Declaratory Order - Disabled American Veterans

The Petitioner filed two petitions for two of its Iowa thrift stores. One petition was filed under the name of “Disabled American Veterans Store, Trustee Account” (Trustee) and the other petition was in the name of “D.A.V. Thrift Store of Iowa” (DAV). In both petitions it is stated that the Petitioners own and operate business operations commonly known as a thrift stores. Both Petitioners are declared by the Internal Revenue Service as being exempt from federal income tax pursuant to Internal Revenue Code (IRC) section 501(c)(3). The business of both stores consists of soliciting donations of tangible personal property for resale to the public. Proceeds from the sales by both Petitioners are donated to entities that are also exempt from federal income tax pursuant to IRC section 501(c)(3). Trustee donates its proceeds to Iowa DAV chapters 20 and 53 and DAV donates its proceeds to Disable American Veterans, Department of Iowa. The organizations that receive proceeds from the Petitioners use the moneys for basically similar purposes, which includes, the t ransportation of veterans to and from their homes throughout central Iowa to the two veteran's hospitals located in Iowa for medical appointments and therapy, fund veteran's hospital activities, purchase needed equipment for the hospital, distributing toiletries, such as toothbrushes, toothpaste, and shaving articles; phone cards and other necessary items for veterans when they unexpectedly require hospitalization, provides funds for annual scholarships to veterans and their dependents, provide funding for the purchase of U.S. Bonds for an annual students' essay contest and provide clothing items to veterans when necessary.

Based on this information, the Director held that both Petitioners are exempt from Iowa sales tax and any applicable local option tax pursuant to Iowa Code section 423.3(78), as implemented by department rule 701 IAC 17.1 as long as the Petitioners donate the entire proceeds from sales made by the Petitioner to these organizations because they are also exempt from federal income tax pursuant to IRC 501(c)(3) and the utilize the money for charitable activities.

August 25, 2005