Those who have been following Light of Islam know my strong hesitation to sell items that are not clearly identifiable as educational – i.e., books, CDs, DVDs, educational software, magazines, maps. My concern is primarily over the 501c3 guidelines, based on the research I did in responding to the IRS’ request for my info in my 501c3 application, during the course of which I came across examples of tax-exempt retails who lost their 501c3 status because the IRS felt the businesses were outside the scope of their charitable purpose and functioning as a business for the sake of doing business under the guise of being a charitable organization.
Last week I finally called the IRS and talked to someone about these issues. I got some good clarification on what to concern myself with, although for a lot of my questions she advised me to read Publication 598, which I have. Bottom line is that I am going to finally start selling a limited number and type of sidelines, starting with these oriental carpet items – which after I ordered them realized are as educational as many other things I sell, since they are based on real carpets. In addition to the charitable purpose issue there is the issue of having to pay unrelated business income tax on sales that aren’t directly related to my mission other than making money to support it. There are no hard guidelines, but I think I get the idea, and I have a call in to someone at ESCH about it, and will talk to my accountant about it.
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Light of Islam is a nonprofit bookstore whose mission is to provide the Houston-area community with accurate and accessible information about Islam and Muslims. Find out more at www.light-of-islam.org/.
