(a) Sales of taxable services by a corporation or organization that are exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code, and that meet the requirements set forth in subsection (b) of this section, are exempt from the tax imposed by this article, except that this exemption shall not apply to sales of taxable services to the extent that income received from the sales of such services is taxable under Section 511 of the Internal Revenue Code.
(b) The exemption set forth in this section applies only to those corporations or organizations meeting the following criteria:
(1) The corporation or organization is organized and operated primarily for charitable or educational purposes and its activities and programs contribute importantly to promoting the general welfare of youth, families and the aged, improving health and fitness and providing recreational opportunities to the public;
(2) The corporation or organization offers membership or participation in its programs and activities to the general public and charges fees or dues which make its programs and activities accessible by a reasonable cross-section of the community; and
(3) The corporation or organization offers financial assistance on a regular and on-going basis to individuals unable to afford the organization's membership dues or fees.
(c) The Tax Commissioner is prohibited from issuing any assessments and from taking any other action under article ten of this chapter after December 31, 1991, to collect the tax imposed by this article from an organization described in subsections (a) and (b) of this section that did not collect the tax on transactions occurring before July 1, 1992. The Tax Commissioner is also prohibited from refunding any tax collected by a qualified organization prior to July 1, 1992, that was paid over to the Tax Commissioner.
(d) For purposes of this section, the term "corporation" and the term "organization" are used interchangeably and mean a corporation or other organization that is exempt from income tax under Section 501(c)(3) of the Internal Revenue Code, as amended.
(e) Nothing in this section shall affect the application of this article to nonprofit tax-exempt hospitals.