If you go to church next Sunday and happen to purchase a cup of coffee there, do you have to pay sales tax on that cup of joe?
In Missouri, it depends when the coffee is being poured.
A letter ruling recently issued by the Missouri Department of Revenue describes a church where pews in the congregation area have been replaced by tables and chairs. The church continues to hold religious services in that area, and it also sometimes sells “coffee, baked goods, and miscellaneous items” there.
According to the letter ruling, the “Applicant continues to maintain religious activities within its congregational area in the church and is also operating a service.” When coffee and catering services within the church building are used “as an outreach of [the church’s] ministry,” the Missouri Department of Revenue determined that “sales through its coffee services within its church are not subject to sales tax.” No businesses offer similar services near the church.
However, when the church provides coffee and catering services for functions outside of church services, such as during at wedding receptions or birthday parties, those sales are subject to sales tax. The letter ruling states, “Applicant’s sales through this business it operates within and outside of the building do not fall within its religious exemption and the sales are subject to sales tax.” If the church provides catering services off-site, those services too are taxable.
Is the coffee your business provides subject to sales tax? Are you sure?