Illinois Clarifies Sales Tax Exemptions for Non-Profits
- Sep 28, 2012 | Gail Cole
The Illinois Department of Revenue recently released a General Interest Letter regarding sales tax exempt organizations and individuals who work for them.
In ST-12-0044-GIL, a church asks the state if the following purchases qualify for sales tax exemptions:
- restaurant purchases made by members of the organization during business meetings
- gasoline purchases made by members of the organization en route to business meetings
The DOR responds that in order for an organization to be exempt from the Illinois Retailer's Occupation Tax Act, it must obtain an exemption identification number, also known as an "E number".
Organizations with E numbers are "exempt from incurring Use Tax when purchasing tangible personal property in furtherance of their organizational purposes." A purchase of tangible personal property made by the organization itself may be exempt. Sales to individual members of the organization, however, are not exempt. This is true even when an individual purchases something out of pocket for the organization.
Therefore, "the purchase of meals by staff and members may not be made tax-free on the basis of the E number issued to the church." Only sales to the organization itself are tax-free.
ST-12-0044-GIL clarifies that "individual members or clients of exempt organizations who purchase items of tangible personal property with their own funds and are then reimbursed by the exempt organization" are not entitled to purchase those items tax-free.