Do school student clubs qualify for the youth-development sales-tax exemption, and when are PTA/PTO sales exempt?

Plain-English summary

A requester asked how Kansas retailers' sales tax applies to retail sales by parent-teacher associations, public schools, and school student clubs, referencing the Department's Notice 98-01. The Department addressed two questions:

• Do school student clubs or activity funds fall under the "other nonprofit organizations" youth-development exemption? No. The Department's opinion is that schools and school clubs do not enjoy the exemption in K.S.A. 79-3606(ii), which exempts nonsectarian comprehensive multidiscipline youth development programs. It reasoned that this reading is bolstered because Kansas law contains a specific exemption for public schools in K.S.A. 79-3606(c), and K.S.A. 79-3606(yy) contains a similar exemption for sales by parent-teacher associations.
• Can a "parent group" buy concession items tax-free and route proceeds to a student club? Only if the parent group is a PTA or PTO. A PTA is a nonprofit chartered by the National PTA or Kansas PTA and authorized to operate within a public or private school by the school's governing authority; a PTO is a functionally equivalent nonprofit similarly authorized. The PTA/PTO must operate for the benefit and support of an individual school with a defined structure, purpose, and goals, and be recognized by the school as a PTA/PTO.

The Department added that subsequent transfers of moneys acquired through fundraising and transferred to other organizations would incur no Kansas retailer sales tax liability.

What this means for you

Exempt status for school-connected groups depends on exactly which entity is making the sale.

• Student clubs/activity funds are not covered by 79-3606(ii). The nonsectarian youth-development exemption does not extend to schools and their clubs.
• Public schools have their own exemption under K.S.A. 79-3606(c); PTAs have theirs under K.S.A. 79-3606(yy). These are distinct provisions.
• "Parent group" ≠ automatically exempt. To use the PTA exemption, the group must genuinely be a PTA (National/Kansas PTA charter) or a functionally equivalent PTO authorized by the school.
• Passing fundraising proceeds along is not a taxable sale. Money a PTA/PTO raises and then transfers to other organizations does not create Kansas retailer sales tax liability.

Common questions

Do school student clubs get the youth-development sales-tax exemption?
No. The Department ruled that schools and school clubs do not enjoy the K.S.A. 79-3606(ii) exemption for nonsectarian multidiscipline youth development programs.

Which exemptions apply to schools and PTAs?
Public schools have a specific exemption in K.S.A. 79-3606(c); parent-teacher associations have one in K.S.A. 79-3606(yy).

When can a parent group buy concession items tax-free?
Only if it is a true PTA (chartered by the National or Kansas PTA) or a functionally equivalent PTO authorized to operate within the school.

Is transferring fundraising money to another group taxable?
No. The Department said subsequent transfers of fundraising money to other organizations incur no Kansas retailer sales tax liability.

Citations and references

• K.S.A. 79-3606(ii) — exempts nonsectarian comprehensive multidiscipline youth development programs (which the Department held does not cover schools or school clubs).
• K.S.A. 79-3606(c) — specific exemption for public schools.
• K.S.A. 79-3606(yy) — exemption for sales by (and purchases of) parent-teacher associations/organizations.

Source

• Original ruling (DOCX): https://www.ksrevenue.gov/pildocs/rulings/P-1999-94.docx
• Kansas Policy Information Library: https://www.ksrevenue.gov/prpil.html

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

March 26, 1999

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Dear Ms. XXXXXXX

The purpose of this letter is to respond to your letter dated August 25, 1998.

In your letter you asked for clarification and answers to questions on the application of Kansas retailers’ sales tax on retail sales by parent teacher associations, public schools and school student clubs.

You have reviewed the Department’s Notice 98-01, and have stated that no changes are apparent for sales by schools, except for sales by parent teacher associations.

The Department is in agreement this statement.

You asked, “Would school student clubs or activity funds fall into the category ‘other nonprofit organizations’ for sales of tangible personal property made by or on behalf of a non-profit organization for nonsectarian multidiscipline youth development programs? Many of our schools sell candy or other items to promote the development of students of the school.”

It is the opinion of the Department that schools and school clubs do not enjoy the exemption contained in K.S.A. 79-3606(ii), which exempts nonsectarian comprehensive multidiscipline youth development programs. This opinion is further bolstered by the fact that Kansas sales tax law contains specific exemptions for public schools K.S.A. 79-3606(c). K.S.A. 79-3606(yy) does contain a similar exemption for sales by parent teacher associations

You asked, “Can a parent group purchase all the items tax-exempt for concession stand and then their members run the concession stand and give the student club of their interest a tax free donation?

To be exempt the parent group must be a parent teacher association (PTA) or a parent teacher organization (PTO). For purposes of the exemption, a parent-teacher association is a nonprofit association chartered by the National PTA or Kansas PTA that is authorized to operate within a public or private school by the governing authority of the school. A parent-teacher organization is a nonprofit organization that is functionally equivalent to a “parent-teacher association” and is authorized by the governing authority of a public or private school to operate within the school. The PTA or PTO operates for the benefit and support of an individual school with a defined organizational structure, purpose, and goals, and is recognized by the school as a PTA/PTO.

Subsequent transfers of moneys acquired through fund raising and transferred to other organizations would incur no Kansas retailer sales tax liability.

This is a private letter ruling pursuant to Kansas Administrative Regulation 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 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 effects this ruling.

Sincerely,

Mark D. Ciardullo
Tax Specialist

MDC

Date Composed: 04/02/1999 Date Modified: 10/11/2001

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