Must a non-profit collect Kansas sales tax on its annual fundraising events?

Plain-English summary

The treasurer of a local non-profit chapter had been told the organization must collect sales tax on its annual fundraising events and wrote to confirm. The Department confirmed that advice: the organization must collect sales tax on the fundraising events.

The organization must collect "even though (1) the planned events are held once a year, (2) your organization qualifies as a non-profit organization, and (3) the proceeds form the sales are used to fund the organization." The reason is the recurring, planned nature of the events: "the selling events do not qualify for the isolated or occasional sale exemption" because they "are held once each year."

The Department explained the distinction that causes confusion: "Other organizations that do not plan annual selling events are permitted to make one sale per year without incurring tax collection responsibilities." But groups "that hold annual selling events should register to collect sales tax and remain registered because they know they will be holding a fundraising event each year where retail sales are made. Regular, planned selling events cannot be said to be events that are held only 'occasionally.'"

Finally, the Department noted the policy was in flux: "The department is currently reviewing all of its administrative regulations at the Governor Grave's behest," including "the one for isolated and occasional sales," and invited the treasurer to check back in six months.

What this means for you

Non-profits with recurring fundraisers

If your group holds a fundraising sale every year, register for sales tax and collect it on those sales. Being a non-profit, holding the event only once a year, and spending the proceeds on your mission do not exempt you.

The one-sale-a-year rule is narrow

The isolated or occasional sale exemption is for a genuinely unplanned, one-time sale. It does not cover an event you plan to repeat annually — that is a "regular, planned selling event," not an occasional one.

Explain it to your patrons

Because some organizations mistakenly do not charge tax, you can point to this rule: planned annual fundraisers are taxable, and collecting the tax is the correct, required practice.

Common questions

Q: Does a non-profit owe sales tax on a once-a-year fundraiser?
A: Yes, if the fundraiser is a planned annual event. It does not qualify as an isolated or occasional sale, so the organization must collect and remit sales tax.

Q: Isn't a single yearly event "occasional"?
A: No. The Department treats a planned, recurring annual event as a regular selling event, not an occasional one. The exemption is for unplanned one-time sales.

Q: What about groups that don't hold annual events?
A: An organization that does not plan annual selling events may make one sale per year without collecting tax — the key difference is whether the event is a planned, recurring one.

Citations and references

• The Department did not cite a specific statute number. It applied the Kansas isolated-or-occasional-sale policy: a planned annual fundraising event is a regular selling event that does not qualify for the exemption, so the non-profit must register and collect sales tax. The Department noted this administrative policy was under review in 2000.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: O-2000-020

Original ruling text

Opinion Letter

Body:

Office of Policy & Research

October 2, 2000

XXXX
XXXX
XXXX

RE: Your e-mail inquiry

Dear XXXX:

I have been asked to answer your letter that we received in late August. In it, you state that you have served as the treasurer for the Topeka chapter of XXXXXXX. You state that in a telephone conversation with department employees, you were advised that XXXXXX is required to collect sales tax on its annual fundraising events. This advice is correct. Your organization is required to collect sales tax on these sales even though (1) the planned events are held once a year, (2) your organization qualifies as a non-profit organization, and (3) the proceeds form the sales are used to fund the organization. You complain that other organizations do not appear to be charging sales tax on their events and want to make sure your patrons understand your sales tax collection obligations.

XXXXXXX is required to collect sales tax on its fundraising events because the planned events are held once each year. Because of this, the selling events do not qualify for the isolated or occasional sale exemption. Other organizations that do not plan annual selling events are permitted to make one sale per year without incurring tax collection responsibilities. This policy may be some of the source of confusion. Essentially, the policy is based on the assumption that an organizations like XXXXXXX, church groups, and others non-profit groups that hold annual selling events should register to collect sales tax and remain registered because they know they will be holding a fundraising event each year where retail sales are made. Regular, planned selling events cannot be said to be events that are held only “occasionally.”

The department is currently reviewing all of its administrative regulations at the Governor Grave’s behest. This means that some basic policies such as the one for isolated and occasional sales will be reviewed. Please contact me again in six months and ask me how this review has proceeded. By that time, I should be able to advise you if there have been any changes to the policy that currently governs your organization’s fundraising events.

Sincerely,

Thomas E. Hatten

Attorney/Policy & Research

Date Composed: 10/03/2000 Date Modified: 05/17/2002

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