Q: Does our ministry need to obtain a special permit before serving or selling food?
A: Local law determines if your ministry needs a permit to serve or sell food.
If your ministry holds an event offering food, you may need to obtain a permit or temporary food license to sell or serve certain items. Permits may be required by a state or local department of health, department of agriculture, or city clerk. Contacting these governmental offices can help you determine what requirements may apply to your ministry.
Permits are more likely to be required when:
The event involves the sale or service of food to the public.
The event lasts longer than a day.
Permits help ensure that organizations offering certain food items comply with state or local food and sanitation requirements. For non-profits, permits may also be required to avoid collecting sales tax. In some states, if food is sold to the ministry to be resold at the event, the ministry may need to obtain a resale certificate to avoid paying sales tax on the initial purchase.
If your ministry is required to obtain a permit for your event, plan to submit an application for the permit a month or more beforehand. Most government departments need a few weeks to review, process, and approve the application. After the permit has been approved, the governing authorities may conduct an inspection of the food and preparation areas to ensure appropriate sanitation practices are being followed.
There may be exceptions or exemptions from permits. For example:
If your ministry already has a long-term license to sell or provide food through a soup kitchen or a coffee shop, you might not be required to obtain a special permit for events.
Permits may not be required when the food that will be provided is not considered potentially hazardous. Non-hazardous food generally includes items that are prepackaged and do not require any kind of temperature control (for example, packaged chips or cookies).
Contact the appropriate governmental officials or a local attorney to confirm whether potential exemptions apply to your situation.
The penalties for failing to obtain a permit can be significant. In some states, fines may be as high as $4,000 per day that the violation occurs. In one state, failure to obtain a permit is considered a class C misdemeanor, which could include potential jail time for violators.
Sales tax. Your ministry may be required to collect sales tax when selling food items. While many states provide an exemption for non-profit organizations, some do not. To obtain a sales tax exemption, ministries typically must file for an exemption with its state’s department of revenue.
Unrelated business tax. If your ministry is selling food items with some regularity, the income the ministry earns from these sales could be subject to the Unrelated Business Income Tax (UBIT). The UBIT may be owed if the ministry regularly carries on, and earns income from, an activity that does not specifically accomplish the ministry's tax-exempt purpose. Brotherhood Mutual provides a resource with additional information on how unrelated business income may affect your ministry.
Liability risks. While the ministry can be liable for negligently preparing or serving food, most states will also apply “strict liability” if the food is found to be defective. Strict liability requires the maker of a defective product to assume legal responsibility for a loss, even if the maker did not act negligently. In light of this risk, it is very important to always follow proper food preparation and serving procedures.
Raffles and contests. If food is sold as part of a raffle or contest, or is perhaps provided as a prize in such an event, ministry leaders should be aware of the special rules that apply to sweepstakes, door prizes, and raffles.
Ministry leaders are encouraged to consult with a local attorney about these issues.
*Important information: Brotherhood Mutual is pleased to provide Legal Assist as a complimentary resource. The services we offer through Legal Assist are intended to provide general legal information to our current and prospective policyholders.
The information we provide is intended to be helpful, but it does not constitute legal advice and is not a substitute for the advice from a licensed attorney in your area. Accordingly, no attorney/client relationship is created through this process, and no legal advice will be provided. We strongly encourage you to regularly consult with a local attorney as part of your risk management program.
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