REMEMBER: Please refer to your local CPA and/or Attorney before major action. Take this information to inform yourself and your church setting so that accurate, legal and responsible action is taken.
It seems as soon as the calendar turns to October 1st, the fundraiser flyers triple in my mailbox. From pumpkins, to pie, and to poinsettias, this is the time of year where many churches get creative and sell things to fund raise for ministry.
The first time I led a church fundraiser, I was focused on raising money for the mission project. I didn’t think about sales tax, but as it turns out I should have. Focusing on the administrative details are part of keeping the focus on the mission and in an effort not to get detoured by later administrative disasters.
Many states, while giving non-profits exemptions from paying sales tax on many items, may not exclude them from collecting sales tax in all cases. The rules are different state by state and change from time to time, so check with your local comptroller for the latest information.
The main thing I learned from my first experience, all those long years ago, is there are many caveats to learn about sales tax – to know when you had to collect and when you didn’t…
For instance, in Texas:
- “An organization does not have to register for a sales tax permit if all its sales are of exempt items, or sales made through tax free fundraisers.”
- An organization “can hold two one-day, tax-free sales or auctions each calendar year (January – December)”
- “If two or more groups together hold a one day, tax-free sale, the event counts as one tax free sale for each participating organization”
(These quotes came from: https://www.comptroller.texas.gov/taxes/publications/96-122.pdf)
My advice… before you sell anything, ask if you need to collect sales tax. It is better to ask than to find out later that you were not in compliance and deal with the mess.