IDAHO PTA every child, one voice Sales and Use Tax Nonprofit Organization April 22, 2016 Idaho State Tax Commission Agenda Sales and Use Tax Responsibilities of a Nonprofit Organization
Taxable Purchases Taxable Sales Obtaining a Sellers Permit Help and Resources 2 Nonprofit Organizations Sales and Use Tax Nonprofit Organizations
There are many types of nonprofit organizations. One of the most common types is known as a 501(c)(3) organization (IRS - Internal Revenue Code). Those that have been granted federal tax exempt status through the IRS usually have
some tax benefits in Idaho. 4 Nonprofit Organizations 5 WHAT ABOUT SALES & USE TAX? 6
Nonprofit Organizations A PTA, like many nonprofit organizations, are not exempt from sales and use tax. A nonprofit organization is not automatically exempt from sales and use tax unless it is specifically exempted in Idaho Code. ICS 63-3622O EXEMPT PRIVATE AND PUBLIC ORGANIZATIONS 7
School Affiliates PTA Ready to Buy PURCHASES : Tax Obligations School Affiliates PTA In Idaho, school affiliates are not exempt from paying sales tax.
Examples include PTAs, PTOs, Alumni Association, or other Auxiliary Groups. An affiliate, such as a PTA, may collectively influence the decisions of a nonprofit school; however, they are not considered an educational institution. 9
63-3622O(1)(a) Educational Institution Defined A nonprofit school is an educational institution. An educational institution is a nonprofit school college, university, qualified public charter school, the Idaho Digital Learning Academy, and other primary and secondary schools. devoted solely to education providing a full curriculum
systematic instruction in the usual branches of learning such as reading, writing, arithmetic, and more. 10 Exemption Certificate (ST101) Nonprofit schools that meet the definition of an educational institution may buy goods exempt from tax as an exempt buyer. The exemptions for a
nonprofit school can be found in the Exempt Buyer section of the ST-101. 11 PTA - Purchases Since a PTA is not an exempt buyer, tax must be paid on all purchases, even if the purchase is on behalf of the school. Supplies, Equipment, General Merchandise
Items to be raffled / Games of Chance Items to be donated 12 PTA Buying For Resale Are there any exceptions? As a seller, PTAs may buy items exempt: If they are permitted, and They will sell what they purchase, and They will collect tax on the sale
13 PTA Buying For Resale With a valid sellers permit, a PTA may only buy resale items without paying tax, using an exemption form (ST101). A properly
completed form must be provided to the vendor. 14 PTA Buying for Resale Without a regular sellers permit, a PTA may either: Choose to obtain a temporary sellers permit prior to purchasing only items that will be resold;
Provide a completed exemption form (ST-101) to the vendor at time of purchase. -ORChoose to purchase the items that will be resold and pay tax to the vendor. When a sellers permit is obtained, subtract or adjust any sales tax paid on resale items from the tax owed when completing its sales tax return. 15
PTA - Use Tax Dont Forget Use Tax What is use tax? Use tax is a tax on an item that is used or stored in Idaho when sales tax has not been paid. When does use tax apply? When a retailer did not charge sales tax on an item that is taxable.
16 PTA - Use Tax If sales tax was not paid on an item that should have been taxed, use tax is due. Certain online purchases that were not taxed Purchases made in a state with no sales tax -ORIf an item was purchased for resale and then used by the PTA instead, use tax is
due on the original cost of the item. -OR- 17 PTA - Use Tax If an item is purchased for resale and is given away instead, use tax is due on the original cost of the item. What is the rate? Same as the sales tax rate (6%)
How is it paid? Sales and Use Tax Returns (Retailer) Form 850U (Non-retailers, Individuals) Idaho Income Tax Return (Individuals) 18 School Affiliates PTA Making The Sale Sales Tax Obligations
PTA Sales A PTA must collect sales tax on all sales, unless the sale is exempted by law. 20 PTA Sales What sales are generally taxable? Sales of Tangible Personal Property (TPP) Candy, Food, T-Shirts, Calendars, Books
21 Which of the following are tangible personal property? Real property Stocks & Bonds 22
Vending Machine (Food, Drinks, Snack) Subscriptions (Magazines, Newsletters) Printed Materials (Posters, Maps, Pictures) Promotional Items / Souvenirs (Pins, Logos) Fixed Fees (Suggested Donations) 23 PTA Sales What sales are generally not taxable? Sales of Service Car Wash, Bookkeeping, Hair Cutting, Lawn Mowing, etc.
