Were member donations for refreshments served by a Florida tax-exempt organization taxable sales?

Plain-English summary

A section 501(c)(3) organization served snacks and drinks at member meetings and welcomed donations. Florida said the result depended on whether payment was truly voluntary.

If a member could take refreshments without donating, no sale occurred and the monetary donation was not subject to sales tax. The organization could suggest an amount, but it could not restrict the amount paid or refuse the item when no donation was made.

If a member had to make a "donation" to receive food or a beverage, the payment was the sales price of taxable tangible personal property. The organization's use of the money for meeting rooms or building upkeep did not change that result. Although the petition also referred to room usage, the TAA's operative determination did not separately decide the tax treatment of room-use charges.

What this means for you

Calling a payment a donation does not control its tax treatment. For a nonprofit giveaway, the practical question is whether the recipient can receive the item without paying anything and may choose the amount freely.

Common questions

Does section 501(c)(3) status exempt all nonprofit sales? No. The cited exemption applied to qualifying purchases or leases by the organization, not generally to sales by it.

Can the organization suggest a donation amount? Yes, if payment remains voluntary and no item is withheld from someone who pays nothing.

What if payment is required for the refreshments? The payment is a taxable sales price, not a donation.

Citations and references

• Fla. Stat. §§ 212.05, 212.031, 212.08(1), and 212.08(7)(p), as listed or discussed in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 11A-018

Original ruling text

SUMMARY
QUESTION: Whether donations made to an exempt organization for food and
beverages or for room usage constitute taxable sales.
ANSWER: Exempt organizations are generally required to collect tax on its fundraising
sales. However, no sales tax is due on monetary donations voluntarily made to an
exempt organization while it is giving away an item that would otherwise be taxable if
sold. Donations for such items are not taxable, because no sale has occurred. Exempt
organizations can ask for a specific amount for an item, but the amount paid must be
voluntary, with no restrictions on the amount given, and they may not prohibit a person
from taking an item if no donation is made.
June 17, 2011
XXX
Re:

Technical Assistance Advisement 11A-018
Sales and Use Tax – Charges by/Donations to Exempt Organization
Sections: 212.031, 212.05, 212.08, Florida Statutes (F.S.)
Petitioner: XXX [hereinafter “Exempt Organization”]

Dear XXX:
This letter is a response to your petition dated May 11, 2011, for the Department's
issuance of a Technical Assistance Advisement ("TAA") concerning the above
referenced party and matter. Your petition has been carefully examined and the
Department finds it to be in compliance with the requisite criteria set forth in Chapter 1211, Florida Administrative Code. This response to your request constitutes a TAA and is
issued to you under the authority of Section 213.22, F.S.
Issue
Whether donations made to Exempt Organization for food and beverages or for room
usage constitute taxable sales.
Presented Facts
The petition sets forth the following information:
[Exempt Organization] is a [501(c)(3)] charitable organization. It would like to
request information with regard to collection of sales tax from its members.
Enclosed [] are the By-Laws and the Consumer’s Certificate of Exemption. The
following outlines information regarding the organization and the various
questions the organization has pertaining to the collection of sales tax. The main
issue is whether the donations given by members in exchange for refreshments

