Taxation - Part 6

• The Arkansas Supreme Court addressed the issue of a religious organization's eligibility for exemption from state sales taxes. A religious organization operated a variety of retail businesses, including a restaurant, grocery store, two service stations, a clothing store, and an auto repair shop. Members of the organization performed services for these businesses without compensation other than the receipt of food, shelter, and clothing at no cost. A state agency determined that the organization's provision of food and clothing to its members, in exchange for their services, constituted "sales" subject to the state sales tax. A trial court upheld the assessment of the sales tax, and the organization appealed. The state supreme court agreed that the transfers of food and clothing were sales subject to tax, since they were "transfers for valuable consideration." The court rejected the ...