N.Y. Comp. Codes R. & Regs. tit. 20 § 529.8

Current through Register Vol. 46, No. 45, November 2, 2024

Section 529.8 - Posts and organizations consisting of past or present members of the Armed Forces of the United States

Tax Law, § 1116(a)(5), (g)

(a)General.

(1) Posts or organizations of past or present members of the Armed Forces of the United States, or auxiliary units or societies of, or trusts or foundations for, such posts or organizations may be exempt from the sales and use tax on purchases of tangible personal property, services, food and drink, hotel occupancy, or admissions and dues. In addition, such organizations may, under the circumstances described in subdivision (i) of this section, make sales without collecting the sales or use tax.

(2) An organization is not exempt from tax because it is organized and operated as a nonprofit organization or because it appears to meet the requirements of this section. In order to establish its exempt status, it is necessary to file an application form as set forth in subdivision (g) of this section.

(3) Applications for exemption are determined solely on an individual organization or unit basis. Organizations qualifying for exemption will be issued an exempt organization certificate as set forth in subdivision (g) of this section. Subordinate units are not to be included in an exemption granted to a central organization and they may not use their parents' exemption number to make tax-free purchases.

(b)Definitions.

(1)Post as used in this section means a chartered subordinate unit of an organization of past or present members of the Armed Forces of the United States.

(2)Auxiliary units or societies means a unit or society of a post or organization described in section 1116(a)(5) of the Tax Law, if the unit or society is affiliated with and organized in accordance with the bylaws and regulations formulated by such post or organization.

(c)Organizational requirements.

In order to qualify for exemption, a post or organization must establish that it is organized in this State.

(1) An organization must be formally organized. An organization is formally organized if it has an organizing document defining its purposes and activities and a code of regulations describing how it will function and select the officers empowered to act for it. Evidence of a formal organization structure is:

(i) a certificate of incorporation and bylaws; or

(ii) a declaration of trusts and bylaws; or

(iii) articles of association and bylaws; or

(iv) a constitution and bylaws.

(2)Organized in this State means that (i) the organization is incorporated under the laws of New York State or, if unincorporated, it is created under a formal organizing document, and (ii) is physically located in this State.

(d)Membership requirements of posts or organizations.

In order to be exempt a post or organization must meet the membership requirements of section 1116(a)(5)(B) of the Tax Law and of this subdivision as follows:

(1) at least 75 percent of the members of the post or organization must be past or present members of the Armed Forces of the United States; and

(2) 90 percent of the remaining 25 percent of the post's or organization's members must be in one or more of the following categories:

(i) cadets (including only students in college or university ROTC programs or at armed services academies); or

(ii) spouses, widows, widowers, ancestors, or lineal descendants of the individuals referred to in paragraph (1) and subparagraph (2)(i) of this subdivision.

(3) Auxiliary units or societies of organizations or posts are not required to meet the membership requirements but must establish their affiliation with an organization or post which has qualified for exemption under section 1116(a)(5) of the Tax Law.

(e)Non-inurement requirement.

A post or organization is not exempt from sales tax if any part of its net earnings, income, or assets inures in whole or part to the benefit of private shareholders or individuals. The term private shareholders or individuals as used in this section refers to persons having a personal and private interest in the activities of the organization.

(f) Exempt purposes.

In addition to the requirements of subdivisions (c), (d) and (e) of this section, in order to be an exempt post or organization, the post or organization must be operated exclusively for one or more of the following purposes:

(1) to promote the social welfare of the community;

(2) to assist disabled and needy past or present members of the United States Armed Forces and their dependents, and the widows and orphans of deceased members;

(3) to provide entertainment, care and assistance to hospitalized past or present members of the Armed Forces of the United States;

(4) to carry on programs to perpetuate the memory of deceased members of the Armed Forces and to comfort their survivors;

(5) to conduct programs for religious, charitable, scientific, literary or educational purposes;

(6) to sponsor or participate in activities of a patriotic nature;

(7) to provide insurance benefits for their members or dependents of their members or both; or

(8) to provide social and recreational activities for their members.

(g)Trust or foundation.

