Many churches think that their state sales tax exemption applies to ALL TRANSACTIONS.

Unfortunately, this is not the case.  An exemption from sales taxes only allows the church to avoid taxes on goods and services that it purchases in carrying out its mission.  It does not apply to things that it might sell!

There is not necessarily a need to panic if you haven’t been collecting and remitting sales taxes.  First, you simply need to educate yourself about how the sales tax process works and see if any of the many exemptions from the tax apply.

For example, in Texas, where I live, the list is long of possible exemptions:

Meal and food products sold at church functions.  (Whew! Wednesday night suppers are safe!)

Annual banquets

Auctions, rummage sales and other fundraisers

One day sales

Membership dues

Publication fees if published and distributed by the church

These are just a few, and only apply in Texas.  Although many of the states operate in a similar fashion, there are differences from state to state.  If you are selling stuff, and haven’t thought about taxes, it may be time to give your tax professional a call.