Does a nonprofit spouses' club have to collect Kansas sales tax on its fundraising sales?

Plain-English summary

A nonprofit enlisted spouses' club asked whether Kansas sales tax applies to its fundraising sales.

Nonprofit status alone is not enough. The Department's standard answer: "Many organizations, such as your enlisted spouses' club, perform a great deal of services for their communities with the funds that they raise. However, not every non-profit organization enjoys an exemption from Kansas sales tax. Yours does not."

The club must register and collect tax on its sales. "[Y]our organization also would be obligated to register, collect, and remit both state and local sales tax on retail sales of admission tickets, shirts, hats, posters, snack-type items, and etc." The Department enclosed a Kansas Department of Revenue Business Tax Application so the club could register.

Bottom line: because the club is not one of the entities Kansas law specifically exempts, its fundraising sales are taxable retail sales. The club has to register as a retailer and collect and remit state and local sales tax on those sales.

What this means for you

Nonprofit fundraising sales are taxable

Directing the proceeds to a good cause does not exempt the sale. A nonprofit that is not among Kansas's specifically exempt entities must charge sales tax on the merchandise, tickets, and food it sells to raise funds.

You must register as a retailer

Before making taxable sales, the organization completes a Kansas Department of Revenue Business Tax Application to register, then collects and remits the tax it charges.

Both state and local tax apply

The club collects both the state rate and any applicable local sales tax on its retail fundraising sales — tickets, shirts, hats, posters, and snacks are all listed as taxable in this ruling.

Consistent with the Department's treatment of similar clubs

This mirrors the Department's rulings on other nonprofit and civic fundraising groups: nonprofit status by itself does not remove the obligation to register, collect, and remit tax on retail sales.

Common questions

Q: Is our nonprofit club exempt from Kansas sales tax on fundraising sales?
A: No. The Department stated that "not every non-profit organization enjoys an exemption," and this club does not; its fundraising sales are taxable.

Q: What do we have to do?
A: Register with the Department (via the Business Tax Application), then collect and remit both state and local sales tax on your retail sales of tickets, apparel, posters, snacks, and similar items.

Q: Does it matter that the money goes to community services?
A: No. Using the proceeds for community services does not exempt the underlying retail sales from Kansas sales tax.

Citations and references

• K.S.A. 79-3603 — imposes Kansas retailers' sales tax on taxable retail sales; a nonprofit not within a statutory exemption must collect it on its fundraising sales.
• K.S.A. 79-3606 — the list of Kansas sales-tax exemptions; this nonprofit club is not among the enumerated exempt entities.
• 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-1999-128

Original ruling text

Private Letter Ruling

Body:

Office of Policy and Research

June 3, 1999

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Dear Ms. TTTTTTTT:

We wish to acknowledge receipt of your letter dated April 30, 1999, regarding the application of Kansas Retailers’ Sales tax.

Many organizations, such as your enlisted spouses’ club, perform a great deal of services for their communities with the funds that they raise. However, not every non-profit organization enjoys an exemption from Kansas sales tax. Yours does not.

In closing, your organization also would be obligated to register, collect, and remit both state and local sales tax on retail sales of admission tickets, shirts, hats, posters, snack-type items, and etc. For your convenience, I have enclosed a Kansas Department of Revenue Business Tax Application, along with the applicable instructions.

This is a private letter ruling pursuant to K.A.R. 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 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

Enc

Date Composed: 06/22/1999 Date Modified: 10/11/2001

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