A trust or foundation may be exempt as an organization described in subdivision (a) of this section and section 1116(a)(5) of the Tax Law if it is a trust or foundation for a post or organization exempt under this section.

(h) Application for exempt status.

(1) A post, organization, or affiliate in order to establish its status as an organization exempt from the sales and use tax must submit to the Taxpayer Assistance Bureau, W.A. Harriman Campus, Albany, NY 12227, for review, a completed application for an exempt organization certificate.

(2) In addition to the application, the organization must also submit the following documents which will be retained as part of the application:

(i) if incorporated, a copy of the articles of incorporation, and a filing receipt from the appropriate governmental entity, or if not incorporated, the articles of association, declaration of trust, or constitution with a copy of any amendments thereto;

(ii) a copy of the bylaws or other similar code of regulations, with a copy of any amendments;

(iii) a statement of activities which fully describes the organization's current and proposed activities;

(iv) a statement of receipts and expenditures for the most recent fiscal year of operation, or for the period for which the organization was in existence, if less than a year. This statement should clearly reflect the nature and amount of receipts and the purpose and amount of expenditures;

(v) a statement of assets and liabilities as of the end of the most recent fiscal year of operation, or as of the date of the filing of the application, if the organization was in existence for less than a year; and

(vi) a statement answering the following questions on membership of the post or organization but excluding data regarding affiliated organizations:

(a) what percentage of the members are past or present members of the Armed Forces of the United States;

(b) what percentage of the members are cadets or are spouses, widows or widowers of past or present members of the Armed Forces of the United States;

(c) what percentage of the members do not fall within either clause (a) or (b) of this subparagraph.

(3) In addition to the documentation specified in paragraph (2) of this subdivision, if an applicant has received a Federal ruling on its claim for exemption, it must submit a copy of the determination letter or ruling.

(4) In addition to the information specifically called for by this section, the Department of Taxation and Finance may require any additional information deemed necessary for a proper determination of whether an organization is exempt under section 1116(a)(5) of the Tax Law and may prescribe the form in which the proof of exemption shall be furnished.

(5) The application, of which all supporting documents are a part, must contain, or be verified by, a written declaration that it is understood that any willfully false representation may be subject to the criminal penalties prescribed by section 1817 of the Tax Law and the Penal Law.

(6) Upon approval of the application by the Taxpayer Assistance Bureau, the bureau will issue to the applicant a numbered exempt organization certificate.

(i)Amendments and revocation.

(1) The exempt organization certificate must be returned to the Sales Tax Exempt Organization Section, Taxpayer Assistance Bureau, W.A. Harriman Campus, Albany, NY 12227, if the organization changes its purposes, activities or organizational structure. A reappraisal of the organization's exempt status will be made, provided it submits a copy of the applicable amended organizing document or statement of activities.

(2) An organization which changes its structural form (e.g., an association reorganizes as a corporation) must file an application and supporting documents for an exempt organization certificate in order to establish the new entity's status for sales tax exemption.

(3) An exempt organization certificate may be revoked for any reason constituting misuse of the exemption granted, or if it is discovered that the organization's application contained misleading or deceptive information, or if the organization has changed its purposes, activities or organizational structure without notifying the Bureau as provided by this subdivision. Where the Department of Taxation and Finance determines it to be appropriate, for example in the case of fraud, intentional misuse and other similar misuses, such revocation may be effective retroactively to the date of such misuse or deception.

Cross-reference:

For applicable general regulations, including denials and revocations, see subdivision (j) of section 529.1 of this Part.

(j) Sales to posts, organizations and affiliates.

(1) Any sale or amusement charge to or any use or occupancy by a post, organization or affiliate to which an exempt organization certificate has been issued is exempt from sales and use tax.

(2) In order to exercise its right to exemption, the post, organization or affiliate must be the direct purchaser, occupant or patron of record. It must be the direct payer of record, except as provided in paragraph (5) of this subdivision, and must furnish to its vendors a properly completed exempt organization certification. Direct purchaser, occupant or patronas used in this paragraph includes any agent or employee authorized by the post, organization or affiliate to act on its behalf in making such purchases, provided the post, organization or affiliate and its agent are both identified on any bill or invoice. An organization is the direct payer of record where direct payment is made by the organization or from its funds directly to the vendor.

