No blanket sales or use tax exemption exists for sales and pur¬chases made by non profit organizations. There are, however, various provisions for certain non profit organizations and cer¬tain types of property. Sales by charitable organizations are exempt from sales and use tax if:

1) The organization is formed for charitable purposes and qualifies for the “welfare exemption” for property tax purposes provided by Section 214 of the Revenue and Taxation Code. (However, in the case of Good Shepard Luthern Home, Inc. vs State Board of Equalization, the fact that the non profit corporation did not qualify for the welfare exemption was not a valid ground for denial of the sales tax exemption.)

2) The organization must be engaged in the relief of poverty and distress.

3) The organization’s sales or donations must be made principally as a matter of assistance to purchasers or donees in distressed financial condition.

4) The property sold or donated must have been prepared, assembled or manufactured by the organization.

Non profit organizations often times have fund raisers which involve sales to the general public (e.g. Boys and Girls Club auc¬tions, etc). These sales are not exempt under this regulation as they are not made to people in distressed financial condition.

Sales by such organizations as the Salvation Army, Amvets, or Goodwill, on the other hand, are principally to people in dis¬tressed financial condition although occasionally sales may be made to persons other than indigents. These incidental sales will not preclude the organization from the exemption provided in this part.

Condition (4) requiring that the property be prepared, assembled, or manufactured is fulfilled when the property is picked up at various locations and brought together (assembled) at one or more locations for purposes of sale or donation. This is true even though nothing further remains to be done to the property to place it in saleable condition.

Purchases by retailers of items which are donated to any federally exempt organization described in Internal Revenue Code Section 170(b)(1)(A) that is located in the State are exempt from use tax. Property donated to churches, educational organizations maintaining a faculty, a curriculum and a regular student body, medical organizations providing health care, education, or research and certain private foundations are also exempt from use tax.

Museums qualify as donee organizations only if they use the property solely for display purposes. Also, art purchased by in¬dividuals or retailers and donated to a museum or a non profit corporation that lends not less than 85% of the value of its art collection to a museum, is exempt from sales and use tax.

Other miscellaneous provisions for charitable organizations include:

1) An exemption for meals and food products sold by religious organizations at its gatherings provided the sales are for obtaining revenue for the organization’s functioning (don’t forget to tax the cokes).

2) Food products and non alcoholic beverages sold by little league and other non profit youth organizations.

3) Meals served to students (private or public schools) are not subject to tax. This exemption does not apply when sold within a place subject to an admission charge.

4) Newspapers and periodicals distributed by non profit organizations at least four times a year (but not more than 60 times per year) if:

A) They are published (or purchased) by an IRC Section 501(C)(3) organization and are distributed to the members as part of the membership fee or to contributors of the organization or,

B) The 501(C)(3) organization does not receive revenue from or accept any commercial advertising, or

C) Distributed by a non profit organization to members as part of the membership fee provided the amount paid by the organization for the cost of printing is less than 10% of the membership fee.

The California sales and use tax exemption for non profits is more narrow in scope than one might expect.