Pennsylvania Code › Title 61 - REVENUE › Part I - Department of Revenue › Subpart B - General Fund Revenues › Article II - Sales and Use Tax › Chapter 32 - EXEMPTIONS › GENERAL PROVISIONS › Section 32.1 - Definitions

Current through Register Vol. 54, No. 28, July 13, 2024
The following words and terms, when used in this
						  chapter, have the following meanings, unless the context clearly indicates
						  otherwise:
Blasting
-The use of a combustible or
						  explosive composition in the removal of material resources, minerals and
						  mineral aggregates from the earth, including the separation of the dirt, waste
						  and refuse in which they are found.
Charitable organization-
(i) An organization whose primary activities
						meet the following criteria. The organization:
(A) Advances a charitable purpose. An
						organization advances a charitable purpose if it makes gifts of services or
						property for general public use which are designed to benefit an indefinite
						number of persons from an educational, religious, moral, physical or social
						standpoint.
(B) Donates or renders
						gratuitously a substantial portion of its services. A substantial portion of
						the organization's services shall be provided without charge to the subjects of
						the charity or to persons or entities that are directly providing the service
						on its behalf. The Department will determine whether the portion donated or
						rendered is substantial on an organization by organization basis. The word
						"substantial" does not imply a magical number.
(I) In calculating the gratuitous rendering
						of a substantial portion of services, an organization may include services to
						the same person, some of which are given without charge and some for which a
						charge is made. To qualify under this criteria, an organization may charge for
						some of its services but must render a substantial portion of its services
						without charge. This provision is not meant to exclude an organization that
						would otherwise meet this criteria if it charges some recipients on a sliding
						scale or graduated fee basis.
(II)
						To determine if an organization meets this criteria, the Department will
						examine the remuneration paid to its director and staff, the organization's
						budget and the percentage of income used to provide charitable services in
						addition to other factors. In examining these factors, the Department will
						consider the type of charitable services provided, the location of the
						organization, the length of time the organization has been in operation and the
						cost of providing its charitable services.
(C) Benefits a substantial and indefinite
						class of persons who are legitimate subjects of charity. An organization's
						gratuitous activity shall be "purely public," in that the public must be the
						beneficiary of the gift conferred by the organization. The scope of the
						recipients can be limited to a particular group of the public, so long as the
						group is a legitimate subject of charity. Legitimate subjects of charity are
						those that are unable to provide for themselves what the organization provides.
						Examples include the handicapped, the aged, the sick, children and the
						poor.
(D) Relieves the government
						of some of its burden.
(E) Operates
						entirely free from private profit motive. An organization is not deemed to have
						a private profit motive merely because it hires employes and pays them
						reasonable compensation, or otherwise purchases at market rates other services
						that are required to carry out the charitable activity. The fact that an
						organization's charitable activities generate surplus funds will be deemed by
						the Department to constitute evidence of a private profit motive, unless the
						surplus funds are reinvested to aid legiti-mate subjects of charity. Surplus
						funds reapplied to the maintenance and operation of a facility or to retire
						outstanding debt is not evidence of a private profit motive. Examples of
						operating entirely free from a private profit motive and not operating free
						from a private profit motive are as follows:
(I) A nursing home receives Medicaid
						reimbursements for a substantial number of its residents. The nursing home has
						a commitment to serve all applicants without regard to their financial means.
						The nursing home accepts the government reimbursement as full payment for its
						services. This government reimbursement does not cover the patient costs. The
						nursing home makes up the difference. This nursing home operates entirely free
						of a private profit motive.
(II) A
						corporation produces publications concerning the biological sciences and gives
						free seminars designed to educate the public. However, it also requires its
						clients to pay a fee for services rendered and charges clients for computer
						searches of its library. This organization does not operate entirely free of a
						private profit motive.