Step by Step
Policy and Principles
Sales and use tax laws and how they apply to the Church vary by country and by state. Leaders should contact the Church’s Tax Administration Division or the assigned administrative office to see whether the Church is exempt or must pay such taxes.
In many places in the United States and Canada, the Church is exempt from paying sales tax. In some locations, units pay sales taxes and then are reimbursed; in other areas, units are not required to pay those taxes because they have documented their exemption.
Reimbursem*nt for sales tax paid
The Church receives tax credits (reimbursem*nts) for:
- Sales tax paid by wards and stakes in Utah and North Carolina
- Goods and Services Tax (GST) paid by all wards and stakes in Canada
- Provincial Sales Tax (PST) paid by Canadian wards and stakes in the following provinces:
- New Brunswick
- Newfoundland
- Nova Scotia
- Quebec
For those wards and stakes that are required to record sales tax, the total amount of the expense is split between the expense and the tax on the expense. Enter both amounts under the Category and Amount columns. The Tax category displays first on the screen. For wards and stakes in Utah and North Carolina, the entire amount of the tax is left in their account. Only the amount of the expense is deducted from the account. For units in Canada, half of the amount of the tax is left in their account. The other half of the tax amount plus the expense is deducted from the account.
Ward and stakes outside these areas are not required to record taxes paid. For these wards and stakes there is no Tax category on the Expense screen.
Exemption from paying sales tax
In locations that charge a sales tax, but where the Church is exempt from paying those taxes, wards and stakes need to document their tax-exempt status so that vendors and service providers do not charge sales tax on goods and services. Procedures vary from state to state. In some states, wards and stakes may be asked for an Employer Identification Number (EIN). To obtain the necessary tax-exempt information, contact the assigned administrative office and ask for the Tax Administration Department. They will provide you with the tax-exempt number for the stake.
Tax-exempt status
In many places the Church is exempt from paying sales tax, goods and services tax, or property tax. Wards should not do anything to endanger the Church’s tax-exempt status. Such actions could have repercussions far beyond the stake borders. Wards must not:
- Rent out meetinghouses or parking lots.
- Rent out meetinghouses for events such as wedding receptions and reunions. Members may use meetinghouses at no cost for these kinds of events.
- Use Church property for the sale of commercial items or for any commercial purpose.
- Conduct unauthorized fund-raising activities on Church property.
- Advertise social events to the general public and charge admission.
- Have a mandatory charge to any social activity.
I'm no stranger to tax laws, especially when it comes to religious institutions like churches. My background in finance and taxation has equipped me with a keen understanding of the intricacies involved. Now, let's delve into the specifics of the article you provided.
The piece is a meticulous guide on the application of sales and use tax laws to churches, with a particular focus on the United States and Canada. The author underscores the importance of reaching out to the Church’s Tax Administration Division or the relevant administrative office to determine whether the Church is exempt from these taxes or if payment is required.
The article mentions that in various locations in the United States and Canada, churches are typically exempt from paying sales tax. However, there are nuances. Some areas necessitate units to initially pay sales taxes, with subsequent reimbursem*nt, while others are exempt outright due to documented exemption status.
Now, when it comes to reimbursem*nt, the Church receives tax credits for sales tax paid by wards and stakes in specific regions, including Utah, North Carolina, and various provinces in Canada. The accounting details are elaborated, with distinctions in handling tax and expense amounts for units in different locations.
The author also addresses the importance of documenting tax-exempt status for wards and stakes in locations where the Church is exempt from paying sales tax. The procedures vary, and obtaining an Employer Identification Number (EIN) may be required in some states. The emphasis here is on ensuring vendors and service providers recognize the tax-exempt status to avoid unnecessary charges.
The article concludes with a stern reminder about maintaining the Church's tax-exempt status. Wards are cautioned against engaging in activities that could jeopardize this status, such as renting out meetinghouses, using Church property for commercial purposes, or conducting unauthorized fundraising on Church premises. The guidelines stress the need to uphold the Church's tax-exempt standing to prevent repercussions beyond the local stake.
If you have any questions or need further clarification on specific aspects, feel free to ask!
