Is a charity golf tournament whose proceeds go to a parks and recreation department exempt from Kansas tax?

Plain-English summary

An organizer holding its "fourth annual golf tournament in October of 1999," whose "proceeds from this event are to be donated to the [ ] Parks and Recreation," asked the Department for a "federal tax exemption letter for our event."

No Kansas exemption applies. The Department wrote: "I am not aware of any provision under either the Kansas retailers' sales tax act, or under the Kansas income tax act, which would permit your annual golf tournament to enjoy an exemption from tax."

The one arguably relevant sales tax exemption doesn't fit. The Department explained that the sales tax act "does provide an exemption for sales of tangible personal property (buttons for example) which will admit the purchaser thereof to an annual event sponsored by a nonprofit organization which is exempt from federal income taxation pursuant to section 501(c)(3) of the federal internal revenue code [see K.S.A. 79-3606(rr)]." But "nothing in your letter indicates your event is sponsored by a 501(c)(3) nonprofit organization," so the exemption did not apply.

Federal exemption comes from the IRS, not Kansas. Because the taxpayer had specifically asked for a federal tax exemption letter but sent the request to the Kansas Department of Revenue, the Department noted: "If it is your intention to obtain a federal tax exemption letter you will need to contact the Internal Revenue Service."

Bottom line: donating a golf tournament's proceeds to a parks and recreation department does not, by itself, exempt the event from Kansas sales or income tax. The K.S.A. 79-3606(rr) exemption for admission-item sales requires that the event be sponsored by a 501(c)(3) organization, and federal exemption is an IRS matter.

What this means for you

Charitable purpose alone is not a Kansas exemption

Directing an event's proceeds to a government department or charity does not automatically make the event's receipts or purchases exempt. Kansas exemptions are specific and statutory — you have to fit an actual provision.

The admission-item exemption has conditions

K.S.A. 79-3606(rr) can exempt the sale of tangible items (buttons, badges, and the like) that admit the buyer to an annual event — but only when the event is sponsored by a 501(c)(3) nonprofit. If your event is not sponsored by a qualifying 501(c)(3), this exemption is unavailable.

Federal vs. state exemption are different processes

A federal income tax exemption (501(c)(3) status) comes from the IRS. The Kansas Department of Revenue cannot issue it. Sort out which exemption you actually need — federal recognition, a Kansas sales tax exemption, or both — and apply to the right agency.

Common questions

Q: Does donating golf tournament proceeds to a city parks department make the event tax-exempt in Kansas?
A: No. The Department found "no . . . provision under either the Kansas retailers' sales tax act, or under the Kansas income tax act," to exempt the tournament on these facts.

Q: What is the K.S.A. 79-3606(rr) exemption the Department mentioned?
A: It exempts sales of tangible personal property (for example, buttons) that admit the purchaser to an annual event "sponsored by a nonprofit organization which is exempt from federal income taxation pursuant to section 501(c)(3)." It did not apply because nothing showed the event was sponsored by a 501(c)(3).

Q: How do I get a federal tax exemption letter?
A: From the Internal Revenue Service. The Department noted that a request for a federal exemption "you will need to contact the Internal Revenue Service," not the State of Kansas.

Citations and references

• K.S.A. 79-3606(rr) — exempts sales of tangible personal property (e.g., buttons) that admit the purchaser to an annual event sponsored by a 501(c)(3) nonprofit; the Department identified this as the only arguably relevant exemption and found it inapplicable because the event was not shown to be sponsored by a 501(c)(3).

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1999-172

Original ruling text

Private Letter Ruling

Body:

Office of Policy and Research

August 3, 1999

XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX

Re: Kansas Taxes

Dear XXXXX:

Your correspondence of July 22, 1999, has been referred to me for response. Thank you for your inquiry. Your letter states:

XXXXXXXXXXXXX is holding its fourth annual golf tournament in October of 1999. Any proceeds from this event are to be donated to the XXXXXX Parks and Recreation here in our community. I am requesting a federal tax exemption letter for our event. (Emphasis added.)

I am not aware of any provision under either the Kansas retailers’ sales tax act, or under the Kansas income tax act, which would permit your annual golf tournament to enjoy an exemption from tax. The sales tax act does provide an exemption for sales of tangible personal property (buttons for example) which will admit the purchaser thereof to an annual event sponsored by a nonprofit organization which is exempt from federal income taxation pursuant to section 501(c)(3) of the federal internal revenue code [see K.S.A. 79-3606(rr)]. However, nothing in your letter indicates your event is sponsored by a 501(c)(3) nonprofit organization.

Your letter specifically states you are requesting a federal tax exemption letter. In fact your letter was sent to the Kansas Department of Revenue. If it is your intention to obtain a federal tax exemption letter you will need to contact the Internal Revenue Service.

This private letter ruling is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to make an accurate determination by the department, this ruling is null and void. This private letter ruling will be revoked in the future by operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or a published revenue ruling, that materially affects this private letter ruling.

I trust this information is of assistance. If I can be of further service, please feel free to contact me.

Sincerely,

Jim Weisgerber
Attorney
Tax Specialist

JW:jw

Date Composed: 08/04/1999 Date Modified: 10/10/2001

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