Are a school's fundraising sales exempt when made on behalf of a parent-teacher association, and what about services?

Plain-English summary

A school asked how Kansas sales tax applies to fundraising it conducts in connection with a parent-teacher association or organization (PTA/PTO).

The exemption. The Department cited K.S.A. 79-3606(yy), which exempts "all sales of tangible personal property and services purchased by a parent-teacher association or organization," and sales of tangible personal property by or on behalf of such an organization.

Goods sold on behalf of a PTA/PTO are exempt. "[I]f the school is selling flowers, birdhouses, concessions at sporting events, chili suppers, etc., on behalf of a parent-teacher association or organization, then the sale of tangible personal property would be exempt from sales tax."

Taxable services are not exempt. "However, if a service is rendered to the final user, by or on behalf of a parent-teacher association or organization, the … organization would be obligated to collect the appropriate Kansas sales tax(es)." That is "because the statute exempts only the sale of tangible personal property and not the providing of a taxable service."

The school's own sales are taxable. "[I]f the school is selling tangible personal property or providing taxable services on their own behalf, the transaction would be subject to the appropriate Kansas sales tax(es), since the exemption … is for sales of tangible personal property by or on behalf of a parent-teacher association or organization."

Bottom line: the PTA/PTO exemption is a tangible-property exemption tied to selling on behalf of the association. Selling goods for the PTA/PTO is tax-free; providing taxable services is not, and sales the school makes for itself are fully taxable.

What this means for you

The exemption is for goods sold on behalf of the PTA/PTO

When the school runs a product fundraiser — flowers, birdhouses, concessions, chili suppers — for a parent-teacher association or organization, those sales of tangible personal property are exempt from Kansas sales tax.

Taxable services are outside the exemption

The statute exempts sales of tangible personal property, not the providing of taxable services. If a taxable service is rendered to the final user by or on behalf of the PTA/PTO, tax must be collected on it.

"On behalf of" the PTA/PTO is the key

The exemption depends on the sale being made by or on behalf of the parent-teacher association. If the school is really selling for itself rather than the PTA/PTO, the sale is taxable — even for the same kind of goods.

Keep the fundraiser clearly tied to the PTA/PTO

Because the tax result turns on whose sale it is, a school should be able to show that a tax-free product fundraiser was conducted on behalf of the parent-teacher association or organization.

Common questions

Are school fundraiser sales of goods taxable when done for a PTA?
No. Sales of tangible personal property (flowers, birdhouses, concessions, chili suppers) made on behalf of a parent-teacher association or organization are exempt under K.S.A. 79-3606(yy).

What about services?
Taxable services are not exempt. If a taxable service is rendered to the final user by or on behalf of the PTA/PTO, the organization must collect Kansas sales tax.

What if the school sells on its own behalf?
Then the sale is taxable. The exemption applies only to sales of tangible personal property by or on behalf of a parent-teacher association or organization.

Why are goods treated differently from services?
Because the statute exempts only the sale of tangible personal property, not the providing of a taxable service.

Citations and references

• K.S.A. 79-3606(yy) — exempts sales of tangible personal property by or on behalf of a parent-teacher association or organization; the Department applied it to school product fundraisers conducted for a PTA/PTO.
• The ruling limits the exemption to tangible personal property (not taxable services) and to sales made by or on behalf of the PTA/PTO (not the school's own sales).
• K.A.R. 92-19-59 — authorizes Kansas private letter rulings; this ruling binds the Department only as to the requesting taxpayer and the facts presented.
• Issued August 24, 1998 by Thomas P. Browne, Jr., Tax Specialist, Kansas Department of Revenue.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1998-105

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

August 24, 1998

TTTTTTTTTT
TTTTTTTTTT
TTTTTTTTTT
TTTTTTTTTT

Dear Mr. TTTTT:

We wish to acknowledge receipt of your letter dated July 27, 1998, regarding the application of Kansas Retailers’ Sales tax.

This is a private letter ruling pursuant to K.A.R. 92-19-59.

K.S.A. 79-3606(yy) exempts from sales tax: “all sales of tangible personal property and services purchased by a parent-teacher association or organization, and all sales of tangible personal.

Please be advised that if the school is selling flowers, birdhouses, concessions at sporting events, chili suppers, etc., on behalf of a parent-teacher association or organization, then the sale of tangible personal property would be exempt from sales tax in the state of Kansas. However, if a service is rendered to the final user, by or on behalf of a parent-teacher association or organization, the respective organization would be obligated to collect the appropriate Kansas sales tax(es). The reason that the latter transaction would be subject to sales tax in this state, is that the statute exempts only the sale of tangible personal property and not the providing of a taxable service.

On the other hand, if the school is selling tangible personal property or providing taxable services on their own behalf, the transaction would be subject to the appropriate Kansas sales tax(es), since the exemption from sales tax is for sales of tangible personal property by or on behalf of a parent-teacher association or organization.

This response private letter ruling is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to an accurate determination by the department, this ruling is null and void. This private letter ruling will be revoked in the future by the operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or published revenue ruling, that materially effects this private letter ruling.

If I may be of further assistance, please contact me at your earliest convenience at (785) 296-7776.

Sincerely yours,

Thomas P. Browne, Jr.
Tax Specialist

TPB

Date Composed: 09/14/1998 Date Modified: 10/10/2001

Table 1

Table 2