24 PTA Sales Handling sales tax depends on the activity involved. Each activity may have its own sales tax obligation. The following slides discuss some of the most common activities and how sales tax should be handled.
25 Auctions Nonprofit Special Rules Auctions: For Profit vs Nonprofit An auction is a process of buying and selling goods by offering them up for bid, taking bids, and then selling the
item to the highest bidder. Auctioneers collect sales tax on the actual selling price. This includes any additional fees charged Buyers Premium, Credit Card Processing, etc. 27 Auctions: For Profit vs Nonprofit Does a PTA have to also collect sales tax
on the actual selling price? If proper procedures are used, NO. A nonprofit organization, such as a PTA, may calculate sales tax differently. 28 Auctions - Nonprofit If you follow proper procedures, the auctioned item is only subject to tax on its
Fair Market Value. Post a sign by each auctioned item showing its suggested FMV. The FMV of this pie is posted as $10 If the sale is for $100, tax would be due on $10 29 Auctions - Nonprofit
What is fair market value? The Fair Market Value should be considered reasonable by customer standards (what someone would expect to pay). There are various acceptable ways to determine the items Fair Market Value. 30 Fair Market Value
31 Auctions - Nonprofit If you provide the buyer with an invoice, you would write: Apple Pie: $10.00 ID Sales Tax:
Donation: $ .60 $89.40 Remember to post the sale to your records the same way.
32 Auctions - Nonprofit If these procedures are not followed, you must charge sales tax on the full sale amount. Apple Pie: $100 Sales Tax: $ 6 Total:
33 $106 Auctions - Nonprofit : Other However, an auction may include donated services or gift certificates. These would generally be nontaxable items. 34
Auctions - Nonprofit : Other Sales of services that are generally not taxed include: Bookkeeping Tax Preparation Car Washing Lawn Mowing and Raking Snow Shoveling Hair cutting and styling
35 Auctions - Nonprofit : Other A nonprofit may auction off vouchers or gift certificates for lessons (swimming, tennis, etc.) or for an overnight stay at a local hotel/motel. These type of sales would generally not
be considered taxable. Tax would be collected when redeemed. 36 Auctions: For Profit vs Nonprofit What if the PTA hires a professional auctioneering service? Then, the auctioneer is responsible for collecting the sales tax on the actual selling price. NOTE: If only the auctioneer (caller) is
used, the PTA would still be responsible for collecting sales tax. 37 Carnivals Fun For All 38 Carnivals Generally, a carnival includes a variety
of activities and events. Knowing what to tax will depend on the specific activity or event. 39 Carnivals TAXABLE Activities include: Sales of Merchandise Student-Designed T-Shirts Calendars/Souvenirs
Cookbooks/Recipe Books Baked Goods Arts and Crafts Concessions Games with Guaranteed Prizes (Retail Sale) Fishing Booth Wheel of Fortune Pick-A-Duck 40 Carnivals
NONTAXABLE Activities include: Service Oriented (not a sale of TPP) Face Painting, Hair Coloring Group Art/Murals/Graffiti Canvas Games of Chance (no guarantee of a prize) Cakewalk/Musical Chairs Dunk Tank / Darts Water Balloon Toss / Dime Toss / Ring Toss Bingo / Guess How Many Casino Games
41 Carnivals -ReminderItems purchased for taxable activities may be purchased exempt. Items purchased for nontaxable activities would be taxable. If items are purchased in bulk, tax would be due only on items not actually sold.
42 Carnivals Ticket Sales for ACTIVITIES When tickets are purchased at the booth, If the event is nontaxable, no tax is collected o 5 throws for $5 / 1 ticket = $5 Customer pays $5. No sales tax. Total Collected $5.00
If the event is taxable, tax is collected o Pick-A-Duck for $5 / 1 ticket = $5 Customer pays $5 plus sales tax of $0.30 Total collected $5.30 43 Carnivals Ticket Sales for ACTIVITIES
When tickets are pre-purchased and may be used at any booth, then no tax should be collected at the time of original sale. Tax will be determined when ticket is redeemed or used. o If the event is nontaxable, no tax is collected 5 throws for $5 / 1 ticket = $5 Customer redeems $5 ticket. No sales tax. o If the event is taxable, tax is collected Pick-A-Duck for $5 / 1 ticket = $5 Customer redeems $5 ticket. Sale would include sales tax.
