We are a 501(c)(3) charity that is exempt from state sales tax in our home state. We recently sent an employee to another state for training and the hotel insists we must pay sales tax and city taxes on the hotel room. Is that legal?
Probably yes. States that have a general state sales tax often exempt charities from its coverage, but normally require a separate application to obtain such recognition. Qualification under the federal 501(c)(3) standard is not necessarily sufficient to qualify under the state standard. (See Ready Reference Page: “Act 55 Defines ‘Charity’ Eligible for Exemption [in Pennsylvania]”)
But obtaining tax-exempt status in your home state does not necessarily give you exemption in another state. In most cases, in order to qualify in another state that has a charitable exemption, you have to file and obtain a separate exemption there. It obviously isn’t cost effective to apply for one training session, but if you are doing a lot of business and purchasing a lot of goods or services there, it may make sense.