Once again the sales & use taxation on sales to or by non-profit organizations vary widely by state. Here are some issues you need to be aware of when dealing with these entities.

Non-profit Issues:

In many states, sales to non-profit organizations, religious, charitable, educational organizations are exempt. Once again, taxation does vary by state. Sales by these organizations are generally taxable, with numerous exemptions, such as sales for fundraising.

Let's consider a couple of points. First, in almost all cases when you sell tangible personal property or a taxable service to an exempt entity, the organization must be billed directly and they must pay directly in order for that sale to be exempt. So, if someone buys something from you for an exempt organization but does not pay with an organization check (e.g. pays with their personal credit card), the sale is taxable even though they will be reimbursed by the exempt entity.

Second, in most instances in order for an entity to be exempt they must apply for the exemption in the state of delivery. Unless you obtain the appropriate exemption forms from them. We would be delighted to help you research these requirements.

Of course, due to the presumption of taxability, sales to these organizations will be taxable unless you obtain the appropriate exemption forms from them. We would be delighted to help you research these requirements.

Feel free to call or e-mail us to discuss any tax issues you may have.

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