$5/1.06 = $4.72 (sale amt) x .06 = $0.28 (sales tax) 44 Carnivals QUESTION: At the pick-a-duck booth, 10 tickets were redeemed. The tickets were not initially taxed. How much sales tax is due? Sales tax would be calculated based on the number of tickets redeemed.
Qty of Tix Recd x $ Value of Ticket = Sale Amt Sale Amt / (1 + tax rate) = Taxable Sales Taxable Sales x Tax Rate = Sales Tax Collected 10 tickets x $5 per ticket = $50 $50 / 1.06 = $47.17 $47.17 x .06 = $2.83 45 Admissions/Ticket Sales
Fundraising Events 46 Admission to a Charitable Event An admission to a recreational event is generally taxable. What is an admission? It is the: Right to enter Right to reserve a seat Right to a table
47 Admission to a Charitable Event Taxable Recreational Events Include: Talent Shows / Magic Shows / Art Shows Dances / Parties / Picnics / Social Events Concerts / Plays / Dance Performances / Movies Sporting Activities / Carnivals / Fairs Corn Maze /Box Maze/Tape Maze Haunted House Water Slide / Bounce House / Moonwalk
Laser Tag / Sumo Wrestling Karaoke (Charge Per Song) 48 Admission to a Charitable Event The taxable price would include the cost of admission and would include any additional fees such as: Cover charges Minimum charges Extra charges for reserved seats
49 Admission to a Charitable Event If the taxable price is calculated so that its a nice even number, be sure to separately state the sales tax: An individual may pay $9 for admission; but, the stub should show, $8.49 admission and
$0.51 sales tax. This method works with smaller events, too. It may be easier to collect a stream of $5 bills than a stream of $5 and change. When a receipt is issued, it should show the sale price and tax separately stated ($4.72 sale price + .23 tax = $5.00). 50 Admission to a Charitable Event
Are ALL admission charges taxable? 51 NO Rule 085.11 Sales by Nonprofits Admission to a Charitable Event Sales of admissions by an nonprofit
organization registered under IRS Section 501(c)(3) are exempt IF: The event is not predominately recreational or commercial; and Any entertainment value is minimal when compared to the price of admission; and The charitable organization paid sales or use tax on all tangible personal property or services consumed during the event 52
Admission to a Charitable Event A PTA hosts a fundraising event that includes dinner served by a local caterer, a local amateur band, and an auction (they hire an auctioneering service). Tickets are $200 per person. The PTA does not have to collect tax on the $200 charge if they pay sales tax to the
caterer and pay tax on any other items they purchase (e.g. centerpieces, dcor) The auctioneering service will be responsible for collecting sales tax on auctioned items 53 Suggested Donation Fixed Fee Suggested Donation If you put a price on admission or what
you are selling, even if you call it a donation, it is taxable. If the sign does not have a posted amount, it is considered a true donation and not subject to tax. 55 Concession Sales Food, Drink, and Snacks
56 Concession Sales Sales of food and drink are taxable. Tax is added to the total selling price and collected from the buyer. 57
Concession Sales The amount of sales tax should be separately stated on the invoice. The purchaser has proof that tax was paid. The tax commission has allowed concessionaires with very limited price choices to post a sign stating that sales tax is included. The amount of sales tax collected would
be calculated from gross receipts. 58 Concession Sales If the tax rate is 6%: Total $ collected 1.06 = Taxable sales Taxable sales .06 = Sales tax collected Example: A nonprofit groups concession sales total $500. Tax was included in the sales price. If the tax rate is 6%, the
Vending Machines Vending machine sales have their own unique method of taxation: Goods with a sale price over $1.00 are taxed on the actual sale price Taxable sales can be calculated by dividing gross receipts by 1.06 (1 + tax rate) Goods with a sale price of $0.12 - $1.00
are taxed at 117% of the sellers cost of the goods 61 De Minimis Sales Sales Under 11 Sales in the amount of eleven cents (11) or less are exempt from tax Individual transactions or sales through a vending machine
62 Honor Bars Sales of food using an honor bar system are taxable. Since receipts are typically not provided, A notice should be posted stating sales tax is included in the price
Taxable sales can be calculated by dividing gross receipts by 1.06 (1 + tax rate) 63 63 Subscriptions Magazines/Newsletters 64
