For a parent-teacher organization, which fundraiser sales are exempt tangible-property sales and which are taxable services under the PTA/PTO exemption?

Plain-English summary

A parent-teacher organization asked how Kansas sales tax applies to a range of its fundraisers. The Department's answer turns on a single line the statute draws: the PTA/PTO exemption covers sales of tangible personal property, but not taxable services.

The exemption. K.S.A. 79-3606(yy) exempts "all sales of tangible personal property and services purchased by a parent-teacher association or organization, and all sales of tangible personal property by or on behalf of such association or organization."

Exempt — sales of tangible personal property. The Department listed items a PTO can sell without collecting tax: "tickets that can be exchanged for food and drink"; "proceeds from the silent auction, if held by or on behalf of" the PTO; and "the sale of school supply kits, t-shirts, yearbooks, geraniums, family portraits, spaghetti supper tickets and book fair sales."

Taxable — charges for services. "Sales of tickets for right to play carnival games, as well as pre-sold bingo pads, by or on behalf of a parent-teacher association or organization, would be subject to the appropriate Kansas sales tax(es)." Why? "[T]he statute exempts only the sale of tangible personal property and not the providing of a taxable service." A ticket to play a game is buying a service, not a good.

Bingo enforcement tax. Separately, "the parent-teacher association or organization is obligated to remit the Bingo Enforcement tax on the gross receipts received from the sale of the pre-sold bingo cards."

Refunds. If the PTO seeks a sales-tax refund, "proof would have to be submitted to this department that the sales tax has been refunded to your customers" — you can't recover tax you collected and kept.

Bottom line: a PTO's fundraiser sales of physical goods are exempt, but charges for playing games (carnival tickets, bingo) are taxable services, and bingo carries its own enforcement tax.

What this means for you

Parent-teacher organizations running fundraisers

Sales of physical goods — supply kits, apparel, yearbooks, plants, portraits, meal tickets, book-fair items — and silent-auction proceeds can be made tax-free under K.S.A. 79-3606(yy). Don't collect sales tax on those.

Game and activity charges are taxable

Charging for the right to play a carnival game or for bingo is selling a service, which the PTA/PTO exemption does not cover. Collect and remit Kansas sales tax on those charges, and remember bingo also carries the separate Bingo Enforcement tax on the pre-sold cards.

Refunds require refunding your customers first

To get a sales-tax refund from the Department, you must show you actually refunded the tax to the customers who paid it. Keep documentation if you over-collected and are correcting it.

Common questions

Q: Are a PTO's fundraiser goods sales taxable in Kansas?
A: No. Sales of tangible personal property — meal tickets, auction items, apparel, yearbooks, plants, portraits, book-fair items — are exempt under K.S.A. 79-3606(yy).

Q: Why are carnival-game tickets and bingo pads taxable?
A: Because the exemption covers only sales of tangible personal property, not services. A ticket to play a game is a taxable service, so it falls outside the exemption.

Q: Is there any other tax on the bingo activity?
A: Yes. The PTO must remit the Bingo Enforcement tax on the gross receipts from selling the pre-sold bingo cards, separate from sales tax.

Citations and references

• K.S.A. 79-3606(yy) — exempts a parent-teacher association/organization's purchases and its sales of tangible personal property; the Department applied it to exempt the PTO's goods sales while holding that taxable services (carnival-game tickets, bingo pads) fall outside the exemption.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1999-256

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

November 3, 1999

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Dear Ms. TTTTT:

We wish to acknowledge receipt of your letter dated January 11, 1999, regarding the application of Kansas Retailers’ Sales tax.

K.S.A. 79-3606(yy) exempts from sales tax: “all sales of tangible personal property and services purchased by a parent-teacher association or organization, and all sales of tangible personal property by or on behalf of such association or organization.”

Please be advised that the tickets that can be exchanged for food and drink by a parent-teacher association or organization would be exempt from sales tax in the state of Kansas. Additionally, the proceeds from the silent auction, if held by or on behalf of a parent-teacher association or organization, would likewise be exempt from Kansas sales tax(es). Further, the sale of school supply kits, t-shirts, yearbooks, geraniums, family portraits, spaghetti supper tickets and book fair sales would not have to have sales tax collected thereon.

Sales of tickets for right to play carnival games, as well as pre-sold bingo pads, by or on behalf of a parent-teacher association or organization, would be subject to the appropriate Kansas sales tax(es). The reason that the latter transaction would be subject to sales tax in this state, is that the statute exempts only the sale of tangible personal property and not the providing of a taxable service.

It should be noted that the parent-teacher association or organization is obligated to remit the Bingo Enforcement tax on the gross receipts received from the sale of the pre-sold bingo cards.

In order to obtain a sales tax refund, proof would have to be submitted to this department that the sales tax has been refunded to your customers.

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: 12/01/1999 Date Modified: 10/11/2001

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