Does a group have to collect Kansas sales tax on a food fundraiser it holds on behalf of an exempt youth development organization?

Plain-English summary

A group asked whether it must collect Kansas sales tax on a food fundraiser it conducts on behalf of a youth development organization.

The exemption. K.S.A. 79-3606(ii) exempts "all sales of tangible personal property purchased directly by a non-profit organization for nonsectarian comprehensive multidiscipline youth development programs and activities provided or sponsored by such organization, and all sales of tangible personal property by or on behalf of any such organization." The exemption "shall not apply to tangible personal property customarily used for human habitation purposes."

The fundraiser is exempt. Applying that statute, the Department advised: "since the food sale is conducted on behalf of the [youth development organization], there would not be an obligation to collect any Kansas sales tax(es) on the respective fundraiser."

Bottom line: the exemption for a qualifying nonsectarian comprehensive multidiscipline youth development organization covers not just what it buys, but also sales of tangible personal property made "by or on behalf of" the organization. A food fundraiser run on the organization's behalf therefore does not require collecting Kansas sales tax.

What this means for you

The exemption reaches "on behalf of" sales

Unlike many nonprofit exemptions that cover only purchases, K.S.A. 79-3606(ii) also exempts sales of tangible personal property made "by or on behalf of" a qualifying youth development organization. A supporting group running a fundraiser for the organization stands in the organization's shoes for this purpose.

The organization must be the qualifying type

The exemption applies to a nonprofit organized for "nonsectarian comprehensive multidiscipline youth development programs and activities." Not every youth-serving group qualifies; the organization has to fit that statutory description.

Watch the human-habitation exclusion

The statute carves out "tangible personal property customarily used for human habitation purposes." Sales of that kind of property are not covered even when made by or on behalf of the organization.

Keep proof the sale is on the organization's behalf

Because the exemption turns on the sale being "by or on behalf of" the qualifying organization, keep records showing the fundraiser was conducted for the organization and that the proceeds support its programs.

Common questions

Do we collect sales tax on a food fundraiser for a youth development organization?
No, if the organization qualifies under K.S.A. 79-3606(ii) and the sale is conducted on its behalf. The Department found no obligation to collect Kansas sales tax on the fundraiser.

Does the exemption only cover the organization's purchases?
No. It also covers sales of tangible personal property made "by or on behalf of" the organization — which is why the fundraiser is exempt.

Which organizations qualify?
Nonprofits organized for nonsectarian comprehensive multidiscipline youth development programs and activities. A group must fit that specific description to be covered.

Is anything excluded?
Yes. The exemption does not apply to tangible personal property customarily used for human habitation purposes.

Citations and references

• K.S.A. 79-3606(ii) — exempts tangible personal property purchased directly by a nonprofit for nonsectarian comprehensive multidiscipline youth development programs, and all sales of tangible personal property by or on behalf of such an organization; excludes property customarily used for human habitation.
• K.A.R. 92-19-59 — authorizes Kansas private letter rulings; this ruling binds the Department only as to the requesting taxpayer and the facts presented.
• Issued October 16, 1998 by Thomas P. Browne, Jr., Tax Specialist, Office of Policy & Research, Kansas Department of Revenue.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1998-169

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

October 16, 1998

TTTTTTTTTTT
TTTTTTTTTTT
TTTTTTTTTTT
TTTTTTTTTTT

Dear Ms. TTTTT:

We wish to acknowledge receipt of your letter dated September 29, 1998, regarding the application of Kansas Retailers’ Sales tax.

K.S.A. 79-3606(ii) exempts from sales tax: “all sales of tangible personal property purchased directly by a non-profit organization for nonsectarian comprehensive multidiscipline youth development programs and activities provided or sponsored by such organization, and all sales of tangible personal property by or on behalf of any such organization. This exemption shall not apply to tangible personal property customarily used for human habitation purposes. . .”

Please be advised that since the food sale is conducted on behalf of the TTTTTTTTTTTT, there would not be an obligation to collect any Kansas sales tax(es) on the respective fundraiser.

This is a private letter ruling pursuant to K.A.R. 92-19-59. It is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to an accurate determination by the department, this ruling is null and void. This ruling will be revoked in the future by the operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or published revenue ruling, that materially effects this private letter ruling. If I may be of further assistance, please contact me at your earliest convenience at (785) 296-7776.

Sincerely yours,

Thomas P. Browne, Jr.
Tax Specialist

TPB

Date Composed: 10/29/1998 Date Modified: 10/10/2001

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