Ruling 92-5

Sales and Use Taxes Charitable and Religious Organizations

ISSUE:

Whether purchases of meals by a charitable or religious organization that has been issued an exemption permit pursuant to Conn. Agencies Regs. §12-426-15 at a luncheon or dinner that is held by the organization to honor or encourage its volunteers are exempt from sales and use taxes where the organization pays for the meals entirely with its own funds and neither seeks nor accepts reimbursement, direct or indirect, from the volunteers for the cost of the meals.

FACTS:

A charitable organization (hereinafter, "the organization") that has been issued an exemption permit pursuant to Conn. Agencies Regs. §12-426-15 holds an annual luncheon for the volunteers who will be working in its upcoming fundraising campaign. The purpose of the luncheon is to inspire and encourage the campaign leaders and volunteers. The organization pays for the luncheon wholly with its own funds and by check drawn on its checking account. While many of those in attendance may themselves contribute to the organization's fundraising campaign, there is no solicitation, direct or indirect, of such individuals, at the luncheon or thereafter, to reimburse the organization for the cost of the meal.

DISCUSSION:

Conn. Gen. Stat. §12-412(8) provides for exemption from sales and use taxes for sales of tangible personal property or services to charitable and religious organizations.

Conn. Agencies Regs. §12-426-15(f) provides that "[a] tax-exempt organization which purchases taxable goods and/or services shall not owe the Sales and Use Tax if it uses its own funds and if the purchase is made exclusively for the purposes for which the organization was established. If the tax-exempt organization makes a purchase for the convenience of its officers, employees, members or other individuals, the Sales and Use Tax shall be due and owing."

Conn. Agencies Regs. §12-426-15(g) provides that, unless the seller takes a certificate "substantially in the form prescribed below," the burden of proving "that a sale of tangible personal property or service is not a taxable sale at retail is upon the seller...." The certificate provides that, if sales of meals to a tax-exempt organization are involved, that the organization "neither has been nor will be reimbursed in any manner, by donations, sales of tickets or otherwise, by the consumers of the meals for the price of such meals."

Bulletin No. 34, which was issued by the Department in June 1987 and revised in November 1990, restates the requirements of Conn. Agencies Regs. §12-426-15 and further requires that a charitable or religious organization pay for meals or lodging that are furnished to it by check drawn on the organization's checking account. TSSN-42, which was issued by the Department in January 1991, clarifies that all purchases (other than purchases for $10 or less) of tangible personal property or services by a charitable or religious organization must be paid for by check drawn on the organization's checking account.

Bulletin No. 34 lists fundraisers as nonqualifying taxable events. However, a luncheon or dinner that is held and wholly paid for by a charitable or religious organization to honor or encourage its volunteers or employees and for which no direct or indirect solicitation is made to reimburse the organization for the cost of the meal is not a fundraiser, as the term is used therein. Purchases of such meals by the organization are made for, and in furtherance of, the exempt purposes of the organization, and are not made for the convenience of the organization's officers, employees, members or other individuals.

RULING:

Purchases of meals by a charitable or religious organization that has been issued an exemption permit pursuant to Conn. Agencies Regs. §12-426-15 at a luncheon or dinner that is held by the organization to honor or encourage its volunteers or employees are exempt from sales and use taxes where the organization pays for the meals entirely with its own funds and by check drawn on its own checking account and neither seeks nor accepts reimbursement, direct or indirect, from the volunteers for the cost of the meals.

LEGAL DIVISION

March 31, 1992