New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 24 - SALES AND USE TAX ACT › Subchapter 9 - REQUIREMENTS RELATING TO EXEMPT PRIVATE ORGANIZATIONS › Section 18:24-9.3 - Organizational tests

Current through Register Vol. 56, No. 14, July 15, 2024
(a) In general, an organization is exempt if it
				meets one of the following:
1. An organization is
				organized exclusively for one or more exempt purposes only if its "articles of
				organization" (articles), as defined in (b) below, limit the purposes of such
				organization to one or more exempt purposes; and do not expressly empower the
				organization to engage, otherwise than as an insubstantial part of its activities,
				in activities which in themselves are not in furtherance of one or more exempt
				purposes.
2. In meeting the
				organizational test, the organization's purposes, as stated in its articles, may be
				as broad as, or more specific than, the purposes stated in
				54:32B-9(b).
				Therefore, an organization, which, by the terms of its articles, is formed for
				literary and scientific purposes within the meaning of
				54:32B-9(b), shall, if
				it otherwise meets the requirements in this section, be considered to have met the
				organizational test. Similarly, articles stating that the organization is created
				solely "to receive contributions and pay them over to organizations, which are
				exempt from taxation under
				54:32B-9(b) " are
				sufficient for purposes of the organizational test. Moreover, it is sufficient if
				the articles set forth the purpose of the organization to be the operation of a
				school for adult education and describe in detail the manner of the operation of
				such school. In addition, if the articles state that the organization is formed for
				charitable purposes, such articles ordinarily shall be sufficient for purposes of
				the organizational test (see (e) below for rules relating to construction of
				terms).
3. An organization is not
				organized exclusively for one or more exempt purposes if its articles expressly
				empower it to carry on, otherwise than as an insubstantial part of its activities,
				activities which are not in furtherance of one or more exempt purposes, even though
				such organization is by the terms of such articles, created for a purpose that is no
				broader than the purposes specified in
				54:32B-9(b). Thus, an
				organization that is empowered by its articles, to engage in a manufacturing
				business, or to engage in the operation of a social club, does not meet the
				organizational test regardless of the fact that its articles may state that such
				organization is created for charitable purposes within the meaning of
				54:32B-9(b).
4. In no case shall an organization be considered
				to be organized exclusively for one or more exempt purposes if, by the terms of its
				articles, the purposes for which such organization is created are broader than the
				purpose specified in
				54:32B-9(b). The fact
				that the actual operations of such an organization have been exclusively in
				furtherance of one or more exempt purposes shall not be sufficient to permit the
				organization to meet the organizational test. Similarly, such an organization will
				not meet the organizational test as a result of statements or other evidence that
				the members thereof intend to operate only in furtherance of one or more exempt
				purposes.
5. An organization, in order
				to establish its exemption, may be required to submit a detailed statement of its
				proposed activities with and as part of its application for exemption.
6. An organization should submit a copy of its
				Internal Revenue Code section 501(c)(3) determination letter or ruling issued by the
				Internal Revenue Service as prima facie evidence of exemption under
				54:32B-9(b)(1) or
				(2).