Must a nonprofit shelter collect Kansas sales tax on its annual fundraiser's admissions, food, and auction sales?

Plain-English summary

A community shelter asked whether the sales at its annual fundraiser are subject to Kansas sales tax. The Department said yes.

Most Kansas nonprofits — including this shelter — are not exempt from the retailers' sales tax act. That means the shelter must pay sales tax on its purchases and charge sales tax on its taxable sales. Because the shelter holds a recurring annual fundraiser, it is treated as making recurring sales, so it must register, collect, and remit Kansas sales tax on:

• admission tickets to the fundraiser,
• food and sales-taxable drinks, and
• items sold at the auction held during the fundraiser.

The auction sales are not shielded as an "isolated or occasional sale" under K.S.A. 79-3602(j), precisely because the annual event makes them recurring rather than isolated.

What this means for you

Nonprofits holding fundraisers in Kansas

Being a nonprofit does not exempt you. If you hold a recurring (e.g., annual) fundraiser, register and collect sales tax on admissions, food, taxable drinks, and auction items — the occasional-sale exemption will not cover a recurring event.

One-time vs. recurring events

The isolated-or-occasional-sale exemption (K.S.A. 79-3602(j)) is aimed at genuinely one-off sales; a repeating annual fundraiser does not qualify.

Common questions

Q: We're a nonprofit shelter — do we still collect tax at our fundraiser?
A: Yes. Most Kansas nonprofits are not exempt, and a recurring annual fundraiser means you must collect tax on admissions, food, drinks, and auction sales.

Q: Aren't the auction sales an exempt occasional sale?
A: No. Because the fundraiser recurs annually, the sales are recurring, not an isolated or occasional sale under K.S.A. 79-3602(j).

Citations and references

• K.S.A. 79-3602(j) — defines "isolated or occasional sale"; the Department held the shelter's annual fundraiser (including the auction) is recurring rather than isolated, so those sales are taxable. Most Kansas nonprofits are not exempt and must register, collect, and remit tax on admissions, food, taxable drinks, and auction items.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2005-022

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

August 31, 2005

TTTTTTTTTTT
TTTTTTTTTTT
TTTTTTTTTTT
TTTTTTTTTTT

Dear Mr. TTTTTT:

We wish to acknowledge receipt of your letter dated August 29, 2005, regarding the application of Kansas Retailers’ Sales tax.

Most Kansas non-profit organizations, including the TTTTTTTTTTTTTTTTTTTTT, are not exempt from the requirements of the Kansas retailers’ sales tax act. This means that most of these organizations, including the shelter, must pay sales tax on its purchases and charge sales tax on its taxable sales. Generally, if an organization holds a recurring annual fundraising event, the organization must register, collect and remit sales tax on the taxable sales made at the event. Accordingly, since the shelter holds an annual fundraiser, it is considered to be making recurring sales and must register, collect and remit sales tax on the sales of admission tickets to the fundraiser and on any customer charges for food and sales-taxable drinks.

Sales made at the auction that is held during the fundraiser are also subject to sales tax. The fact these auction sales are taxable is found under the definition of “isolated or occasional sale,” is set forth in K.S.A. 79-3602(j). In this situation, the shelter is engaging in what is considered to be recurring sales, because it holds an annual 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: 09/14/2005 Date Modified: 09/14/2005

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