Taxation – Part 2


Church Law and Tax 1989-01-01 Recent Developments

Taxation – Sales

A California state appeals court ruled that Jimmy Swaggart Ministries was subject to state sales taxes on sales of literature and products in the state of California. Jimmy Swaggart Ministries (JSM) sold a variety of items in California, including tapes, records, mugs, bowls, plates, pen and pencil sets, vases, communion cups, candlesticks, prints, t-shirts, and replicas of the ark of the covenant. The state informed JSM that California law did not exempt religious organizations from sales taxes. JSM contended that the first amendment guaranty of religious freedom prevented the assessment of sales taxes on its products. Specifically, JSM argued that “since funds raised from the sale of religious materials are used to produce other religious materials to further spread the gospel and `to remain a going concern’ and payment of sales taxes diminishes the amount of funds available for this evangelistic work, the taxes are an unconstitutional burden on [the right of JSM] `to spread its religious beliefs through the spoken and written word’ as guaranteed by the constitution” as interpreted by previous decisions of the United States Supreme Court. The court rejected this argument, noting that “a state may justify a limitation on religious liberty by showing that it is essential to accomplish some overriding governmental interest.” Such an interest clearly was present in this case, concluded the court—a “state’s general interest in raising revenue.” The court emphasized that the sales tax is a tax “on the consumer, not the religious organization/seller; the religious organization/seller only collects the tax on behalf of the consumer.” Jimmy Swaggart Ministries v. State Board of Equalization, 250 Cal. Rptr. 891 (Cal. App. 4th Dist. 1988).

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