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"Use Taxes" and Churches

Use taxes are designed to prevent the avoidance of sales tax.


• The Iowa Supreme Court upheld the application of a state "use tax" to the purchase of religious products by a local church. A state tax agent audited a Lutheran church, and claimed that it owed "use taxes" on several items that were purchased from out-of-state church-affiliated suppliers. Most states have enacted "use taxes" as a means of taxing property that is purchased out-of-state. Use taxes are designed to prevent persons from avoiding state sales taxes by purchasing items out-of-state. The church purchased several items from out-of-state church-affiliated suppliers (including Augsburg Publishing House and Concordia Publishing House). Items purchased included church supplies, certificates, religious literature, envelopes, crosses, hymnals, and bulletins. The church objected to the tax, claiming that taxing a church's purchase of religious supplies violated the first amendment ...

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Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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  • March 2, 1992

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