(3) An exempt organization certification is properly completed when it contains the:

(i) name and address of the vendor;

(ii) name and address of the exempt post, organization or affiliate;

(iii) number assigned to the exempt organization certificate;

(iv) signature of the responsible officer of the exempt post, organization or affiliate; and

(v) date the certification was executed.

(4) Sales to any member, officer or employee of an exempt post, organization or affiliate are subject to the sales or use tax when the sales are for the personal use of the purchaser rather than the post or affiliate.

(5) Special rule for exemption from sales tax on hotel occupancy for duly authorized representatives of posts, organizations or affiliates.

(i) Any rent due for hotel occupancy (not including charges for food or drink, entertainment services, parking services, safety deposit box rentals, taxable telephone calls, or any other taxable sales or services) paid by use of the personal funds or credit card of a duly authorized representative of a post, organization or affiliate to which an exempt organization certificate has been issued, is exempt from the sales tax imposed upon such rent when:

(a) such representative is acting on behalf of the post, organization or affiliate so that such representative will be reimbursed by the post, organization or affiliate for the rent incurred;

(b) the representative provides to the hotel operator a timely and properly completed "Exempt Organization Certification for Hotel or Motel Occupancy by Representatives of Veterans' Organizations" and an attached copy of the post's, organization's or affiliate's exempt organization certificate; and

(c) the hotel operator identifies both the representative and the post, organization or affiliate such representative is acting on behalf of, on any bill provided to such representative for the rent charged.

(ii) The "Exempt Organization Certification for Hotel or Motel Occupancy by Representatives of Veterans' Organizations" is properly completed when it contains the:

(a) name and address of the hotel or motel;

(b) purpose of the travel (e.g., State convention specifying the convention site);

(c) name, telephone number and exempt organization number of the post, organization or affiliate;

(d) period of occupancy;

(e) name and signature of the representative renting the room;

(f) name, signature and title of the responsible officer of the exempt post, organization or affiliate executing the certification (signature must be of an officer other than the representative renting the room);

(g) date the certification was executed; and

(h) certification statement that the authorized representative is acting on behalf of the post, organization or affiliate, including the statement that the authorized representative will be reimbursed by such post, organization or affiliate for the rent incurred.

(iii) The hotel or motel operator must also verify that the representative presenting the "Exempt Organization Certification for Hotel or Motel Occupancy by Representatives of Veterans' Organizations" is in fact the individual named on such exemption document. Such verification may be in the form of photo identification or a current credit card which shows the representative's signature. Where the representative does not have either a photo identification or current credit card and pays the occupancy charges in cash, the representative must sign the hotel bill in the presence of the hotel operator so that the representative's signature can be compared to the representative's signature on the exemption certification. Where the signatures are determined to be discernibly and distinctly different by the hotel operator, the hotel operator shall not accept the exemption certification and must charge the appropriate tax.

(iv) The "Exempt Organization Certification for Hotel or Motel Occupancy by Representatives of Veterans' Organizations" is timely provided when it, and the required copy of the post's, organization's or affiliate's exempt organization certificate, are properly completed and received by the hotel operator within 90 days of the first period of occupancy, as described in section 532.4(b)(2)(iii) (b)(5) of this Title.

(k)Sales by exempt posts, organizations and affiliates.

(1) Except as provided in section 1116 of the Tax Law or other law, sales of tangible personal property and services by exempt posts, organizations and affiliates are exempt from the sales and use tax.

(i) Retail sales of tangible personal property made through a shop or store operated by a post, organization or affiliate are subject to the sales and use tax. A shop or store as used in this section includes any place or establishment where goods are sold from display with a degree of regularity, frequency and continuity, as well as any place where sales are made through a temporary shop or store located on the same premises as persons required to collect tax. Vending machines alone do not constitute a shop or store. However, where vending machines are located in a defined area devoted to selling tangible personal property, then sales from such vending machines constitute sales from a shop or store.

Example 1:

An exempt post makes door-to-door sales of patriotic bumper stickers. Such sales are not taxable.

