Not-for-profit organizations for educational, cultural or religious purposes; sales

Sec. 58. (a) The state gross retail tax shall not apply to sales by qualified not-for-profit organizations of tangible personal property of a

kind designated and intended primarily for the educational, cultural or religious purposes of such qualified not-for-profit organization and not used

in carrying out a private or proprietary business.

(b) The gross receipts from each sale of tangible personal property by a qualified not-for-profit organization are exempt under this rule

[45 IAC 2.2] only if:

(1) The nature of the property sold will further the educational, cultural or religious purposes of the organization; and

(2) The organization is not carrying on a private or proprietary business with respect to such sales.

(c) Furthering the educational, cultural or religious purpose. The primary purpose of the property sold must be to further the educational,

cultural or religious purpose of the qualified not-for-profit organization.

–EXAMPLE–

(1) The sale of textbooks and supplies by a parochial, public or private not-for-profit school is exempt if made to students of the school

in grades one through twelve. Such sales are primarily intended to further the educational purposes of the school.

(2) The sale of bibles, choir robes and prayer books by a religious organization is exempt. Such sales are primarily intended to further

the religious purposes of the organization.

(3) The sale of meals by an art gallery is taxable. The meals are intended primarily for the convenience of visitors.

(4) The sale of textbooks and other educational materials by a secretarial school which is operated for profit is taxable. A profit-making

educational enterprise is not a qualified not-for-profit organization under this regulation [45 IAC 2.2].

(5) The sale of greeting cards by a church bookstore is taxable. Such sales are not primarily intended to further the religious purposes

of the organization.

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(d) Qualified not-for-profit organization. This regulation [45 IAC 2.2] applies only to qualified not-for-profit

organizations. For example, the sale of educational books by a social club is taxable. A predominantly social not-for-profit organization is not a

qualified not-for-profit organization with respect to sales and use tax.

(e) Definition. Refer to Regulation 6-2.5-5-25(a)(010)(2) [45 IAC 2.2-5-55(b)] for the definition of a "qualified not-for-

profit organization".