Prior to this opinion, you might have assumed that funds your church charged for providing food, beverages, or lodging related to a religious activity were tax-exempt and not liable for state sales tax. We are writing to inform you and your leadership about a recent opinion issued by the Office of the Attorney General for the State of Tennessee that may impact your church’s operations, especially regarding the church’s offerings of lodging, food, and beverages as part of your ministry or activities.
Opinion No. 24-012 (July 19, 2024) addresses the tax responsibilities of 501(c)(3) organizations, including religious organizations, that offer lodging, food, and beverages.
- Sales Tax: A 501(c)(3) organization that offers lodging, food, and beverages is responsible for collecting and remitting sales tax on these transactions. This applies regardless of the organization’s religious, charitable, or nonprofit status.
- Occupancy Tax: All 501(c)(3) organizations, including religious ones, are required to collect and remit sales tax if your church offers lodging, such as through a retreat center or other accommodations. This is also known as the hotel-motel tax which is required to be collected and remitted to the local government.
- No Exemptions: The opinion clarifies that there are no exemptions for religious organizations from these tax obligations under state law.
This means that if your church offers any lodging, food, or beverage services, you must ensure compliance by collecting and remitting the appropriate taxes.
Please find the complete ruling in the document here.
We recommend you review your programs and offerings and evaluate compliance with these requirements.
