Does a parent-teacher organization (PTO) qualify for the Kansas sales and compensating tax exemption for parent-teacher associations/organizations under K.S.A. 79-3606(yy)?

Plain-English summary

A parent-teacher organization (PTO) asked whether it qualifies for exemption from Kansas retailers' sales and compensating (use) tax under K.S.A. 79-3606(yy). Based on the information submitted, the Department concluded the organization is a PTO and recognized it as exempt.

What the exemption does. A qualifying organization may:

• Purchase tangible personal property and services without paying sales tax; and
• Sell tangible personal property without charging sales tax.

But the legislature did not exempt it from collecting sales tax on receipts from taxable services it provides.

The statute. K.S.A. 79-3606(yy) 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."

Who qualifies. A "parent-teacher association" is a nonprofit PTA chartered by the National PTA or Kansas PTA, authorized to operate within a public or private school by the school's governing authority. A "parent-teacher organization" is a nonprofit group functionally equivalent to a PTA, likewise authorized to operate within the school. The PTA/PTO must operate for the benefit and support of an individual school, with a defined structure, purpose, and goals, be recognized by the school, and run programs promoting the education, health, and safety of children. Typically there is only one PTA/PTO per school, with long-term goals and numerous programs. For this exemption, a school is an institution meeting the compulsory attendance provisions of K.S.A. 72-1111.

Who doesn't. "Booster clubs" and similar clubs usually do not qualify. They are narrow or one-dimensional — organized to support a single sport, band, or drama group — and don't encompass the broader objectives of a PTA/PTO, even if made up of parents, students, and businesses interested in the school.

What this means for you

Qualifying PTAs and PTOs

If you are a nonprofit PTA/PTO chartered/authorized to operate within a school and serving the whole school's educational, health, and safety mission, you can buy exempt and sell tangible personal property exempt under 79-3606(yy). Issue the Department's exemption certificate to your vendors.

Still collect tax on taxable services

The exemption does not relieve you from collecting sales tax on taxable services you provide. Selling tangible personal property is covered; providing an enumerated taxable service is not.

Booster clubs: usually taxable

A single-activity booster club (sports, band, drama) generally does not qualify as a PTA/PTO and should not assume it can buy or sell tax-free under this exemption.

Common questions

Q: Is our PTO exempt from Kansas sales and use tax?
A: If it meets the K.S.A. 79-3606(yy) definition (a nonprofit PTA/PTO authorized to operate within a school and serving the whole school), yes — the Department recognized this organization as an exempt PTO.

Q: What does the exemption cover?
A: Purchases of tangible personal property and services without paying tax, and sales of tangible personal property without charging tax. It does not cover collecting tax on taxable services the organization provides.

Q: Do booster clubs qualify?
A: Usually not. Narrow, single-activity clubs supporting a sport, band, or drama group don't encompass the broader objectives of a PTA/PTO and generally don't qualify.

Q: What counts as a "school" for this exemption?
A: An institution meeting the compulsory attendance provisions of K.S.A. 72-1111.

Q: Does this ruling apply to my organization?
A: A Kansas private letter ruling addresses only the requesting taxpayer's facts and cannot be relied on as precedent by others, though it shows how the Department applies the PTA/PTO exemption.

Citations and references

• K.S.A. 79-3606(yy) — exempts purchases of tangible personal property and services by a parent-teacher association or organization, and sales of tangible personal property by or on behalf of it.
• PTA/PTO definitions — a nonprofit PTA chartered by the National or Kansas PTA, or a functionally equivalent nonprofit PTO, authorized to operate within a school for the school's benefit; booster clubs and narrow single-activity clubs generally don't qualify.
• K.S.A. 72-1111 — the compulsory attendance provisions defining a "school" for this exemption.
• Taxable services caveat — the exemption does not relieve the organization from collecting sales tax on taxable services it provides.
• K.A.R. 92-19-59 — the regulation authorizing Kansas private letter rulings.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2002-100

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

December 5, 2002

XXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXX

Dear Ms. XXXXXX:

I have been asked to respond to your letter dated November 18, 2002.

In it, you ask if the Parent Organization XXXXXX qualifies for exemption from Kansas retailers' sales and compensating tax pursuant to K.S.A. 79-3606(yy). The answer is "yes."

This means that the organization may purchase tangible personal property and services without the payment of sales tax. The organization may also sell tangible personal property without imposing sales tax. However, the legislature did not exempt your organization from the responsibility of collecting sales tax on receipts from the providing of taxable services.

K.S.A. 79-3606(yy) exempts from Kansas retailers' 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;"

For purposes of the exemption extended at K.S.A. 79-3606(yy), "parent-teacher association" shall mean a nonprofit parent-teacher association chartered by the National PTA or Kansas PTA. PTAs are authorized to operate within a public or private school by the governing authority of the school. A "parent-teacher organization" means a nonprofit parent-teacher organization that is functionally equivalent to a "parent-teacher association" that is authorized by the governing authority of a public or private school to operate within the school.

The PTA or PTO must operate for the benefit and support of an individual school with a defined organizational structure, purpose, and goals; and is recognized by the school as a PTA/PTO. A PTA/PTO provides programs within a school promoting the education, health and safety of children. Generally, there is only one PTA/PTO within a school and they would have long-term goals and objectives and numerous programs operating within the school.

Other organizations such as "booster clubs" that operate in connection with schools usually do not qualify for exemption. These clubs or associations are organized and operated for the benefit of clubs or organizations that are recognized school organizations but are of a narrow or one-dimensional nature. They are typically operated to support a sport, band or drama group. They do not encompass the broader objectives of PTAs or PTOs. Booster clubs or other types of clubs that support sports, bands, or other extra-curricular activities do not qualify as PTA's or PTO's, even though they may be composed of parents, students, businesses, and others who are interested in the school or in certain facets of the educational process.

For purposes of this exemption, a school is defined as an institution which meets the compulsory attendance provisions of K.S.A. 72-1111.

Based solely upon the information and documents you submitted, it is the opinion of the Kansas Department of Revenue that your organization is a PTO. Therefore, the department recognizes your organization is exempt pursuant to K.S.A. 79-3606(yy).

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 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 private letter ruling.

I have enclosed a copy of an exemption certificate for purchases by your organization. You may duplicate this certificate and issue to retailers as needed.

Sincerely,

Mark D. Ciardullo
Tax Specialist

MDC

Date Composed: 12/16/2002 Date Modified: 12/16/2002

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