Were a Florida 501(c)(3)'s gift-shop and proposed thrift-shop sales exempt from sales tax?

Plain-English summary

The Florida Department of Revenue concluded that the nonprofit's gift-shop sales and proposed thrift-shop sales were subject to sales tax under its existing exemption certificate.

The organization was classified only as a section 501(c)(3) nonprofit under section 212.08(7)(p). That classification exempted qualifying purchases and leases to the organization for its customary nonprofit activities; it did not exempt retail sales by its shops.

The organization was a separate legal entity from the church whose ministry it extended, so it did not qualify as a religious institution under the facts presented. The Department said it might qualify as an organization benefiting minors if it applied for and received that classification. If so, sales of donated property transferred for less than 50 percent of fair market value could be exempt while the shops operated as the same legal entity as the organization.

What this means for you

Nonprofit gift and thrift shops

A federal 501(c)(3) status or Florida consumer's certificate of exemption does not automatically exempt the organization's own retail sales. The precise Florida exemption category and the property being sold matter.

Religious and youth-serving organizations

Separate legal entities are analyzed separately. The Department noted different results could follow if the church itself operated the shops or if the youth-serving organization obtained the minors-benefit classification.

Common questions

Q: Were the current gift-shop and proposed thrift-shop sales exempt?
A: No.

Q: Could donated thrift-shop items become exempt?
A: Potentially. The ruling said the organization would first need the section 212.08(7)(l) classification, and the property would have to meet the statute's donated-property definition.

Citations and references

• Fla. Stat. §§ 212.05(1)(a)1.a., 212.054, 212.08(7)(l), (m), and (p), and 213.22

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 14A-022

Original ruling text

Executive Director
Marshall Stranburg

QUESTION: WHETHER ITEMS SOLD IN THE GIFT SHOP AND DONATED
ITEMS SOLD IN A THRIFT SHOP ARE EXEMPT FROM SALES TAX UNDER SS.
212.08(7)(L) AND (M), F.S., WHEN THE ORGANIZATION IS CATEGORIZED AS A
SECTION 501(C)(3), INTERNAL REVENUE CODE (“I.R.C.”), NONPROFIT
ORGANIZATION UNDER S. 212.08(7)(P), F.S.

ANSWER:
NO. THE HOME CURRENTLY HOLDS A CONSUMER’S
CERTIFICATE OF EXEMPTION CATEGORIZED AS A S. 501(C)(3), I.R.C.,
NONPROFIT ORGANIZATION UNDER S. 212.08(7)(P), F.S., AND IS NOT
CATEGORIZED AS A RELIGIOUS INSTITUTION UNDER S. 212.08(7)(M), F.S.,
OR AN ORGANIZATION BENEFITTING MINORS UNDER S. 212.08(7)(L), F.S. AS
SUCH, THE SALES OF TANGIBLE PERSONAL PROPERTY IN THE GIFT SHOP
AND IN THE PROPOSED THRIFT SHOP ARE SUBJECT TO SALES TAX.
September 29, 2014
Re:

Technical Assistance Advisement 14A-022
Sales and Use Tax - Sales by Nonprofit Organizations
Section: 212.08(7)(l), (m), and (p), Florida Statutes (“F.S.”)

Dear XXXX:
This letter is a response to your petition dated XXXX, for the Florida Department of
Revenue’s (the “Department”) 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 12-11, Florida Administrative Code. This response to your request
constitutes a TAA and is issued to you under the authority of s. 213.22, F.S.
Requested Advisement
Advice is requested on whether items sold in the Gift Shop and donated items sold in a
Thrift Shop are exempt from sales tax under ss. 212.08(7)(l) and (m), F.S., when the
organization is categorized as a section 501(c)(3), Internal Revenue Code (“I.R.C.”),
nonprofit organization under s. 212.08(7)(p), F.S.
Child Support Enforcement – Ann Coffin, Director  General Tax Administration – Maria Johnson, Director
Property Tax Oversight – Howard Moyes, Interim Director  Information Services – Damu Kuttikrishnan, Director

