California Code of Regulations › Title 18 - Public Revenues › Division 2 - California Department of Tax and Fee Administration- Business Taxes (State Board of Equalization- Business Taxes, See Ch. 6 and 9.9) › Chapter 4 - Sales and Use Tax › Article 6 - Specific Business Engaged in Retailing › Section 1570 - Charitable Organizations

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) Definition. For purposes of this
				  regulation, the term "charitable organization" means and includes any
				  organization which meets all of the following conditions:
(1) The organization must be formed and
				  operated for charitable purposes and must qualify for the "welfare exemption"
				  from property taxation provided by section
				  214
				  of the Revenue and Taxation Code.
(2) The organization must be engaged in the
				  relief of poverty and distress.
(3)
				  The organization's sales or donations must be made principally as a matter of
				  assistance to purchasers or donees in distressed financial condition.
(4) The property sold or donated must have
				  been made, prepared, assembled or manufactured by the organization.
(A) The welfare exemption referred to in
				  condition (1) is available to property owned and operated by a charitable
				  organization under certain conditions. Among them is the requirement that the
				  property be used in the actual operation of a charitable activity. Property
				  used merely to raise funds is not used in a charitable activity even though the
				  funds will be devoted to a charitable purpose. An example of a retail location
				  being engaged in a charitable activity is a store employing handicapped persons
				  as store personnel which devotes its profits to the store operation and an
				  associated closed workshop for the handicapped.
(B) In order to receive the sales tax
				  exemption it is necessary for the organization to receive the welfare exemption
				  on the retail location for which the seller's permit is held. The welfare
				  exemption must be claimed annually with the county assessor on forms provided
				  for this purpose. If the organization does not own the store premises, it must
				  receive the welfare exemption on its personal property, i.e., furnishings and
				  fixtures.
(C) Conditions (2) and
				  (3) are fulfilled if the primary purpose of the organization is to relieve
				  poverty and distress and to aid purchasers and donees by selling its property
				  at reduced prices or donating its property so as to be of real assistance to
				  the purchasers and donees. Incidental sales to persons other than indigents
				  will not preclude the organization from receiving the benefits of Revenue and
				  Taxation Code Section
				  6375.
(D) Condition (4) is fulfilled when the
				  property is picked up at various locations and brought together (assembled) at
				  one or more locations for purposes of sale or donation, even though nothing
				  further remains to be done to the property to place it in saleable condition.
				  Property is deemed "prepared" when it is made ready for sale or donation by
				  such processes as cleaning, repairing, or
				  reconditioning.