Technical Assistance Advisement
Page 2
and/or the temporary use of meeting rooms, where monies are used for the upkeep
of the building housing their meetings, constitute tax-free donations, or
alternatively, are exempt from sales and use tax.
The basic mission of the organization is to promote and provide a clean, safe, and
XXX environment for individuals in the XXX community. It furthers its mission
by assisting its members and others who seek its aid to maintain XXX and by
providing facilities to perform a function of charity, to aid them spiritually, and to
practice and promulgate the XXX XXX to XXX in accordance with the principles
laid down by XXX XXX. Many of these functions are conducted daily at
[Exempt Organization] meetings [at] which refreshments are served. There is no
charge for the food and/or beverages, but donations are welcomed. Additionally,
the refreshments are available to members only and not [to] the general public.
[Exempt Organization] has questions concerning the collection and remittance of
Florida State sales tax on the refreshments served at the meetings. As part of the
XXX program, this organization holds daily meetings in which refreshments are
given in exchange for donations. These meetings are held so the various members
can get together and discuss the issues they face with XXX. It is commonplace
for refreshments, i.e.[,] snacks and drinks to be served at meetings, as some
meetings can be lengthy. It also creates a welcoming environment, puts the
members’ minds at ease, and relaxes nerves.
. . . [Exempt Organization] has filed with the IRS and is exempt under [section]
501(c)(3) [of the Internal Revenue Code]. Additionally, it has filed [an
application for a Florida Consumer’s Certificate of Exemption] and is exempt
from sales tax on purchases and leases when used in carrying on customary nonprofit activities.
The organization is self-supporting. The organization provides refreshments at
the meetings and collects donations from the members who attend the meetings.
The organization does not charge a membership fee or an entrance fee so all
donations provided in exchange for food and beverages are used to pay for the
temporary use of the meeting rooms and general upkeep of the building. The
refreshments are not offered to the general public, but are only offered to the
members of the organization and only during the time the meeting is being
held. . . .
Applicable Law
Section 212.05, Florida Statutes, generally imposes tax on the sale of tangible personal
property. Section 212.08(1), Florida Statutes, specifically exempts the sale of general
grocery items from tax; however, the exemption specifically excludes food and drink
prepared for immediate consumption from the exemption.

Technical Assistance Advisement
Page 3
Section 212.031, Florida Statutes, generally imposes tax on the lease or license to use real
property.
Section 212.08(7)(p), Florida Statutes, provides an exemption to section 501(c)(3),
I.R.C., organizations, and it states as follows:
(p) Section 501(c)(3) organizations.--Also exempt from the tax imposed by this
chapter are sales or leases to organizations determined by the Internal Revenue
Service to be currently exempt from federal income tax pursuant to s. 501(c)(3) of
the Internal Revenue Code of 1986, as amended, when such leases or purchases
are used in carrying on their customary nonprofit activities. (Emphasis Supplied)

Determination
Section 212.08(7)(p), Florida Statutes, provides an exemption on sales to section
501(c)(3), I.R.C., organizations, for which the items purchased are used to carry on the
organization’s customary nonprofit activities. There is, however, no specific exemption
for sales by these exempt organizations. Exempt Organization is generally required to
collect tax on its fundraising sales.
Your petition indicates that members are asked to make a donation for food and
beverages. No sales tax is due on monetary donations voluntarily made to an exempt
organization while it is giving away an item that would otherwise be taxable if sold.
Donations for such items are not taxable, because no sale has occurred. Exempt
organizations can ask for a specific amount for an item, but the amount paid must be
voluntary, with no restrictions on the amount given, and they may not prohibit a person
from taking an item if no donation is made.
Your petition is not specific as to whether members are required to make a donation in
order to partake of the refreshments. If members attending the meetings are required to
make a “donation” in order to receive food or beverage, then the amount given is not
considered a donation. It is, instead, the sales price for the purchase of taxable tangible
personal property, and the Exempt Organization is required to collect and remit tax on the
items sold. The use of the money by the Exempt Organization is irrelevant.
If the members may partake of the refreshments without making a donation, then the
money donated is not considered the sales price for tangible personal property, and no tax
is due on the donations.
Closing Statement
This response constitutes a Technical Assistance Advisement under Section 213.22, F.S.,
which is binding on the Department only under the facts and circumstances described in
the request for this advice, as specified in Section 213.22, F.S. Our response is predicated
upon those facts and the specific situation summarized above. You are advised that

Technical Assistance Advisement
Page 4
subsequent statutory or administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject similar future transactions to
a different treatment from that which is expressed in this response.
You are further advised that this response, your request, and related backup documents
are public records under Chapter 119, F.S., and are subject to disclosure to the public
under the conditions of Section 213.22, F.S. Confidential information must be deleted
before public disclosure. In an effort to protect confidentiality, we request you provide
the undersigned with an edited copy of your request for Technical Assistance
Advisement, the backup material and this response, deleting names, addresses, and any
other details which might lead to identification of the taxpayer. Your response should be
received by the Department within 10 days of the date of this letter.
Sincerely,

Sara D. Faulkenberry
Senior Tax Specialist
Technical Assistance and Dispute Resolution
Control # 103340