if it is a trust or foundation for a post or organization exempt under this
section.
(h)
Application for exempt status.
(1) A
post, organization, or affiliate in order to establish its status as an
organization exempt from the sales and use tax must submit to the Taxpayer
Assistance Bureau, W.A. Harriman Campus, Albany, NY 12227, for review, a
completed application for an exempt organization certificate.
(2) In addition to the application, the
organization must also submit the following documents which will be retained as
part of the application:
(i) if incorporated,
a copy of the articles of incorporation, and a filing receipt from the
appropriate governmental entity, or if not incorporated, the articles of
association, declaration of trust, or constitution with a copy of any
amendments thereto;
(ii) a copy of
the bylaws or other similar code of regulations, with a copy of any
amendments;
(iii) a statement of
activities which fully describes the organization's current and proposed
activities;
(iv) 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;
(v) 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 the application, if the organization was in existence for less
than a year; and
(vi) a statement
answering the following questions on membership of the post or organization but
excluding data regarding affiliated organizations:
(a) what percentage of the members are past
or present members of the Armed Forces of the United States;
(b) what percentage of the members are cadets
or are spouses, widows or widowers of past or present members of the Armed
Forces of the United States;
(c)
what percentage of the members do not fall within either clause
(a) or (b) of this subparagraph.
(3) In addition to the
documentation specified in paragraph (2) of this subdivision, if an applicant
has received a Federal ruling on its claim for exemption, it must submit a copy
of the determination letter or ruling.
(4) In addition to the information
specifically called for by this section, the Department of Taxation and Finance
may require any additional information deemed necessary for a proper
determination of whether an organization is exempt under section
1116(a)(5) of the Tax Law
and may prescribe the form in which the proof of exemption shall 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 approval of the
application by the Taxpayer Assistance Bureau, the bureau will issue to the
applicant a numbered exempt organization certificate.
(i)
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 applicable general regulations, including denials and
revocations, see subdivision (j) of section
529.1 of this
Part.
(j)
Sales to posts, organizations and affiliates.
(1) Any sale or amusement charge to or any
use or occupancy by a post, organization or affiliate 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 post, organization or affiliate must be the direct
purchaser, occupant or patron of record. It must be the direct payer of record,
except as provided in paragraph (5) of this subdivision, and must furnish to
its vendors a properly completed exempt organization certification.
Direct purchaser, occupant or patronas used in this paragraph
includes any agent or employee authorized by the post, organization or
affiliate to act on its behalf in making such purchases, provided the post,
organization or affiliate and its agent 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
properly completed when it contains the:
(i)
name and address of the vendor;
(ii) name and address of the exempt post,
organization or affiliate;
(iii)
number assigned to the exempt organization certificate;
(iv) signature of the responsible officer of
the exempt post, organization or affiliate; and
(v) date the certification was
executed.
(4) Sales to
any member, officer or employee of an exempt post, organization or affiliate
are subject to the sales or use tax when the sales are for the personal use of
the purchaser rather than the post or affiliate.
(5) Special rule for exemption from sales tax
on hotel occupancy for duly authorized representatives of posts, organizations
or affiliates.
(i) Any rent due for hotel
occupancy (not including charges for food or drink, entertainment services,
parking services, safety deposit box rentals, taxable telephone calls, or any
other taxable sales or services) paid by use of the personal funds or credit
card of a duly authorized representative of a post, organization or affiliate
to which an exempt organization certificate has been issued, is exempt from the
sales tax imposed upon such rent when:
(a)
such representative is acting on behalf of the post, organization or affiliate
so that such representative will be reimbursed by the post, organization or
affiliate for the rent incurred;
(b) the representative provides to the hotel
operator a timely and properly completed "Exempt Organization Certification for
Hotel or Motel Occupancy by Representatives of Veterans' Organizations" and an
attached copy of the post's, organization's or affiliate's exempt organization
certificate; and
(c) the hotel
operator identifies both the representative and the post, organization or
affiliate such representative is acting on behalf of, on any bill provided to
such representative for the rent charged.
(ii) The "Exempt Organization Certification
for Hotel or Motel Occupancy by Representatives of Veterans' Organizations" is
properly completed when it contains the:
(a)
name and address of the hotel or motel;
(b) purpose of the travel
(e.g., State convention specifying the convention
site);
(c) name, telephone number
and exempt organization number of the post, organization or
affiliate;
(d) period of
occupancy;
(e) name and signature
of the representative renting the room;
(f) name, signature and title of the
responsible officer of the exempt post, organization or affiliate executing the
certification (signature must be of an officer other than the representative
renting the room);
(g) date the
certification was executed; and
(h)
certification statement that the authorized representative is acting on behalf
of the post, organization or affiliate, including the statement that the
authorized representative will be reimbursed by such post, organization or
affiliate for the rent incurred.
