BEFORE THE UTAH STATE TAX COMMISSION
Petitioner, ) FINDINGS OF FACT,
: CONCLUSIONS OF LAW,
v. ) AND FINAL DECISION
AUDITING DIVISION OF THE ) Appeal No. 90-0055
UTAH STATE TAX COMMISSION, :
STATEMENT OF CASE
This matter came before the Utah State Tax Commission for a formal hearing on XXXXX. Alan Hennebold, Presiding Officer, heard the matter for and in behalf of the Commission. Present and representing the Petitioner were XXXXX, President, and XXXXX, Treasurer. Present and representing the Respondent was XXXXX, Assistant Utah Attorney General.
Based upon the evidence and testimony presented at the hearing, the Tax Commission hereby makes its:
FINDINGS OF FACT
1. The tax in question is sales and use tax.
2. Petitioner seeks relief from liability for sales and use tax pursuant to Utah Code Ann. §59-12-104(8), which provides an exemption from such taxes for sales made to or by charitable institutions in the conduct of their regular charitable functions and activities.
3. The Petitioner was organized during XXXXX. Its Articles of Incorporation included the following statement of purposes:
The Corporation is formed as a non-profit corporation exclusively for educational and charitable purposes relating to women including, but not limited to, the following:
A. To educate women about common problems facing women and the family society.
B. To help women become informed on issues regarding government, social problems, rights, privileges, and responsibilities, as they relate to individual citizens at all levels of society.
C. To assist women in becoming involved with seeking solutions to problems as they apply to themselves and to the family, inasmuch as the family is the fundamental building block of a healthy society.
D. To conduct or sponsor seminars, workshops, meetings, lectures, conferences, conventions and other activities.
E. To share and exchange information gathered through studies of these problems and issues by publishing and distributing information to its members and to any others who may request it.
F. To encourage citizens everywhere to be law-abiding and eager to maintain our constitutional form of government.
G. To engage in any and all lawful activities and for such charitable or educational purposes as from time to time determined by the Board of Directors and as allowed by the Utah Non-profit Corporation and Cooperative Association Act as presently enacted or hereafter amended and which are not proscribed by Section 501(c)(3) of the Internal Revenue Code of 1954 (or the corresponding provisions of any future United States Internal Revenue law).
4. Since its incorporation, the Petitioner has published a newsletter entitled "XXXXX" focusing on various family oriented issues. The organization has also published studies of social issues and has undertaken other family related projects, such as the financing and distribution of a video tape on the subject of teenage pregnancy.
5. All officers and agents of the Petitioner serve as volunteers without compensation. Most of the Petitioner's income comes from donations and dues. Conference fees, publication sales and fund raising generate minimal additional income.
6. The Petitioner's income is primarily expended on the organization's newsletter and other publications. A substantial portion of its income is utilized in maintaining an office. The Petitioner maintained an operating reserve of slightly more than XXXXX as of XXXXX.
7. The Petitioner has been recognized as a "publicly supported organization" by the Internal Revenue Service. As such, donations to the organization are deductible from donors' taxable income. Salt Lake County has also exempted Petitioner from property tax as a charitable organization.
CONCLUSIONS OF LAW
Utah Code Ann. §59-12-104 exempts from sales and use taxes sales made to or by religious or charitable institutions in the conduct of their regular religious or charitable functions and activities.
DECISION AND ORDER
Because charitable institutions are exempt from sales and use tax, the issue in this case is whether the Petitioner is a "charitable"' organization. The Utah Sales and Use Tax Act does not define "charitable institution" nor is the term defined by rule. However, in Youth Tennis Foundation v. Tax Commission, 554 P.2d 220 (Utah 1976) the Utah Supreme Court provided the following definition of charity:
Charity in the broad sense is the giving of something of benefit to others without expectation of gain. Considering it in more direct focus in this case, it means providing something for the public welfare, which includes not only material, educational and cultural, but also extends to physical and recreational needs.
Petitioner's activities fall within the limits of the Court's definition of charity. Furthermore, the Internal Revenue Service has recognized Petitioner's status as a charitable organization for purposes of receiving tax deductible contributions.
Based on the foregoing, the Tax Commission concludes that Petitioner is a charitable organization within the meaning of Utah Code Ann. §59-12-104(8) and is therefore entitled to exemption from Utah sales and use tax. However, the Commission's determination in this matter is based upon facts as presented during the hearing and is subject to review and modification based upon any change of those facts. It is so ordered.
DATED this 18th day of December, 1991.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco S. Blaine Willes*