Must a church collect Kansas sales tax on a months-long consignment fundraiser selling greeting cards for UNICEF?

Plain-English summary

A church planned to sell holiday greeting cards on consignment for UNICEF (the United Nations Children's Fund) from October 1, 1998 through mid-December. All sales proceeds would go to UNICEF; although UNICEF offered the church the option of keeping 10% of receipts, the church did not anticipate keeping any. The church asked whether it had to collect Kansas sales tax.

The exemption is for purchases, not sales. "The new exemption for religious institutions extends to their purchases --- not to their sales." So the religious-organization exemption does not make the church's card sales tax-free.

Duration matters; consignment does not. "Because of the duration of the event, there are no exemptions that extend to these sales. The fact that it is a consignment sale does not [a]ffect this determination." A months-long selling event does not fit any short-term fundraising exemption, and selling on consignment for UNICEF does not change the analysis.

The church must collect and remit. "Accordingly, these card sales are subject to Kansas sales tax. Your church must collect and remit state and local sales tax on all such sales made in Kansas."

Purchases are still exempt. The Department added that "while the new exemption does not exempt church sales, it does exempt many of their purchases," and enclosed Notice 98-05 explaining the exemption for purchases by religious institutions.

Bottom line: the religious-organization exemption covers what a church buys, not what it sells. A church running a months-long consignment card sale is acting as a retailer and must collect and remit Kansas state and local sales tax on those sales — even when every dollar goes to charity.

What this means for you

The exemption is a purchases exemption

The religious-organization exemption lets a qualifying church buy many things tax-free. It does not turn the church's own retail sales tax-free. Buying and selling are analyzed separately.

Charitable destination of proceeds does not exempt the sale

It did not matter that all proceeds went to UNICEF and the church kept nothing. The sale is still a taxable retail sale in Kansas.

Consignment is still a sale

Selling goods on consignment for another organization does not remove the transaction from Kansas sales tax. The church, as the seller making the sales in Kansas, must collect the tax.

Watch event duration for any fundraising exemption

The Department stressed that "because of the duration of the event," no exemption applied. Short, occasional fundraising sales can sometimes qualify for relief, but a multi-month selling program does not — so a church running an extended sale should plan to collect tax.

Common questions

Does our church collect sales tax on a charity card sale?
Yes. The religious-organization exemption covers purchases, not sales, so the church must collect and remit Kansas state and local sales tax on the card sales.

Does it matter that all the money goes to UNICEF?
No. The charitable destination of the proceeds does not exempt the sales; they are still taxable Kansas retail sales.

We're only selling on consignment — does that help?
No. The Department said the consignment nature of the sale does not affect the determination. It is still a taxable sale.

Are our church's purchases exempt?
Many are. The new exemption for religious institutions covers many purchases; see Notice 98-05, which the Department enclosed.

Citations and references

• The ruling applies the 1998 religious-institutions exemption, explaining that it reaches purchases, not sales; it does not cite a specific numbered subsection for this sales conclusion. Notice 98-05, "the new exemption for purchases by religious institutions," was enclosed.
• K.A.R. 92-19-59 — authorizes Kansas private letter rulings; this ruling binds the Department only as to the requesting taxpayer and the facts presented.
• Issued October 2, 1998 by Thomas E. Hatten, Attorney, Policy & Research, Kansas Department of Revenue.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1998-140

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

October 2, 1998

XXXXXXX
XXXXXXX
XXXXXXX

RE: Your letter of September 14, 1998

Dear Ms. XXXXXX:

I have been asked to respond to your letter that we received earlier this month. It explains that your church intends to sell holiday greeting cards on consignment for UNICEF, the United Nations Children’s Fund. All sales proceeds will be sent directly to UNICEF. While UNICEF gives you the option of keeping 10% of the sales receipts, your church does not anticipate keeping any. Card sales will be made from October 1, 1998 through mid-December.

The new exemption for religious institutions extends to their purchases --- not to their sales. Because of the duration of the event, there are no exemptions that extend to these sales. The fact that it is a consignment sale does not effect this determination. Accordingly, these card sales are subject to Kansas sales tax. Your church must collect and remit state and local sales tax on all such sales made in Kansas.

While the new exemption does not exempt church sales, it does exempt many of their purchases. I have enclosed a copy of Notice 98-05. It explains the new exemption for purchases by religious institutions. I hope that you find it helpful.

This is a private letter ruling pursuant to K.A.R. 92-19-59. It is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to an accurate determination by the department, this ruling is null and void. This ruling will be revoked by operation of law without further department action if there is a change in the controlling statutes, administrative regulations, revenue rulings or case law that materially effects this determination. Please call me if you have any additional questions. My number is (785) 296-4008.

Sincerely,

Thomas E. Hatten
Attorney/Policy & Research

Enclosure

Date Composed: 10/05/1998 Date Modified: 10/10/2001

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