Can a charitable not-for-profit that is not a religious organization use Kansas's religious-organization sales-tax exemption?

Plain-English summary

A charitable not-for-profit entity asked whether its direct purchases are exempt from Kansas retailers' sales tax under K.S.A. 79-3606(aaa), the exemption for religious organizations. The Department's answer is no.

The exemption is only for religious organizations. The Department explained that "the exemption contained at K.S.A. 79-3606(aaa) applies only to religious organizations and does not apply to all charitable not for profit entities."

What counts as a "religious organization." The statute defines the term narrowly. It means "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 whose net earnings do not benefit any private shareholder or member. The Department cited K.S.A. 79-4701(e) and K.S.A. 8-1730a for that definition.

The result. Because the requesting entity was a charitable not-for-profit that did not fit that definition, the Department concluded that "purchases by the [entity] are not exempt from Kansas retailers' sales pursuant to K.S.A. 79-3606(aaa)."

Bottom line: being charitable or not-for-profit is not the same as being a religious organization. The 79-3606(aaa) exemption is reserved for groups that worship at an established place of worship they maintain for regularly scheduled services — a charity that does not do that cannot claim it.

What this means for you

Charitable and other nonprofits

Do not assume a charitable purpose or 501(c)(3)/not-for-profit status gives you a Kansas sales-tax exemption. Kansas exemptions are entity-specific and narrowly construed. The religious-organization exemption in particular requires the worship-based characteristics the statute spells out; a charity that lacks them buys taxable.

Genuine religious organizations

If your group does gather for worship at an established place of worship you maintain for regularly scheduled religious services, you may qualify under K.S.A. 79-3606(aaa) — but the direct-purchase requirements and the statutory definition must actually be met and documented.

The right question is which specific exemption fits

There is no general "nonprofit" exemption. Identify the specific statutory subsection that names your type of entity (religious, nonprofit hospital, educational institution, etc.); if none names you, you are taxable. A charity that is not a religious organization must look elsewhere in the statute — and here, none applied.

Common questions

Q: Does a charitable nonprofit qualify for the K.S.A. 79-3606(aaa) exemption?
A: No. The Department ruled that subsection exempts only religious organizations, not charitable not-for-profit entities generally.

Q: How does Kansas define a 'religious organization' for this exemption?
A: A group that gathers in common membership for worship and religious observance at an established place of worship it maintains for regularly scheduled religious services or meetings, with no net earnings benefiting a private shareholder or member (K.S.A. 79-4701(e); K.S.A. 8-1730a).

Q: Is being a 501(c)(3) or not-for-profit enough to be exempt in Kansas?
A: No. Kansas exemptions are specific to named categories of entities and are narrowly construed; charitable or nonprofit status alone does not exempt a buyer's purchases.

Citations and references

• K.S.A. 79-3606(aaa) — exempts direct purchases by religious organizations; the Department held it "applies only to religious organizations and does not apply to all charitable not for profit entities."
• K.S.A. 79-4701(e); K.S.A. 8-1730a — supply the statutory definition of "religious organization" (a group worshiping at an established place of worship it maintains for regularly scheduled services, with no private inurement).

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2002-005

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

January 10, 2002

XXXXXXXXXXXXXX
XXXXXXXXXXXXXX
XXXXXXXXXXXXXXX

Dear XXXXXXXXXX:

The purpose of this letter is to respond to your letter dated December 20, 2001. In it you request private letter ruling as to taxability of direct purchases by the XXXXXXXXXXX. pursuant to K.S.A. 79-3606(aaa).

The exemption contained at K.S.A. 79-3606(aaa) applies only to religious organizations and does not apply to all charitable not for profit entities. 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. See K.S.A. 79-4701(e); K.S.A. 8-1730a.

It is the opinion of the Kansas Department of Revenue that purchases by the XXXXXXXXXXXX. are not exempt from Kansas retailers’ sales pursuant to K.S.A. 79-3606(aaa).

This private letter ruling is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to make an accurate determination by the department, this ruling is null and void. This private letter ruling will be revoked in the future by operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or a published revenue ruling, that materially affects this private letter ruling.

Sincerely,

Mark D. Ciardullo
Tax Specialist

MDC

Date Composed: 01/16/2002 Date Modified: 01/16/2002

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