Applying for a Sales Tax Exemption as a Poverty Relief Nonprofit
Under California’s Sales and Use Tax Law, retailers who do business in the Golden State have to pay sales tax on just about every product they sell – unless the state grants them an exemption. Charitable organizations that relieve poverty and distress can often claim one of these exemptions. To do so, however, they must meet a range of qualifications.
Qualifying for a Sales Tax Exemption as a Poverty Relief Charity
To qualify for a sales tax exemption in the Golden State, poverty relief charities must first hold a seller’s permit issued by the California Department of Tax and Fee Administration (CDTFA). It is unlawful for an organization of this nature to sell or lease tangible goods without this document.
Poverty relief nonprofits that wish to claim a sales tax exemption must also meet the following requirements:
- Be formed and operated for charitable purposes
- Engage in activities that relieve distress and poverty
- Sell and/or donate goods principally to assist buyers and recipients in distressed financial situations
- Assemble, make, manufacture, or prepare the items it sells and/or donates to people in distressed financial situations
- Qualify for the welfare exemption under section 214 of the Revenue and Taxation Code on the site where it sells and/or donates items
Charities that meet these requirements can also receive an exemption from sales tax on the products they purchase – as long as they intend to sell or donate the items in question to people in distressed financial situations.
How to Apply for a Sales Tax Exemption as a Poverty Relief Charity
Poverty relief nonprofits that wish to apply for a sales tax exemption must send the following documents to the California Department of Tax and Fee Administration:
- A detailed letter that describes the organization’s activities and the items it typically buys and sells, and
- A copy of its Organizational Clearance Certificate to prove it qualifies for a welfare exemption under section 214 of the Revenue and Taxation Code
These documents should be mailed to the following address:
Compliance Policy Unit, MIC:40
California Department of Tax and Fee Administration
PO Box 942879
Sacramento, CA 94279-0040
When the CDTFA receives an application for a sales tax exemption, it usually takes a few weeks to review the organization’s qualification status. If the application is approved, it then mails out a letter verifying the charity’s eligibility and outlining the paperwork it should provide to vendors to enable them to purchase goods without paying any sales tax.
Need Help Applying? Contact the Semanchik Law Group Today
Do you need a skilled and experienced nonprofit attorney to help your organization apply for a sales tax exemption? If so, you have come to the right place. The Semanchik Law Group has been assisting charities with projects of this nature for years – and we would be happy to do the same for you. To learn more about our services or to set up a free consultation with a member of our team, all you need to do is fill out our short online contact form or give us a call at (619) 535-1811.