www.myflorida.com/dor
Tallahassee, Florida 32399-0100

Technical Assistance Advisement
Page 2 of 4

Facts
According to your letter, the XXXX (the "Home") is a 501(c)(3) organization
incorporated in the State of Florida. The Home holds a valid Consumer’s Certificate of
Exemption issued by the Department, and is categorized under the exemption category of
501(c)(3) organization. The Home has officers and directors, and it provides social
benefits and services to at-risk youth through residential group home care and foster care
services throughout the state of Florida. The Home is an extended ministry of the XXXX
(the “Church”); however, the Home is a separate legal entity. The Home is currently
operating an on-site gift shop (the “Gift Shop”) on its main campus. The Gift Shop
operates as a part of the same legal entity as the Home, and currently collects and remits
sales tax for various items purchased by the Home and sold to consumers. The items sold
in the Gift Shop are purchased by the Home at fair market value (“FMV”).
The Home is also planning to open an off-site thrift shop (the “Thrift Shop”), in XXXX.
The Thrift Shop will operate under the same legal entity as the Home. The Thrift Shop
will sell a variety of donated items including clothing, furniture, household items,
appliances, and vehicles. The Thrift Shop may also occasionally purchase “heavily
discounted” items to sell. You are requesting advice on whether the items sold in the Gift
Shop and donated items sold through the proposed Thrift Shop, by your organization, are
tax exempt under ss. 212.08(7)(l) and (m), F.S.
Applicable Law and Response
The general rule is that Florida imposes sales/use tax at the rate of six percent (6%) on
the retail sale of tangible personal property, unless specifically exempt. 1 See s.
212.05(1)(a)1.a., F.S.
Exemptions under s. 212.08(7)(p), F.S.
Florida law provides an exemption from sales tax for the 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), I.R.C., when such leases or purchases are used in carrying on
their customary nonprofit activities. See s. 212.08(7)(p), F.S.
The Home currently holds a consumer’s certificate of exemption and is categorized as a
s. 501(c)(3) nonprofit organization under s. 212.08(7)(p), F.S. Under this exemption
category, only the sales or leases to the Home are exempt from sales tax when used in
carrying on its customary nonprofit activities. The sales of tangible personal property by
the Gift Shop, and by the proposed Thrift Shop, remain subject to sales tax.

1

Discretionary county sales surtax, if any, is also owed if the six percent (6%) Florida state sales tax applies.
See s. 212.054, F.S. The surtax applies only to the first $5,000 of the sales amount on any item of tangible
personal property. See s. 212.054(2)(b), F.S.

Technical Assistance Advisement
Page 3 of 4

Exemptions under s. 212.08(7)(m), F.S.
Florida law provides an exemption from sales tax on the sales or leases directly to
religious institutions when used in carrying on their customary nonprofit religious
activities, or sales or leases of tangible personal property by religious institutions having
an established physical place for worship at which nonprofit religious services and
activities are regularly conducted and carried on. See s. 212.08(7)(m), F.S. The term
“religious institutions” include churches, synagogues, and established physical places of
worship at which nonprofit religious services and activities are regularly conducted and
carried on. See s. 212.08(7)(m), F.S. Sales of tangible personal property, including
donated and purchased items, are exempt from tax when sold by religious institutions.
Based on the documentation presented, the Home does not qualify as a religious
institution, as specified in section 212.08(7)(m), F.S., and is not categorized as a religious
institution on the consumer’s certificate of exemption. The Home is a separate legal
entity from the Church. As such, the sales of tangible personal property by the Gift Shop
and by the proposed Thrift Shop remain subject to sales tax. Please note, however, that if
the Gift Shop and the proposed Thrift Shop were operated by the Church as the same
legal entity (under the same FEI Number of the Church), then the sales of tangible
personal property, both purchased and donated, would be exempt from sales tax.
Exemptions under s. 212.08(7)(l), F.S.
Florida law also provides an exemption from sales tax for the sales or leases to and sales
of “donated property” by “nonprofit organizations which are incorporated pursuant to
chapter 617 the primary purpose of which is providing activities that contribute to the
development of good character or sportsmanship, or to the educational or cultural
development, of minors.” See s. 212.08(7)(l), F.S. “Donated property” is defined as any
property transferred to the nonprofit organization for less than 50 percent of its fair
market value. See s. 212.08(7)(l), F.S.
Based on the documentation that you presented, it appears that the Home provides special
educational, cultural, recreational, and social benefits to minors, and it may qualify for
tax exempt status under s. 212.08(7)(l), F.S. However, as mentioned above, the Home
currently holds a consumer’s certificate of exemption categorized as a s. 501(c)(3),
I.R.C., nonprofit organization under s. 212.08(7)(p), F.S., and not as an organization
benefitting minors under s. 212.08(7)(l), F.S. Under the current exemption category, only
the sales or leases to the Home are exempt from sales tax, and the sales of tangible
personal property by the Gift Shop and by the proposed Thrift Shop are subject to sales
tax.
If the Home applies for and is issued a valid consumer’s certificate of exemption from
the Department as an organization benefitting minors under s. 212.08(7)(l), F.S., then the
sales of “donated property,” as defined above, would be exempt from sales tax, as long as
the Gift Shop and Thrift Shop operate as the same legal entity as the Home.

Technical Assistance Advisement
Page 4 of 4

Conclusion
The Home currently holds a consumer’s certificate of exemption categorized as a s.
501(c)(3), I.R.C., nonprofit organization under s. 212.08(7)(p), F.S., and is not
categorized as a religious institution under s. 212.08(7)(m), F.S., or an organization
benefitting minors under s. 212.08(7)(l), F.S. As such, the sales of tangible personal
property by the Gift Shop and by the proposed Thrift Shop are subject to sales tax.
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 on those facts and the specific situation summarized above. You are
advised that 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 than that 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 15 days of the date of this letter.
Sincerely,

Pamela Hernandez
Tax Law Specialist
Technical Assistance & Dispute Resolution
Record ID: 174966