New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 24 - SALES AND USE TAX ACT › Subchapter 9 - REQUIREMENTS RELATING TO EXEMPT PRIVATE ORGANIZATIONS › Section 18:24-9.4 - Operational test

Current through Register Vol. 56, No. 14, July 15, 2024
(a) Primary activities. A nonprofit organization
				is considered to be operating exclusively for an exempt purpose only if it engages
				primarily in activities which accomplish one or more of the exempt purposes
				specified in 54:32B-9(b). An
				organization will not be so regarded if more than an insubstantial part of its
				activities is not in furtherance of an exempt purpose.
(b) Distribution of earnings. An organization is
				not operated exclusively for one or more exempt purposes if its net earnings inure
				in whole or in part to the benefit of private shareholders or individuals. (For the
				definition of the words "private shareholder or individual" see
				18:24-8.5 ).
(c) Action organizations are as follows:
1. An organization is not operated exclusively for
				one or more exempt purposes if it is an action organization as defined in (c)2, 3,
				or 4 below;
2. An organization is an
				action organization if a substantial part of its activities is attempting to
				influence legislation by propaganda or otherwise. For this purpose, an organization
				will be regarded as attempting to influence legislation if the organization
				contacts, or urges the public to contact, members of a legislative body for the
				purpose of proposing, supporting, or opposing legislation; or advocates the adoption
				or rejection of legislation. The term "legislation," as used in this paragraph,
				includes action by the Congress, by any state legislature, by any local council or
				similar governing body, or by the public in referendum, initiative, constitutional
				amendment, or similar procedure. An organization will not fail to meet the
				operational test merely because it advocates, as an insubstantial part of its
				activities, the adoption or rejection of legislation.
3. An organization is an action organization if it
				participates or intervenes, directly or indirectly, in any political campaign on
				behalf of or in opposition to any candidate for public office. The term "candidate
				for public office" means an individual who offers himself or herself, or is proposed
				by others, as a contestant for an elective public office, whether such office is
				national, state, or local. Activities which constitute participation or intervention
				in a political campaign on behalf of or in opposition to a candidate include, but
				are not limited to, the publication or distribution of written or printed statements
				or the making of oral statements on behalf of or in opposition to such a
				candidate.
4. An organization is an
				action organization if it has the following two characteristics:
i. Its main or primary objective or objectives (as
				distinguished from its incidental or secondary objectives) may be attained only by
				legislation or a defeat of proposed legislation; and
ii. It advocates, or campaigns for, the attainment
				of such main or primary objective or objectives as distinguished from engaging in
				nonpartisan analysis, study, or research and making the results thereof available to
				the public. In determining whether an organization has such characteristics, all the
				surrounding facts and circumstances, including the articles and all activities of
				the organization, are to be considered.