Question: Sales Tax passed on to parents?

We are a new PTO. We will soon be incorporated and apply for 501c3 status. I've been told the PTO needs to obtain a "Sellers Permit" from the State (Wisconsin) to run our fundraiser, spirit wear sale and scholastic books fairs. Additionally, the PTO is not charged sales tax by the suppliers but the parents (end purchaser) must be charged sales tax. Other PTO's don't charge sales tax and I've never paid sales tax when buying Girl Scout Cookies or BoyScout popcorn. Can anyone explain this?

Asked by ete2012

Answers:

Community Advice

mum24kids writes:
I'm not in Wisconsin, so this is a guess. In my state, you can't be exempt from paying/collecting sales taxes until you have your 501(c)(3) status. Since you don't have yours yet, that could be why. But the best way for you to get the answer to this is to contact the state office in Wisconsin that deals with sales tax and have them explain it to you. Sales tax laws are administered by states, so unless there is someone else on here from Wisconsin, we're not going to be able to be much help.

Community Advice

gjcoram writes:
In addition, 501c3 organizations in MA (where I am) are exempt from sales tax on items purchased for their own use, but *not* exempt for purchases made for resale -- this means we charge sales tax at our book fair. But mum24kids is right, you need to get a WI tax expert to answer.

Community Advice

ete2012 writes:
mum24kids and gjcoram-thanks for the responses.
Any idea why this same rule would not apply to girl scouts and their cookies? (I have nothing against the girl scouts but wonder why the 'resale"=sales tax standard wouldn't apply to them as well). Are there any other PTO's out there that charge sales tax? When I mentioned this to other members they thought I'd lost my mind.....

Advice from PTO Today

Craig writes:
Good answers below from mum24kids and gjcoram, both knowledgeable posters. Also, from a quick reading of the Wisconsin rules, you probably are exempt from sales tax. Two exemptions that might apply -- if your raise less than $25,000 and if you fundraise for no more than 20 days a year. If you have, say, a catalogue fundraiser and take orders for a month but deliver all the orders over three days, the rule states that you only count the three delivery days as fundraising time.

Here's a link to a detailed explanation of the sales tax rules:
http://www.revenue.wi.gov/pubs/pb206.pdf

Community Advice

gjcoram writes:
Girl Scout cookies: good question. In MA, food (including cookies) is not taxed. (Whether cookies, candy, soda, etc. *should* be taxed is a different discussion ... :) )