In today’s economy, when so many non-profit, religious, charitable, and community service organizations are encountering severe financial difficulties, it is especially important to take advantage of all the State tax exemptions provided by law. If you are a member, staff member or friend of a non — profit organization, please share this important information with them.
Our law firm recently represented a client who had received a large NJ Sales tax assessment. Our client, a religious organization, had received a bill for over $40,000 in sales tax, which the State claimed was owed on the purchase of a motor vehicle for use by the organization to transport groups to the church. Although this organization was a Federal 501(c)(3) and met the requirements to be a NJ Exempt Organization, it was not registered as such with the State at the time of the purchase.
I appealed the bill on behalf of the organization, and was able to convince the State that the sales tax assessment should be withdrawn. Our client was spared the outlay of tens of thousands of dollars it had not anticipated. Had the organization not sought counsel, the outcome may have been very different, and very costly.
Don’t let this happen to your organization. If your organization has Federal 501 (c) (3) status, it is entitled to several NJ Sales Tax exemptions. Many veteran, volunteer fire, emergency organizations and PTA/PTOs also meet the requirements to be a NJ Exempt Organization. However, all of these groups must register with the NJ Division of Taxation as a NJ Exempt Organization and receive a NJ Exempt Organization Certificate (ST-5) in order to receive the exemptions. Sales tax exemptions available to NJ Exempt Organizations include:
No sales tax due on purchases. The exemption covers purchases and rentals of goods, equipment and motor vehicles and purchases of services (including janitorial and telecommunications services), meals, admissions and hotel/motel occupancies. Purchases must be paid for with organization funds and must be for the exclusive use of the organization.
No sales tax due on materials/services purchased by contractors to repair or improve the organization’s property. Materials purchased must be incorporated into the organization’s real property, and supplies purchased must be entirely used in doing the work for the exempt organization.
No requirement to collect sales tax on fundraising sales or sales made at a thrift store. Fundraising sales must be occasional, relatively short in duration, and all proceeds must go to the exempt organization. A thrift store run by an exempt organization is not required to collect sales tax on sales of donated merchandise if at least 75 percent of the store merchandise consists of donated items, and at least 75 percent of the work to operate the store is performed by volunteers.
If you are a member of a non-profit organization and need legal or tax advice, Szaferman Lakind can provide guidance, and represent you in dealings with governmental agencies. Many of our attorneys are former Deputy Attorney Generals and/or have substantial experience in administrative law. Contact our office at 609-275-0400 or online at www.szaferman.com.
Lionel J. Frank is a partner at Szaferman, Lakind, Blumstein & Blader, 101 Grovers Mill Road, Suite 200, Lawrenceville, NJ 08648. He concentrates his practice primarily on Corporate, including Trademark, Copyright, Intellectual Property, Antitrust, Trade Regulation, and Litigation.