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California Sales And Use Tax Exemption

 

Steps To Getting A California Sales And Use Tax Exemption

Can my California nonprofit get an exemption from sales and use tax?

There is no general exemption for nonprofits and religious organizations from sales and use tax in California. All nonprofits that use the sales of goods as a source of fundraising are considered retailers and must first get a Sellers Permit, by submitting an Application for Sellers Permit, with no fee to the Board of Equalization. Certain organizations that relieve poverty and distress may request an exemption from sales and use tax. Send your written request in a letter describing your organizations practices and activities. Attach your determination letters from the Franchise Tax Board and the IRS. Also attach your articles of incorporation and bylaws and send it to:

Compliance and Technology Section, MIC:40
Board of Equalization
P.O. Box 942879
Sacramento, CA 94279-0040

If you get approval for the exemption, the board will send you the proper documents to allow your nonprofit to make purchases without paying sales tax.

Your California nonprofit may be exempt from property tax.

If your nonprofit organization owns real or personal property that is taxed by a local California county assessor and the property is only used for religious or charitable activity, you may be eligible for an exemption from property tax through a program that is controlled by the Board of Equalization together with the county assessors offices in California. This exemption is known as the Welfare Exemption.

How do I claim my property tax clearance?

Your California nonprofit organization must complete and submit form BOE-277, Claim for Organizational Clearance Certificate-Welfare Exemption. You need to attach copies of your articles of incorporation, bylaws, letters of exemption from the IRS and California Franchise Tax Board, and a copy of your current financial statement. You can find the form at the link below or in your online account if you hire ‘Northwest’ as your California registered agent.

How much does it cost to apply for the tax clearance?

There is no fee.

How long does it take to receive my Organization Clearance Certificate?

If the Board decides your nonprofit is eligible, you will receive your certificate in about a month. Then you need to deliver it to your local county assessor with all the attachments. The county assessor should let you know if you will be exempt from property taxes in two to four weeks.

Do I have to apply annually?

Not with the Board, but with the county assessor. The assessor will mail you the annual renewal and it must be filed with that office by February 15th.

Where do I send my application?

California Board of Equalization
County-Assessed Properties Division, MIC:64
P.O. Box 942879
Sacramento, CA 94279-0064
Phone:  (916) 274-3430

Welfare Exemption link:

http://www.boe.ca.gov/proptaxes/welfareclaimforms.htm

Additional California Nonprofit Resources:

Corporate Compliance
by Local Corporate Guides®