California Sales Tax Exemptions for NonProfits - Charitable Organizations

If your organization meets all of the following qualifications, your sales are not subject to sales or use tax. The organization must:

Be formed and operated for charitable purposes.

Qualify, under Revenue and Taxation Code section 214, for the “welfare exemption” from property taxation on the retail site where you sell merchandise. Or if the organization does not own the store, the organization must qualify for the welfare exemption on its personal property located there, such as the store fixtures and equipment.

Carry out activities that relieve poverty and distress.

Sell or donate items principally to assist purchasers or recipients in distressed financial condition.

Make, prepare, assemble, or manufacture the items it sells or donates. “Preparation” includes cleaning, repairing, or reconditioning items. “Assembly” includes gathering together items at one or more locations for sale or donation.

Example

Your 501(c)(3) charitable nonprofit corporation, which conducts a rehabilitation program, has qualified for the welfare exemption from property tax. You operate an emergency shelter for homeless families where you cook inexpensive hot lunches and sell them to families in need at reduced prices. Although sales of hot meals are ordinarily taxable, your sales are tax exempt because your organization and sales meet all of the conditions listed above.

Purchases

If your organization meets the qualifications described earlier, your qualifying organization’s purchases are not subject to sales or use tax, provided the qualifying organization will donate or sell the items you purchase.

In the example above, purchases of clothing, personal supplies, and other articles donated to the families in the emergency shelter would be tax exempt.

However, tax does apply to purchases of items that the qualifying organization uses rather than donates or sells, such as office supplies or equipment, tools, displays, and similar items.

Source: California Department of Tax & Fee Administration (CDTFA)

Course: https://salestaxsolutions2000.com/california-sales-tax-exemptions-nonprofits

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