Managing state sales and use taxes during fundraisers can be one of the most confusing aspects of running a fundraising campaign. Most volunteers do not have a lot of experience dealing with the various state sales taxes for fundraisers, and are unsure where help is available.
To make matters even more confusing, there is no one set of rules governing all the United States. Each state has their own set of sales and use taxes, and the responsibility to collect and pay them varies depending on the type of organization, the amount of funds raised, and the organization’s status as a certified [501(c)(3)] non-profit.
With so many factors at play, it is impossible to provide blanket answers to questions like, ‘does my group need to collect sales tax?’, and ‘is my group required to apply for tax permits?’ Some states, cities, and towns also require groups to pay local sales and/or use taxes.
The question, then, becomes…
Where Can You Find Reliable Fundraising Tax Information?
Fortunately, a group has come together and recognized the need for a reliable, straight-forward resource for fund raising tax information; the name of the group is the Multistate Tax Commission.
The Multistate Tax Commission works in cooperation with the Association of Fund-Raising Distributors & Suppliers (AFRDS). Through the sponsorship of the AFRDS, the Multistate Tax Commission has set up a website for the express purpose of serving as a fundraising tax informational clearinghouse. The site is located at FundraiseTaxLaw.com.
Reliable Fundraising Tax Information From State Resources
The Multistate Tax Commission developed a tax survey for distribution to each of the U.S. states; the survey asks targeted questions about tax exemptions and responsibilities for fundraising groups (both for profit groups and non-profit groups) in the given state.
The commission then collated the responses and posted them on their website, making the survey responses easily accessible by a link for each individual state. The survey covers issues such as:
- What types of groups are exempt
- Whether additional local taxes are applicable
- What types of products are exempted from taxes
- Limitations on exemptions
- Procedural requirements to determine exemption
- Responsibility for collection of and remittance of taxes
- How to calculate sales tax
In addition, the survey includes the governing state agency and contact information so that groups can contact the appropriate agents for more help. Responding to the survey was voluntary; if a state chose not to respond, the appropriate contact information is at least provided so groups know where to go for answers.
The Multistate Tax Commission’s website is probably the most straightforward resource for tax information for fundraising groups on the web. Of course, since this is information provided by a source other than the IRS, there is no guarantee for accuracy, but there is so much useful information, incl. phone numbers and government website links, that it’s a very valuable resource!
For More Information
To find more fundraising tax advice specific to your locale and organization, talk to school/group administrators, visit IRS.gov, or consult an experienced tax adviser.
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