New Tax Compliance Ruling Impacts Church Lodging and Food Services

According to JD Supra, a recent opinion from the Office of the Attorney General for the State of Tennessee has created new tax compliance responsibilities for churches and other nonprofit organizations offering lodging, food, and beverage services. Opinion No. 24-012, issued on July 19, 2024, clarifies that 501(c)(3) organizations, including religious entities, must now collect and remit sales and occupancy taxes for these services, even when provided as part of ministry activities.

This ruling marks a significant shift, especially for churches that previously assumed these services were exempt from state taxes due to their religious or nonprofit status. The opinion emphasizes that there are no state exemptions for religious organizations regarding these tax obligations. This means that churches offering lodging services, such as retreat centers or accommodation for church events, must manage both sales and occupancy taxes (often called the hotel-motel tax), which are collected on behalf of local governments.

For churches and ministries, this ruling underscores the need to review existing programs and ensure compliance with new state requirements. Implementing these tax protocols may involve adjustments to pricing structures, record-keeping, and reporting practices, particularly if lodging, food, or beverage services are offered regularly. Additionally, church leaders and administrators are encouraged to educate their teams about the importance of these tax compliance steps, as failing to comply could lead to legal repercussions or fines.

To avoid potential complications, churches should consider consulting with tax professionals or legal advisors familiar with nonprofit and religious organization tax obligations. They can help assess how this new ruling affects specific programs and suggest efficient ways to handle tax collection and remittance. Ensuring compliance now can prevent disruptions and demonstrate the church’s commitment to responsible community service and adherence to state requirements.

For a deeper understanding of these changes, read the full article on, read JD Supra’s full article.