Request By:
Mr. Fred Green
Logan County Attorney
Box 306 - Clark Building
Russellville, Kentucky 42276
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: William S. Riley, Assistant Attorney General
In your recent letter it is stated that a local church conducted a fund raising drive by sponsoring a luncheon. The church was subsequently informed that Kentucky sales tax was due on money received by the church as a result of the luncheon.
The question is whether Kentucky sales tax applies to such activity on the part of a church.
KRS 139.495(a) provides that sales tax does not apply to sales of tangible personal property or services to resident nonprofit educational, charitable, and religious institutions provided the property or service is to be used solely within the exemption function.
KRS 139.495(b) provides that sales made by such institutions are taxable and the tax may be passed on to the customer as provided in KRS 139.210.
KRS 139.496 provides, in part, that sales tax does not apply to the first $500 of sales made in any calendar year by individuals or nonprofit organizations not engaged in the business of selling. This relates to yard sales, garage sales and fund raising projects held by nonprofit organizations. The exemption does not apply where nonprofit organizations conduct regular selling activities in competition with private businesses.
If the church is not conducting a regular selling activity in competition with private businesses, the first $500 of such sales would be exempt from sales tax.
Any additional questions concerning this matter should be directed to Claude B. Slone, Director, Sales and Severance Tax Division, Department of Revenue, Frankfort, Kentucky 40601.