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Charities that sell things and sales tax

1,287 Views | 7 Replies | Last: 5 yr ago by LOYAL AG
Burdizzo
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AG
Last few years we have bought our Christmas trees from the local Optimist Club. They had always been a straight up price with no sales tax. This year they started charging sales tax. I asked them about it, and they said they were always figuring tax into the sales price and then paying the state. Fair enough. I won't bore you with all the details of the conversation, but I was not the first person to ask about.

The reason this is of particular interest to me is because my son's Cub Scout Pack sells that overpriced popcorn every year - about $13k-15k worth. We have never charged tax and never paid the state. This has never been something mentioned by our area council either.

Any CPAs provide insight on this?
TXAGFAN
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AG
Sales tax is almost certainly reported at national level, not Troop/District/Council.
30wedge
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TXAGFAN said:

Sales tax is almost certainly reported at national level, not Troop/District/Council.
Sales tax is a state tax, not national
gigemhilo
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AG
Popcorn probably falls under the exemption as a food item - at least in most states. But if it does not, then yes - the National org is paying sales tax on that. ultimately they are "in charge" of the fundraising and supplying the product.

But, YES, non-profits are required to pay sales tax in Texas. There are situations where they dont, but... if they are selling a product (other than food) they are generally required to pay sales tax on the sale. Now, the actually application of that law against small non-profits is a different story... but by law they are supposed to be doing sales tax.
gigemhilo
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AG
30wedge said:

TXAGFAN said:

Sales tax is almost certainly reported at national level, not Troop/District/Council.
Sales tax is a state tax, not national
it is a local tax paid for by the Boy Scouts of America Inc (national org).
Burdizzo
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AG
gigemhilo said:

Popcorn probably falls under the exemption as a food item - at least in most states. But if it does not, then yes - the National org is paying sales tax on that. ultimately they are "in charge" of the fundraising and supplying the product.

But, YES, non-profits are required to pay sales tax in Texas. There are situations where they dont, but... if they are selling a product (other than food) they are generally required to pay sales tax on the sale. Now, the actually application of that law against small non-profits is a different story... but by law they are supposed to be doing sales tax.


This may explain a conversation I had a few years ago. A buddy of mine in a different council leads a Boy Scout Troop that his sons are in. Their fundraiser is buying frozen turkeys wholesale, getting a local BBQ joint to smoke them, and then selling them. I mentioned this to our leadership, and they all freaked out. They said our Council mandates the only fundraiser can be popcorn. Their are probably a lot of issues driving this policy, and sales tax is one of them.
TXAGFAN
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AG
Nevermind.
diehard03
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Quote:

They said our Council mandates the only fundraiser can be popcorn. Their are probably a lot of issues driving this policy, and sales tax is one of them.

I think it's less this and more "using misinformation to do less work". Council doesn't mandate half of what people claim council mandates. But, it's an easy thing to believe if you want to believe it. Popcorn is a "fundraiser in a box" so to speak. The idea you brought is a lot more involved, so I'm not surprised with the reaction.

edit: I hate the popcorn myself and I am looking for transparency from our committee on what we actually get for it.
LOYAL AG
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AG
While Texas' sales tax rules can be quite confusing I learned this summer than California has one upped Texas in this specific area. Shocking, I know.

We were in LA this summer and Mrs. LOYAL AG stopped in a thrift store. The sign above the register said that they charge sales tax because their proceeds do not support any particular charity. So we went to Goodwill next door and sure enough they didn't charge sales tax.
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