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Federal Credit Unions retail tax

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Jay968

Member
What is the name of your state (only U.S. law)? California

Are federal credit unions exempt from having to pay local (city and/or state) sales tax in California? If so, is this something that the retailer should take care of during point of sale?
 


FlyingRon

Senior Member
What sort of sales tax do you think applies? Sales tax in California only applies to tangible goods (or services that produce them). What is the credit union "selling" that you think would be subject to tax?
 

LdiJ

Senior Member
What sort of sales tax do you think applies? Sales tax in California only applies to tangible goods (or services that produce them). What is the credit union "selling" that you think would be subject to tax?
I think that the OP is asking whether or not the credit union is exempt from paying sales tax, rather than collecting sales tax.

OP, is the credit union buying some tangible goods that they are turning around and reselling? Or do you think they should qualify for a charitable exclusion for paying sales tax? What is the context of your question?
 

Jay968

Member
Sorry for the delay. I work in a retail store and every now and then we get someone from a federal credit union claiming that they do not have to pay sales tax when purchasing from us because federal credit unions are tax exempt. Is this so, and if it is, do we not charge them tax or is this just something they claim when they file?

Also, as far as I understand it, the tax that we do collect on a sale is state and local sales tax. Why would a federal credit union be exempt from state and local sales tax?
 
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FlyingRon

Senior Member
I'd like to know how or why they are exempt.
Most likely they are, not because they are a credit union itself, but because by law, credit unions are non-profit organizations and most states provide some level of exemption for non-profits. A federal credit union doesn't have any special status than other non-profits. The "federal" just implies that they are subject to the NCUA supervision (an federal agency that provides deposit insurance like the FDIC but for credit unions).

However, in California, the exemption is not universal for non-profits. A credit union does not appear to fit in the blanket "charitable organization" category, so each purchase needs to qualify on based on what the item is.

However, again, a merchant who is responsible for collecting sales tax himself, would be foolhardy to take a verbal assumption that the purchase would be exempt. The purchaser should be able to show proof (in California, this is a tax certificate), that they at least COULD be making an exempt purchase. My wife has worked for a long time for a real exempt agency (first the county school system and then the federal government). She's always carried the appropriate documentation when purchasing at retail to show she qualifies.
 

davew128

Senior Member
Most likely they are, not because they are a credit union itself, but because by law, credit unions are non-profit organizations and most states provide some level of exemption for non-profits. A federal credit union doesn't have any special status than other non-profits. The "federal" just implies that they are subject to the NCUA supervision (an federal agency that provides deposit insurance like the FDIC but for credit unions).

However, in California, the exemption is not universal for non-profits. A credit union does not appear to fit in the blanket "charitable organization" category, so each purchase needs to qualify on based on what the item is.
There is no sales/use tax exemption for charities or non-profits in California. So again I ask, where is the justification the OP has for this comment?

http://www.boe.ca.gov/pdf/pub18.pdf

"In other words, nonprofit and religious organizations, in general, are treated just like other California sellers and buyers for sales and use tax purposes."
 

LdiJ

Senior Member
There is no sales/use tax exemption for charities or non-profits in California. So again I ask, where is the justification the OP has for this comment?

http://www.boe.ca.gov/pdf/pub18.pdf

"In other words, nonprofit and religious organizations, in general, are treated just like other California sellers and buyers for sales and use tax purposes."
Based on the document you linked I have to disagree with your blanket statement that there is no sale/use tax exemption for charities or non-profits in CA. There is no blanket exemption, but its totally situational.

I agree that the above statement you quoted does appear in that document, but the document goes on to explain in detail when exemptions exist/apply and when they do not.
 

davew128

Senior Member
Based on the document you linked I have to disagree with your blanket statement that there is no sale/use tax exemption for charities or non-profits in CA. There is no blanket exemption, but its totally situational.

I agree that the above statement you quoted does appear in that document, but the document goes on to explain in detail when exemptions exist/apply and when they do not.
There is no exemption WHATSOEVER from paying sales/use tax in CA for a non-profit on items otherwise considered subject to sales tax. There are certain limited exemptions from COLLECTING sales tax BY a non-profit on sales that clearly are not intended to be sales for profit of taxable items.

Therefore I stand by my comment: There is no sales/use tax exemption for charities or non-profits in California.
 

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