Exceptions to Sales Tax Exemption

Many churches erroneously believe that an exemption from federal income taxes extends to all taxes. However, there are times churches do need to pay or collect sales tax, as outlined below.

When to pay

Sales taxes are collected in 45 states and Washington, DC. Each has a different sales tax statute and exempts certain types of purchasers from the payment of sales tax. As a result, you should check with each state revenue department for the applicability of sales tax to a specific type of sale.

Each state that exempts churches from paying sales tax requires the church to give an exemption certificate to the seller. Some states issue an exemption number; some do not. If the seller does not have the certificate on file, or if this certificate is not properly and completely filled out, then the seller must pay sales tax on the sales.

Further, the sale must be paid with church funds. The church's ...