For some nonprofit organizations, selling goods and/or services is a way for them to support their mission. In most circumstances, these organizations are required to collect and remit sales and use tax (5.5% in Dane County) related to the sale of the goods and/or services. The good news is there are exemptions which can exclude the nonprofit organization from paying the sales tax.
Beginning in 2017, there are new, more relaxed, standards for nonprofits with sales to qualify for the occasional sale exemption.
The following must all be true in order for the organization to qualify:
Standard 1: The nonprofit organization is not engaged in a ‘trade or business.’
- Current – The Department of Revenue has two conditions to meet this standard: less than 20 days of sales or sales less than $25,000 during the calendar year.
- Beginning in 2017 – the thresholds will be increased to less than 75 days or $50,000 in sales.
Standard 2: Entertainment is not involved at an event for which charges by the nonprofit organization constitute admissions.
- Current – The total amount paid to all entertainers must be less than $500.
- Beginning in 2017 – this threshold will increase to less than $10,000.
(if an admission is charged for entertainment, this exemption will not apply, regardless of amount paid to entertainers)
Standard 3: The nonprofit organization does not have and is not required to have a seller’s permit.
Many nonprofit organizations will likely be affected by this upcoming change.
For those organizations that are currently holding a Seller’s Permit and predict their 2017 sales will fall below the thresholds, they can request to inactivate their permit as of January 1, 2017. The organization will need to submit the following information:
- current name on the account
- tax account number
- date of inactivation
- return the permit to Wisconsin Department of Revenue.
This can easily be done through My Tax Account which can be found on the Home page of the Wisconsin Department of Revenue website. https://www.revenue.wi.gov/index.html
For more information on this topic, please contact April Campbell