Does a marriage counseling group qualify for the Kansas religious-organization sales tax exemption?

Plain-English summary

A marriage counseling group asked whether it qualifies for the Kansas sales tax exemption for religious organizations.

The exemption and its definition. The Department quoted K.S.A. 79-3606(aaa), which exempts "all sales of tangible personal property and services purchased by a religious organization which is exempt from federal income taxation pursuant to section 501(c)(3) of the federal internal revenue code, and used exclusively for religious purposes." It set out the statutory definition of a "religious organization" — a group that "gathers in common membership for mutual support and edification, in piety, worship, and religious observance, at an established place of worship which the organization maintains for the purpose of conducting regularly scheduled religious services or meetings," with no part of its net earnings inuring to any private shareholder or member — and the derivative rule for a group composed of religious organizations.

The holding. "[B]ased upon the information that you presented to this office, there is not a basis to support an exemption from Kansas sales/use tax for a marriage counseling group ... as a religious organization." The Department enclosed Notice 98-05, "Sales Taxation of Purchases by Religious Organizations."

Bottom line: on the facts presented, a marriage counseling group does not fit the statutory definition of a religious organization, so it does not qualify for the K.S.A. 79-3606(aaa) exemption.

What this means for you

The exemption is for religious organizations as defined

K.S.A. 79-3606(aaa) is narrow: it applies to a 501(c)(3) group that gathers for worship at an established place of worship, holds regularly scheduled services, and has no private inurement. An organization must fit that definition to qualify.

A religious or spiritual mission is not enough

A group whose work touches on faith or values — like marriage counseling — does not automatically become a "religious organization." The Department found no basis to treat this counseling group as one.

The record matters

The Department decided on "the information that you presented." An organization seeking the exemption should be prepared to show how it meets each element of the statutory definition.

Federal 501(c)(3) status alone does not qualify

The exemption requires both 501(c)(3) status and meeting the Kansas definition of a religious organization. Federal exemption by itself does not establish the Kansas exemption.

Common questions

Q: Did the marriage counseling group qualify for the religious-organization exemption?
A: No. The Department found no basis to support an exemption for it as a religious organization.

Q: What defines a "religious organization" for this exemption?
A: A 501(c)(3) group that gathers for worship at an established place of worship it maintains for regularly scheduled religious services, with no private inurement of its earnings.

Q: Can a group with a faith-related purpose still fail to qualify?
A: Yes. The Department looked to the statutory definition and found this counseling group did not meet it.

Q: Where can such an organization read the rules?
A: The Department enclosed Notice 98-05, "Sales Taxation of Purchases by Religious Organizations."

Citations and references

• K.S.A. 79-3606(aaa) — exempts sales of tangible personal property and services purchased by a 501(c)(3) religious organization and used exclusively for religious purposes, and defines "religious organization"; the Department found a marriage counseling group did not meet the definition.
• Notice 98-05, "Sales Taxation of Purchases by Religious Organizations" — Department guidance, enclosed with the ruling, on the religious-organization exemption.
• K.A.R. 92-19-59 — the regulation authorizing private letter rulings; this ruling was issued under it and binds the Department only as to the requesting taxpayer.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1998-191

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

November 13, 1998

TTTTTTTTTTT
TTTTTTTTTTT
TTTTTTTTTTT

RE: TTTTTTTTTTTTTTT

Dear Mr. TTTTTTTTT:

We wish to acknowledge receipt of your letter dated November 9, 1998, regarding the application of Kansas Retailers’ Sales tax.

K.S.A. 79-3606(aaa) exempts from sales tax: “all sales of tangible personal property and services purchased by a religious organization which is exempt from federal income taxation pursuant to section 501(c)(3) of the federal internal revenue code, and used exclusively for religious purposes.”

For purposes of the Kansas retailers’ sales tax act, “religious organization” shall mean any organization, church, body of communicants, or other group that gathers in common membership for mutual support and edification, in piety, worship, and religious observance, at an established place of worship which the organization maintains for the purpose of conducting regularly scheduled religious services or meetings, and of which no part of the net earnings of such organization inures to the benefit of any private shareholder or individual member. Further, an organization that is composed of religious organizations may derive exemption from its members if all of its members are themselves exempt religious organizations and the derivative organization is organized and operated exclusively to assist its member organizations in carrying out their religious purpose.

Please be advised, that based upon the information that you presented to this office, there is not a basis to support an exemption from Kansas sales/use tax for a marriage counseling group, such as TTTTTTTTTTTTTTTT, as a religious organization.

For your convenience, I have enclosed Notice 98-05 entitled, “Sales Taxation of Purchases by Religious Organizations”.

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 in the future by the operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or published revenue ruling, that materially effects this private letter ruling. If I may be of further assistance, please contact me at your earliest convenience at (785) 296-7776.

Sincerely yours,

Thomas P. Browne, Jr.
Tax Specialist

TPB

Enc

Date Composed: 11/30/1998 Date Modified: 10/10/2001

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