Example 2:

An exempt post operates a gift shop on its premises. Sales made by the gift shop are taxable.

Example 3:

A display case is placed in an enclosed area in the hall of a post's premises. From this case articles may be purchased at certain hours each day at which times a clerk is present. The display case is in a separate area and is used solely to display tangible personal property for sale; therefore, the post is considered to be operating a shop or store.

Example 4:

An exempt post operates coin-operated vending machines for the sale of candy, gum and other tangible personal property. The vending machines are located in hallways, corridors, recesses or alcoves. These vending machine sales do not constitute sales from a shop or store.

Example 5:

An exempt post operates one or more coin-operated vending machines for the sale of candy, cigarettes, gum or other tangible personal property. The vending machines are placed in a room which is only used to make sales from these machines. These vending machine sales constitute sales from a shop or store.

Assume the facts in the immediately preceding paragraph, except that the vending machines are located in a book store and gift shop operated by the exempt post. The vending machine sales constitute sales from a shop or store and are subject to tax.

Example 6:

An exempt post operates one or more coin-operated vending machines for the sale of candy, cigarettes, gum or other tangible personal property. The vending machines are located in a lounge which also contains a pool table and sofas and chairs. These vending machine sales do not constitute sales from a shop or store.

(ii) If an exempt post, organization, or affiliate operates a shop or store and also makes retail sales of similar (though not necessarily identical) items of tangible personal property by any means other than at its shop or store (such as by remote means or at an auction), those additional sales are considered to be made from its shop or store.

(iii) Notwithstanding any other provision of this paragraph and except as provided by law, all of the provisions of section 529.7(i)(2) of this Part apply to sales of tangible personal property and services by an exempt post, organization, or affiliate.

(2) [Reserved]

(3) Sales of food or drink in or by a restaurant, tavern or other establishment operated by a post, organization or affiliate, other than the sales exempt under section 1105(d)(ii) of the Tax Law described in subdivision (h) of section 527.8 of this Title, are subject to the sales tax unless the purchaser is a person or organization exempt under this Part. A restaurant, tavern or other establishment as used in this section includes any dining room, bar and barroom, and concession stand operated with a degree of regularity, frequency and continuity, as well as any place where sales are made through a temporary restaurant, tavern or other establishment located on the same premises as persons required to collect tax. It is immaterial whether or not the restaurant, tavern or other establishment is located on the premises of the post or whether or not the use of such facilities is restricted to the members of the post. (See section 527.8 of this Title for the application of tax on sales of food and drink.) Vending machine sales of food or drink are considered to be in or by a restaurant, tavern or other establishment when the machines are located in a defined area devoted to this purpose, and there are other furnishings or fixtures present which are commonly associated with a restaurant or similar establishment, like tables or chairs.

Example 7:

An exempt post occasionally holds chicken barbecues on its grounds. The sale of food at the barbecue is not taxable.

Example 8:

An exempt post operates a dining room from which it sells food and in which it caters private parties. The sale of the food and the charges for catering are taxable.

Example 9:

An exempt auxiliary unit of a post operates a concession stand at a weekly bingo night. Sales made at the stand are taxable.

Example 10:

An exempt post has several vending machines that dispense coffee, tea, soup and other items. The machines are located in a room which also contains tables and chairs in the area of the machines. The sales through the machines for on-premises consumption constitute taxable sales of food by a restaurant or similar establishment.

(4) Sales of the service of providing parking, garaging or storing for motor vehicles (other than a garage which is part of the premises occupied solely as a private one- or two-family dwelling) are subject to the tax when such services are provided by organizations described under section 1116(a)(5) of the Tax Law.

(i) If a facility for parking, garaging or storing motor vehicles is operated within the counties of Bronx, Kings, Queens or Richmond, the effective rate of tax to be collected on such services is 101/4 percent.

(ii) If a facility for parking, garaging or storing motor vehicles is operated within Manhattan (New York County), the effective rate of tax to be collected on such services is 181/4 percent.

(5) An exempt post organization or affiliate making taxable sales is required to register as a vendor, collect the appropriate tax, and file timely sales tax returns.

Cross-reference:

For the application of the tax on admissions, see section 527.10 of this Title.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 529.8