legal question RE: fundraising
Dan Jett (DanJett@AOL.COM)
Wed, 9 Oct 1996 09:50:44 -0400
Michael Bowman and Milt Forsberg are correct when they say that you must look
to the laws of each state, and in some cases county and city, to determine
sales tax status.
Nonprofit, tax-exempt status recognized for federal purposes grants an
organization relief from paying income tax on its "profits". A smaller
subclassification is "public charities" such as BSA, which are permitted to
receive contributions which are income tax-deductible to the individual or
organization making the donation.
Although many states apparently grant exemption from sales taxes to nonprofit
orgs. (no, I don't have the list handy), others do not. Take California
1. Certain specified youth organizations including boy scouts and girl
scouts are not required to collect, report and pay over to the state, sales
tax on food and merchandise they sell for fundraising. But these
organizations must still pay normal sales tax on purchases they make,
including the products and materials they intend to resell.
2. Some exceptions to #1:
a) To qualify for this "exemption" sales must be "intermittent and
irregular". This seems to mean for single event sales such as scout-o-rama.
Door-to-door sales or sales in front of an established business require the
organization to obtain a sales tax permit and report and pay regularly to the
b) Sales of non-food items such as t-shirts, posters and chewing gum are
not exempt (Christmas trees?) , unless they are made or produced by the
organization's members for fundraising (holiday wreathes? and where does
chopped firewood fit in?)
c) If a fundraising business runs a sale and merely uses the
organization's members as sales agents, that business bears all the sales tax
reporting and payment (popcorn sales?)
Such provisions lead to odd results, as in our council where candy bars are
"given as a thank-you gift", never sold, to those who purchase a scout-o-rama
There will be a quiz next period, class dismissed.
(None of the above constitutes a legal opinion on which you may rely, only an
attempt to obfusticate.)
Webelos Den Leader, (moonlighting as tax attorney)
Pack 6, Palo Alto, CA
Pacific Skyline Council
Terry Howerton Sakima Group, Inc. SCOUTER Magazine Kansas City