Are a nonprofit club's Christmas-tree fundraising sales exempt from Kansas sales tax?

Plain-English summary

A nonprofit 501(c)(4) club that "[e]very December . . . sells Christmas trees in order to raise funds that are in turn donated to . . . related non-profit organizations" asked whether any Kansas sales tax exemption applies to those sales. The club noted it had "been remitting sales tax to the State for many years relating to the sale of these trees."

The general rule. "Kansas law broadly imposes tax on the sale of tangible personal property and enumerated services. The law also contains exemptions and exceptions from the imposition of sales tax."

The holding. "It is the opinion of the Kansas Department of Revenue that the law does not contain an exemption or exception for your organization's fund raising sales. Your organization must collect and remit sales tax on all taxable sales including the gross receipts from fund raising."

Bottom line: selling goods to raise money for charity is still a taxable retail sale in Kansas. A 501(c)(4) club's Christmas-tree fundraiser has no exemption, so the club must collect and remit sales tax on those sales — confirming the practice it had already been following.

What this means for you

Fundraising sales are still taxable sales

Selling tangible goods — Christmas trees, and the like — to raise money is a retail sale subject to Kansas sales tax. Where the proceeds go does not change the taxability of the sale.

501(c)(4) status does not carry a sales tax exemption

Being a nonprofit, including a 501(c)(4) civic organization, does not by itself exempt your sales. Kansas exemptions are specific, and none covered this club's fundraising sales.

Collect and remit on the gross receipts

If your organization sells goods to the public, register as needed and collect and remit sales tax on the gross receipts, just as this club had been doing for years.

Common questions

Q: Does a nonprofit owe Kansas sales tax on fundraising sales of Christmas trees?
A: Yes. The Department found "the law does not contain an exemption or exception for your organization's fund raising sales," so it "must collect and remit sales tax."

Q: Does donating the proceeds to other nonprofits make the sales exempt?
A: No. Kansas taxes the sale itself; using the proceeds for charitable purposes does not exempt the underlying retail sales.

Q: The club had been paying the tax already — was that correct?
A: Yes. The ruling confirms the club "must collect and remit sales tax on all taxable sales including the gross receipts from fund raising," consistent with its long-standing practice.

Citations and references

• The Department relied on the broad imposition of Kansas sales tax on retail sales of tangible personal property and concluded that no statutory exemption or exception covered the organization's fundraising sales; it did not cite a specific exemption statute (because none applied).

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1999-151

Original ruling text

Private Letter Ruling

Body:

Office of Policy and Research

July 12, 1999

XXXXXXX
XXXXXXX
XXXXXXX

Dear XXXXXXXXX:

I have been asked to respond to your letter of July 1, 1999. In it, you ask about the sales and use tax responsibilities of your organization.

In your letter you stated:

I am the XXXXXXXXXX, which is a non-profit 501(c)(4) organization. Every
December, our club sells Christmas trees in order to raise funds that are in turn
donated to your related non-profit organizations (such as XXXXXX,
XXXXXX, etc). We have been remitting sales tax to the State for many years
relating to the sale of these trees.

Are there any Kansas sales tax exemption laws that would apply to this type of sale?
You mentioned to me that you have researched this issue for other XXXXXX clubs
within Kansas, so I am requesting a private letter ruling on this issue so that I can be
sure that I am handling it correctly.

Kansas law broadly imposes tax on the sale of tangible personal property and enumerated services. The law also contains exemptions and exceptions from the imposition of sales tax.

It is the opinion of the Kansas Department of Revenue that the law does not contain an exemption or exception for your organization's fund raising sales. Your organization must collect and remit sales tax on all taxable sales including the gross receipts from fund raising.

This 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 make an accurate determination by the department, this ruling is null and void. This private letter ruling will be revoke 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 private letter ruling.

Sincerely,

Mark D. Ciardullo
Tax Specialist

MDC

Date Composed: 07/15/1999 Date Modified: 10/11/2001

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