(iii) The hotel or motel operator must also
verify that the representative presenting the "Exempt Organization
Certification for Hotel or Motel Occupancy by Representatives of Veterans'
Organizations" is in fact the individual named on such exemption document. Such
verification may be in the form of photo identification or a current credit
card which shows the representative's signature. Where the representative does
not have either a photo identification or current credit card and pays the
occupancy charges in cash, the representative must sign the hotel bill in the
presence of the hotel operator so that the representative's signature can be
compared to the representative's signature on the exemption certification.
Where the signatures are determined to be discernibly and distinctly different
by the hotel operator, the hotel operator shall not accept the exemption
certification and must charge the appropriate tax.
(iv) The "Exempt Organization Certification
for Hotel or Motel Occupancy by Representatives of Veterans' Organizations" is
timely provided when it, and the required copy of the post's, organization's or
affiliate's exempt organization certificate, are properly completed and
received by the hotel operator within 90 days of the first period of occupancy,
as described in section
532.4(b)(2)(iii)
(b)(5) of this Title.
(k)
Sales by exempt posts,
organizations and affiliates.
(1)
Except as provided in section
1116 of the Tax Law or other law, sales of
tangible personal property and services by exempt posts, organizations and
affiliates are exempt from the sales and use tax.
(i) Retail sales of tangible personal
property made through a shop or store operated by a post, organization or
affiliate 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 post makes door-to-door sales of patriotic bumper
stickers. Such sales are not taxable.
Example 2:
An exempt post operates a gift shop on its premises. Sales
made by the gift shop are taxable.
Example 3:
A display case is placed in an enclosed area in the hall of
a post's premises. From this case articles may be purchased at certain hours
each day at which times a clerk is present. The display case is in a separate
area and is used solely to display tangible personal property for sale;
therefore, the post is considered to be operating a shop or store.
Example 4:
An exempt post operates coin-operated vending machines for
the sale of candy, gum and other tangible personal property. The vending
machines are located in hallways, corridors, recesses or alcoves. These vending
machine sales do not constitute sales from a shop or store.
Example 5:
An exempt post operates one or more coin-operated vending
machines for the sale of candy, cigarettes, gum or other tangible personal
property. The vending machines are placed in a room which is only used to make
sales from these machines. These vending machine sales constitute sales from a
shop or store.
Assume the facts in the immediately preceding paragraph,
except that the vending machines are located in a book store and gift shop
operated by the exempt post. The vending machine sales constitute sales from a
shop or store and are subject to tax.
Example 6:
An exempt post operates one or more coin-operated vending
machines for the sale of candy, cigarettes, gum or other tangible personal
property. The vending machines are located in a lounge which also contains a
pool table and sofas and chairs. These vending machine sales do not constitute
sales from a shop or store.
(ii) If an exempt post, organization, or
affiliate 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) Notwithstanding any
other provision of this paragraph and except as provided by law, all of the
provisions of section
529.7(i)(2)
of this Part apply to sales of tangible personal property and services by an
exempt post, organization, or affiliate.
(2) [Reserved]
(3) Sales of food or drink in or by a
restaurant, tavern or other establishment operated by a post, organization or
affiliate, 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, are subject to the sales tax unless 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, and 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
post or whether or not the use of such facilities is restricted to the members
of the post. (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 post occasionally holds chicken barbecues on its
grounds. The sale of food at the barbecue is not taxable.
Example 8:
An exempt post operates a dining room from which it sells
food and in which it caters private parties. The sale of the food and the
charges for catering are taxable.
Example 9:
An exempt auxiliary unit of a post operates a concession
stand at a weekly bingo night. Sales made at the stand are taxable.
Example 10:
An exempt post has several vending machines that dispense
coffee, tea, soup and other items. The machines are located in a room which
also contains tables and chairs in the area of the machines. The sales through
the machines for on-premises consumption constitute taxable sales of food by a
restaurant or similar establishment.
(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)(5) 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) An exempt post organization or affiliate
making taxable sales is required to register as a vendor, collect the
appropriate tax, and file timely sales tax returns.
Cross-reference:
For the application of the tax on admissions, see section
527.10 of this
Title.
