Which parent-teacher organization fundraiser sales are exempt, and which — like carnival games and pre-sold bingo — are taxable?

Plain-English summary

A parent-teacher organization (PTO) asked how Kansas sales tax applies to its fundraiser. The Department noted that this ruling "supersedes the previous letter from this department" to the same organization, dated November 12, 1998.

The PTO exemption covers property, not services. The Department quoted 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 all sales of tangible personal property by or on behalf of such association or organization."

What is exempt. "[T]he tickets that can be exchanged for food and drink by a parent-teacher association or organization would be exempt from sales tax," and "the proceeds from the silent auction, if held by or on behalf of a parent-teacher association or organization, would likewise be exempt." These are sales of tangible personal property.

What is taxable. "Sales of tickets for right to play carnival games, as well as pre-sold bingo pads, by or on behalf of a parent-teacher association or organization, would be subject to the appropriate Kansas sales tax(es)," because "the statute exempts only the sale of tangible personal property and not the providing of a taxable service." In addition, the PTO "is obligated to remit the Bingo Enforcement tax on the gross receipts received from the sale of the pre-sold bingo cards."

Bottom line: the PTO's sales of tangible personal property (food/drink tickets, silent-auction items) are exempt, but its charges for playing carnival games and its pre-sold bingo are taxable services — and it also owes the Bingo Enforcement tax on pre-sold bingo cards.

What this means for you

The exemption is limited to tangible personal property

K.S.A. 79-3606(yy) exempts a PTO's purchases and its sales of tangible personal property. It does not exempt the PTO's sale of taxable services, so activity charges are analyzed separately.

Food/drink tickets and silent auctions are exempt property sales

Tickets redeemable for food and drink, and silent-auction sales, are sales of tangible personal property by or on behalf of the PTO, so they fall within the exemption.

Carnival games and pre-sold bingo are taxable

Charging for the right to play carnival games is a taxable service, and pre-sold bingo is taxable as well; separately, the PTO owes the Kansas Bingo Enforcement tax on gross receipts from pre-sold bingo cards.

A later ruling can supersede an earlier one

This ruling expressly supersedes the Department's earlier November 12, 1998 letter to the same organization. When facts are revisited, the most recent ruling controls.

Common questions

Q: Are a PTO's food and drink tickets taxable?
A: No. Tickets exchangeable for food and drink are exempt sales of tangible personal property under K.S.A. 79-3606(yy).

Q: Are silent-auction proceeds taxable?
A: No, when the auction is held by or on behalf of the PTO; those are exempt sales of tangible personal property.

Q: Why are carnival games and pre-sold bingo taxable?
A: Because the PTO exemption covers only sales of tangible personal property, not the providing of a taxable service.

Q: Does the PTO owe any other tax on bingo?
A: Yes. It must remit the Bingo Enforcement tax on the gross receipts from the sale of pre-sold bingo cards.

Citations and references

• K.S.A. 79-3606(yy) — exempts sales of tangible personal property and services purchased by a parent-teacher association or organization, and its sales of tangible personal property; it does not exempt the PTO's sales of taxable services.
• Kansas Bingo Enforcement tax — a separate tax the PTO must remit on the gross receipts from pre-sold bingo cards; the ruling referenced it without citing a specific statutory subsection.
• K.A.R. 92-19-59 — the regulation authorizing private letter rulings; this ruling was issued under it and binds the Department only as to the requesting taxpayer.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1998-197

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

December 3, 1998

TTTTTTTTTTT
TTTTTTTTTTT
TTTTTTTTTTT
TTTTTTTTTTT

Dear Ms. TTTTTT:

We wish to acknowledge receipt of your letter dated November 9, 1998, regarding the application of Kansas Retailers’ Sales tax.

This is a private letter ruling pursuant to K.A.R. 92-19-59. Please not that this letter supersedes the previous letter from this department to the TTTTTTTTTTTTTTTTTTTT, dated November 12, 1998.

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 property by or on behalf of such association or organization.”

Please be advised that the tickets that can be exchanged for food and drink by a parent-teacher association or organization would be exempt from sales tax in the state of Kansas. Additionally, the proceeds from the silent auction, if held by or on behalf of a parent-teacher association or organization, would likewise be exempt from Kansas sales tax(es).

Sales of tickets for right to play carnival games, as well as pre-sold bingo pads, by or on behalf of a parent-teacher association or organization, would be subject to 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.

It should be noted that the parent-teacher association or organization is obligated to remit the Bingo Enforcement tax on the gross receipts received from the sale of the pre-sold bingo cards.

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: 11/30/1998 Date Modified: 10/10/2001

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