Louisiana – Sales by Non-profit Organizations

3/4/2013

SALT Report 2214 – The Louisiana Department of Revenue issued guidance regarding the sales tax exemption for events sponsored by civic, educational, historical, charitable, fraternal, or religious non-profit organizations. Generally, the sponsoring organization will be considered non-profit if it is publicly recognized and established through a formal charter or incorporation, and is approved for non-profit status under the Internal Revenue Code.

For every fund-raising event held, the Department requires that the non-profit apply for a new exemption certificate.  At that point, proceeds from that event will qualify as exempt only if the entire amount is used to further the purpose of the organization. Events that are intended to create a profit for the promoter will be excluded from the exemption.

Further, any individual, group, or organization will be considered a promoter and ineligible for the exemption if there is an agreement with the non-profit to share in the net proceeds of the event, or if the individual, group, or organization bears a risk of loss or gain that is dependent on the success of the event.

The notice also addresses the following common types of fund-raising events:

  • School or youth organizations selling food at a festival or fair
  • School or religious organizations taking orders on behalf of a promoter for Christmas cards, wrapping paper, candles, etc.
  • Organizations taking orders and purchasing items from a vendor without involvement of a promoter
  • Non-profit organizations purchasing merchandise for its members to resell
  • Non-profit organizations sponsoring a merchandise fair in which the organization is given an agreed-upon percentage of the profits, and
  • Non-profit organizations hosting or facilitating the sale of merchandise by a third-party vendor

For Further Information

Louisiana Department of Revenue – Revenue Ruling No. 13-002

LAC 61:I.4418 – Nonprofit Organizations – Tax Exemption