Request By:
The Reverend James Sturgill
Pastor
United Pentecostal Church
P.O. Box 1301
Paintsville, Kentucky 41240
Opinion
Opinion By: David L. Armstrong, Attorney General; Walter C. Herdman, Asst. Deputy Attorney General
This is in response to your recent letter in which you question the legality of the city requiring the church to pay a license fee when it sells products for church related activities.
Sales involving fund raising events conducted by nonprofit, educational and charitable institutions are commercial in nature and therefore subject to a license by the city under its general police powers. Referring to McQuillin, Mun. Corp., Vol. 9, Sec. 26.57 we quote from the text as follows:
"It may be stated as a general rule that activities or things which are subject to licensing under the police power are nonetheless subject thereto because they are conducted or owned by religious sects or adherents. Religious activities are not per se subject to restraint by licensing, but the time, place and manner thereof may be subject to regulation and licensing under the police power; that is, the regulation and licensing must be reasonably related to preventing a public nuisance or promoting the public welfare. . . .
Some of them (cases) hold the licensing regulation valid as a police measure not suppressive or restrictive of the religious activity in itself, but applicable only to a time, place or manner of conducting it, of concern to the city relative to the public health, safety, morals, order or welfare. . . .
A licensing ordinance should be construed, if possible, as not an unconstitutional restriction on religious activities. . . .
However, insofar as asserted religious activities are exclusively or predominantly commercial in character, a license fee or tax can be imposed on them. . . ." (Emphasis added.)
In the case of Gray v. Methodist Episcopal Church, 272 Ky. 646, 114 S.W.2d 1141 (1938), the court declared that Section 170 of the Constitution exempting from taxation institutions of purely public charity does not exempt a charitable institution from paying a license fee when it is exacted under the police power of the state or is for police and regulatory purposes. In the case of City of Covington v. State Tax Commissioner, 257 Ky. 4, 77 S.W.2d 386 (1934), the court further declared that sales by municipalities, educational and charitable institutions are not exempt from the state gross receipt tax.
As a further example of the power to require a license or a tax from educational, charitable and religious institutions engaged in the sale of products involving fund raising events where such institutions are not regularly engaged in the business of selling, we refer you to the provisions of KRS 139.495 and 139.496 imposing a state sales tax on such fund raising events.
Under the circumstances, we would be of the opinion that a city can legally require the church to pay a reasonable license fee in order to sell products for church related activities, and we further believe that such license can be imposed on a daily basis, particularly where the sale is essentially on a day by day basis.