Are a club's fundraising sales exempt from Kansas sales tax because the proceeds go to youth groups like 4-H and Boy Scouts?

Plain-English summary

A club asked the Department of Revenue whether its retail fundraising sales were exempt from Kansas sales tax. The club explained that "the bulk of [its] proceeds go to 4-H, Boy Scouts, [a] Swim Team, [a] Track Team, Boys and Girl[s] State," and a youth program.

The ruling. The Department was direct: "It is the opinion of the Kansas Department [of] revenue that the fund raisers operated by the [club] do not qualify for exemption from Kansas retailers' sales tax."

Bottom line: the club's fundraising sales are taxable. The fact that the proceeds are donated to worthy youth causes does not, by itself, make the club's retail sales exempt from Kansas sales tax. The club must collect and remit sales tax on those sales.

What this means for you

Donating the proceeds does not exempt the sale

Kansas sales tax applies to a retail sale based on the transaction, not on where the seller sends the money afterward. A club that sells goods to raise money for youth groups is still making taxable retail sales.

A group needs its own statutory exemption

To sell tax-free, an organization generally needs to fit a specific Kansas exemption — for example, one of the narrow carve-outs the Legislature has written for particular kinds of nonprofit or youth organizations. A general "we're a club raising money for good causes" rationale does not qualify.

Plan to collect tax on fundraising sales

Unless the club can identify a specific exemption that fits its organization and its sale, it should register (if it has not already), collect Kansas state and local sales tax on its fundraising sales, and remit it to the Department.

Common questions

Are club fundraiser sales exempt in Kansas?
Not here. The Department ruled that this club's fundraisers do not qualify for exemption from Kansas retailers' sales tax.

Does it matter that the money goes to 4-H, Boy Scouts, and youth sports teams?
No. The charitable destination of the proceeds did not make the club's sales exempt.

What should the club do?
Collect and remit Kansas sales tax on its fundraising sales unless it can identify a specific statutory exemption that applies to its organization.

Could a different type of organization qualify?
Possibly. Kansas has narrow exemptions for certain nonprofit and youth organizations, but they must be matched to the specific statute — a point addressed in other rulings from this same period.

Citations and references

• The ruling states a conclusion — that the club's fundraisers "do not qualify for exemption from Kansas retailers' sales tax" — without citing a specific numbered exemption statute, because no exemption applied.
• 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 September 25, 1998 by Mark D. Ciardullo, Tax Specialist, Kansas Department of Revenue.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1998-133

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

September 25, 1998

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Dear XXXXXXXXXXXXXX:

The purpose of this letter is to respond to your letter dated September 3, 1998. You requested the Kansas Department of Revenue advise you on the application of Kansas retailers’ sales tax on retail sales made by the XXXXXXXXX XXXX Club. You asked if your XXXXXXXX and XXXXXXXXXX sales would be exempt from sales tax. You stated that the bulk of your proceeds go to 4-H, Boy Scouts, XXXXXXXXX Swim Team, XXXXXXXXXX Track Team, Boys and Girl State, and XXXXXXXXXXXXX Program

It is the opinion of the Kansas Department revenue that the fund raisers operated by the XXXXXXX Clubs do not qualify for exemption from Kansas retailers’ sales tax.

This is a private letter ruling pursuant to Kansas Administrative Regulation 92-19-59. It 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 operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or a published revenue ruling, that materially affects this ruling.

Sincerely,

Mark D. Ciardullo
Tax Specialist

MDC

Date Composed: 09/23/1998 Date Modified: 10/10/2001

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