Tax Law, § 1116(a)(4)
The organizational test relates solely to the provisions of the organizing documents.
The terms used in subparagraphs (i), (ii) and (iii) of this paragraph have the same meanings as defined in paragraph (d)(4) of this section.
An organization is not organized exclusively for one or more exempt purposes unless its assets are dedicated to an exempt purpose. An organization's assets will be considered dedicated to an exempt purpose if, upon dissolution such assets would, by reason of a provision in the organization's organizing documents or by operation of law, be distributed for one or more exempt purposes, or to the Federal or a state government or to a local government, for a public purpose. An organization does not meet the organizational test if, by operation of law or through the provisions of its organizing documents, the organization's assets could, upon dissolution, be distributed to its members or shareholders or for a nonexempt purpose.
The operational test relates solely to an organization's activities.
An organization will be regarded as "operated exclusively" for one or more exempt purposes only if almost all of its activities accomplish one or more exempt purposes specified in section 1116 (a)(4) of the Tax Law and described in subdivision (e) of this section. An organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt purpose.
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. Private shareholders or individuals refers to persons having a personal and private interest in the activities of the organization.
An organization is not operated exclusively for one or more exempt purposes if it is an action organization as defined in subparagraphs (i), (ii) or (iii) of this paragraph.
Example 1:
An organization, such as a primary or secondary school, a college, or a professional or trade school, which has a regularly scheduled curriculum, a regular faculty, and a regularly enrolled body of students in attendance at a place where the educational activities are regularly carried on.
Example 2:
An organization whose activities consist of presenting public discussion groups, forums, panels, lectures, or other similar programs. Such programs may be on radio or television.
Example 3:
An organization which presents a course of instruction by means of correspondence or through the utilization of television or radio.
Example 4:
Museums, zoos, planetariums, symphony orchestras, and other similar organizations.
For purposes of clauses (e), (f) and (h) of this subparagraph, the term amateur athletes refers only to athletes who participate, or reasonably can be expected to participate, in national championships or international competition in an amateur sport.
Cross-reference:
For applicable general regulations, including denials, see subdivision (j) of section 529.1 of this Part.
Cross-reference:
For misuse and revocation, see subdivision (j) of section 529.1 of this Part.
Cross-reference:
Sales by Contractors, see sections 528.16 and 528.17 and Part 541 of this Title.
Example 1:
An exempt organization owns a fleet of automobiles. It sells a number of the automobiles at auction. The organization conducts one auction each calendar year, and it is held in its parking lot. The automobiles sold at the auction are not sold from a shop or store and are not subject to sales or use tax. See subparagraph (vi) of this paragraph for rules concerning auctions of this nature.
Example 2:
An exempt organization operates a gift shop and book store. Sales made by such shop or store are taxable.
Example 3:
A counter is placed in an enclosed area at the back of a church for the purpose of displaying religious articles for sale. The counter is open for business each week for two hours on a specific day at which times a clerk is present. The counter is in a separate area used solely to display tangible personal property for sale and, thus, is a shop or store.
Example 4:
An exempt organization operates coin-operated vending machines for the sale of candy, cigarettes, gum and other tangible personal property. The vending machines are placed in hallways, corridors, recesses or alcoves in college buildings. These vending machine sales do not constitute sales from a shop or store and are not subject to the tax.
Example 5:
An exempt organization operates coin-operated vending machines for the sale of candy, cigarettes, gum or other tangible personal property. The vending machines are placed in a room other than a hallway or corridor. The room is only used to make sales from these machines. These vending machine sales constitute sales from a shop or store and are subject to the tax.
Assume the facts in the immediately preceding paragraph except that the machines are located in a gift shop and bookstore operated by the exempt organization. These vending machine sales constitute sale from a shop or store and are subject to tax.
Example 6:
An exempt organization operates coin-operated vending machines for the sale of candy, cigarettes, gum or other tangible personal property. The vending machines are located in a student lounge which also contains a pool table, sofas and chairs. These vending machine sales do not constitute sales from a shop or a store.
Example 7:
An exempt organization occasionally holds a covered dish supper in its hall. The food is prepared and donated by the organization's members. The organization charges $2 for tickets to the supper. The $2 charge is not taxable.
Example 8:
An exempt organization maintains a bar and dining room from which it sells food and drink. Such sales of food and drink are taxable.
Example 9:
An exempt organization operates a concession stand at a weekly bingo night. Sales made at the concession stand are taxable.
Example 10:
An exempt organization operates a hot dog stand at a county fair. Sales made at the stand are taxable because the organization is operating on the same premises as persons required to collect tax.
Example 11:
An exempt organization caters weddings and other banquets. Such catering is subject to tax.
Example 12:
An exempt organization holds a monthly supper. The suppers are subject to tax.
Example 13:
An exempt organization has several vending machines that dispense coffee, tea, soup, and other food items. The machines are located in a room which also contains tables and chairs in the area of the machines. The sales through the vending machines constitute sales by a restaurant, tavern or other establishment. (See section 527.8 of this Title for the application of sales tax on food and drink.)
Cross-reference:
Hotel Occupancy, see section 527.9 of this Title.
Cross-reference:
For the application of tax on admissions, see section 527.10 of this Title.
N.Y. Comp. Codes R. & Regs. Tit. 20 § 529.7