Does a religious organization qualify for the Kansas sales tax exemption, letting it buy ministry literature tax-free?

Plain-English summary

A religious organization asked whether it qualifies for the Kansas sales tax exemption for religious organizations, so that it could buy ministry literature and other property tax-free.

The exemption and the statutory 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 then 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. The Department also noted the derivative rule: "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."

The holding. The Department concluded that the organization "does meet the established criteria, as set out in Notice 98-05, to be extended a sales tax exemption as a religious organization, since the organization is carrying out the ministry of the church." As a result, it "would be able to purchase the printed literature, and other tangible personal property, that you provide to members and prospective members." The Department enclosed Notice 98-05, "Sales Taxation of Purchases by Religious Organizations."

Bottom line: because it qualifies as a religious organization under K.S.A. 79-3606(aaa), the organization may buy its ministry literature and other tangible personal property, used exclusively for religious purposes, without paying Kansas sales tax.

What this means for you

Qualifying turns on the statutory definition

The exemption is for a 501(c)(3) religious organization that gathers for worship at an established place of worship, holds regularly scheduled services, and has no private inurement. Being a nonprofit or having a religious mission is not enough on its own; the group must fit this definition.

Purchases must be used exclusively for religious purposes

K.S.A. 79-3606(aaa) exempts property and services "used exclusively for religious purposes." The printed literature the organization provides to members and prospective members fit that standard because they carry out the church's ministry.

A federation of religious organizations can qualify derivatively

An organization composed of religious organizations can derive the exemption only if all of its members are themselves exempt religious organizations and it exists exclusively to help them carry out their religious purpose.

Use an exemption certificate and keep Notice 98-05 handy

A qualifying organization claims the exemption by giving sellers an exemption certificate; the Department's Notice 98-05 explains how the religious-organization exemption is applied.

Common questions

Q: Can a qualifying religious organization buy ministry literature tax-free?
A: Yes. The Department held that this organization qualifies under K.S.A. 79-3606(aaa) and may purchase printed literature and other property used exclusively for religious purposes without tax.

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

Q: Can an umbrella group of religious organizations qualify?
A: Only derivatively — all of its members must themselves be exempt religious organizations, and it must exist exclusively to assist them in carrying out their religious purpose.

Q: What does "used exclusively for religious purposes" require?
A: The property or service must be devoted to the organization's religious purposes; the literature provided to members and prospective members met that test here.

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; includes the statutory definition of "religious organization" and the derivative-exemption rule for a group composed of religious organizations.
• Notice 98-05, "Sales Taxation of Purchases by Religious Organizations" — Department guidance, enclosed with the ruling, setting out the criteria for 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-1998-214

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

December 15, 1998

TTTTTTTTTTT
TTTTTTTTTTT
TTTTTTTTTTT
TTTTTTTTTTT

Dear Ms. TTTTTT:

We wish to acknowledge receipt of your letter dated December 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 it is the opinion of this office, that TTTTTTTTTTTTTTTTTTTTT, does meet the established criteria, as set out in Notice 98-05, to be extended a sales tax exemption as a religious organization, since the organization is carrying out the ministry of the church. Therefore, your organization would be able to purchase the printed literature, and other tangible personal property, that you provide to members and prospective members

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: 12/18/1998 Date Modified: 10/10/2001

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