Subscriptions Printed Media The sale of a printed media subscription is taxable. Examples include newspapers, magazines, and periodicals. Sales tax is collected on the subscription and/or published price. The total amount charged for purchase and delivery
is subject to sales tax. Does not include separately stated postage charges. 65 Subscriptions Digital Media The sale of a digital subscription is not taxable. Examples include newspapers, magazines
and periodicals that can only be accessed online. A digital subscription gives the user the right to obtain or access digital products: In a fixed quantity For fixed period of time 66
Literature 63-3622I Literature Literature published and sold by the same nonprofit entity is exempt Sales and purchases are exempt Must be a 501(c)(3) organization Proceeds from the sale cannot benefit an
individual. Includes paper media, DVDs, CDs, etc. 68 RAFFLES A Chance to Win 69 Raffles The sale of a raffle ticket is:
a sale of a chance to win. No guarantee of a prize not a sale of tangible personal property. Sales tax does not apply 70 Coupon Books / Gift Certificates Discount Cards
Discounts for Products and Services 71 Coupon Books & Gift Certificates Coupon books and gift certificates are not taxable when sold. Sales tax is collected when the gift certificate or coupon is used.
72 Discount Cards Similar to coupon books & gift certificates they are also not taxable when sold. Sales tax is collected when the discount card is used. 73
Donated Goods Gifts 74 Donated Goods When goods are donated, the donor is responsible for paying sales or use tax on the donors cost off the goods. Example: A retailer donates a snowmobile to
a PTA as part of a fundraiser give-away. It is the responsibility of the retailer to pay tax on their cost not the responsibility of the person who wins it. 75 63-3621(o) Donated Goods With one exception: When food or beverage is donated to an
individual or a qualifying non-profit organization, the donor does not have to pay use tax (2014). A qualifying non-profit is one registered as a nonprofit with the Idaho Secretary of State. 76 Getting Permitted Remitting Sales Tax
77 Remitting Sales Tax Sales Tax is paid by the customer and collected by the retailer. Any sales tax collected from the customer must be remitted to the state. Anyone collecting sales tax must have a permit.
78 Sellers Permit 79 Regular seller's permit Temporary seller's permit No fee for permit
No fee for permit Valid until cancelled Valid up to 90 days; limited to three permits per year Valid for multiple events Valid for only for one event File regular, periodic returns
File return within 15 days of the last day of the event Must file, even if no sales Must file, even if no sales Permit - Regular The application may be completed online using the form IBR.
The IBR (Idaho Business Registration) form is a combined application for the Tax Commission, Idaho Department of Labor and the Industrial Commission Sellers Permit / Use Tax Travel and Convention / Greater Boise Auditorium Idaho Income Tax Withholding State Unemployment Account Workers Compensation Information Available Online / TAX.IDAHO.GOV
80 Permit - Temporary Temporary sales tax permits are a type of seller's permit and allow a seller to make infrequent retail sales in Idaho. These permits include a simple form to report sales and submit the sales taxes collected from customers. They are designed for one-time events such as concerts, fund-raisers, and
bazaars. Available Online / TAX.IDAHO.GOV 81 Help & Resources ISTC Website 82 ISTC Resource :Nonprofit Groups Publication #50,
Nonprofit Groups & Churches. Discussion on Frequently Asked Questions Related to Sales and Use Tax. Available on ISTC website. 83
ISTC Resource :Nonprofit Schools Publication #51, Schools and School Affiliates. Discussion on Frequently Asked Questions Related to Sales and Use Tax.
Available on ISTC website. 84 Need Help? Have Questions? For more information, contact: Idaho State Tax Commission: In the Boise area, 334-7660; Toll free, (800) 972-7660 Hearing impaired: TDD (800) 377-3529
tax.idaho.gov This information was prepared by the Idaho State Tax Commission. It does not provide comprehensive explanations of Idaho tax laws or rules. Specific questions should be addressed to the Tax Commission. 85 QUESTIONS? THANK YOU MORE INFORMATION AVAILABLE ON
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