When can a Louisiana nonprofit make tax-free sales at a fundraising event?

Plain-English summary

Louisiana Revenue Ruling 13-002 explained when admissions, parking, and tangible-property sales at a nonprofit fundraising event could be exempt from sales-tax collection.

The event had to be sponsored by a qualifying nonprofit, use its proceeds—apart from necessary expenses—for the organization's qualifying purpose, and not be intended to produce a profit for a promoter.

The practical dividing line was who controlled and financially benefited from the fundraiser. A nonprofit that bought and resold merchandise on its own account could qualify. A vendor that supplied the sales program, shared proceeds, or bore a gain or loss tied to the event's success was a promoter, making the event ineligible under the ruling.

Basic event requirements

La. R.S. 47:305.14 covered fundraising events sponsored by nonprofit domestic, civic, educational, historical, charitable, fraternal, or religious organizations.

The ruling said:

• the entire proceeds, after necessary event expenses, had to further the organization's educational, charitable, religious, or historical-restoration purpose;
• an event intended to profit a promoter did not qualify; and
• unless the items were exempt under another rule, the nonprofit had to apply for a Department exemption certificate for each event.

An approved event-specific certificate showed that the nonprofit did not have to collect tax on otherwise taxable sales during that event.

When a vendor became a promoter

The ruling generally treated a person or business as a promoter when it:

• shared the event's net proceeds with the nonprofit; or
• bore a financial gain or loss dependent on the fundraiser's success.

Buying goods from a third-party vendor did not by itself defeat the exemption. The vendor's role, financial risk, and profit arrangement controlled.

Six examples from the ruling

1. Food sales

Girl Scouts, Boy Scouts, and 4-H Clubs were identified as congressionally chartered youth-serving organizations whose food sales qualified under La. R.S. 47:301(10)(h) without using the event exemption.

Other groups had to qualify under La. R.S. 47:305.14 or collect tax on packaged and prepared foods, including cookies, popcorn, candy, hamburgers, nachos, jambalaya, and barbecue dinners.

2. Nonprofit takes orders for a vendor's program

A single vendor supplied order forms, set sale terms, provided promotional materials, and offered seller prizes or incentives. The ruling treated the vendor as a promoter because its financial result depended on the fundraiser's success.

The event did not qualify, and tax had to be collected on the sales.

3. Nonprofit takes orders without a promoter

The nonprofit solicited orders and bought the goods from an ordinary vendor such as Sam's Club. The vendor did not promote the event, share profits, or depend on the event's success.

That event could qualify if all other statutory and regulatory requirements were met.

4. Nonprofit buys and resells inventory

The nonprofit purchased merchandise for resale in advance, collected the money itself, and bore the risk of unsold inventory. The vendor had no promotional role or profit-sharing agreement.

That arrangement could qualify if the other requirements were satisfied.

5. School merchandise or book fair

The bookseller delivered inventory and displays, helped organize the fair, took back unsold goods, received all payments, and gave the school an agreed share of book sales.

The profit-sharing agreement and the bookseller's success-dependent return made it a promoter. Sales at the event were taxable.

6. School hosts a third-party seller

Vendors selling class rings, photos, or yearbooks marketed and sold their products at the school, collected payment, fulfilled orders, and sometimes shared profits with the school.

The vendor bore the sales risk and sought its own profit, so the event did not qualify and all sales were taxable.

What this means for you

Nonprofits, schools, and youth groups

Apply for the event certificate when required, document how proceeds will be used, and keep control of the fundraiser if you expect the event exemption to apply.

Fundraising vendors

Providing a turnkey sales program, sharing event proceeds, or tying your return to sales success could make you a promoter under the ruling.

Accountants and event organizers

Review each event separately. The ruling said eligibility depended on the particular facts and circumstances, not merely the organization's nonprofit status.

Common questions

Q: Does nonprofit status automatically make event sales tax-free?

A: No. The event also had to meet the proceeds, promoter, and certificate requirements described in the ruling.

Q: Can a nonprofit buy merchandise from a vendor?

A: Yes. A normal inventory purchase did not itself create a promoter if the vendor had no promotional role, profit share, or success-dependent risk.

Q: Why did the school book fair fail?

A: The bookseller helped run the fair, took back unsold goods, and shared sales proceeds with the school, so it was a profit-seeking promoter.

Q: Were all youth-group food sales treated alike?

A: No. The ruling identified congressionally chartered youth-serving organizations as having a separate food-sales exclusion; other groups needed the event exemption or had to collect tax.

Citations and references

• La. R.S. 47:305.14 — nonprofit fundraising-event exemption
• La. R.S. 47:305.14(A)(2) — exclusion for an event intended to yield a profit to a promoter
• La. R.S. 47:301(10)(h) — food sales by congressionally chartered youth-serving organizations
• LAC 61:I.4418 — nonprofit fundraising-event requirements
• LAC 61:III.101(C) — Revenue Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA Revenue Ruling 13-002

Original ruling text

Revenue Ruling
No. 13-002
February 25, 2013
Sales Tax
Taxability of Sales Made in Connection with Events Held
By Nonprofit Organizations
La. R.S. 47:305.14 provides, among other things, an exemption from the collection of
sales taxes on admissions to, parking fees associated with, and sales of tangible personal property
at events held for fundraising purposes and sponsored by domestic, civic, educational, historical,
charitable, fraternal, or religious organizations, which are nonprofit. A sponsoring organization
will generally be considered nonprofit if it is publicly recognized and established through formal
chartering or incorporation and is approved for nonprofit status under the applicable provisions
of the United States Internal Revenue Code.
In addition to the above requirements, the entire proceeds of a qualifying event-with the
exception of necessary expenses, such as fees for guest speakers, chair and table rentals, and
food and beverage utility connected therewith-must be used for or in furtherance of the
educational, charitable, religious, or historical restoration purpose of the organization. An event
which is intended to yield a profit to a promoter will not meet this requirement. An individual,
group or organization will generally be held to be a promoter-and thus ineligible for the
exemption-where there exists an agreement between the individual, group or organization and
the nonprofit to share in the net proceeds of the event or where the individual, group or
organization bears a risk of loss or gain that is dependent on the success or lack of success of the
event.
Unless it will be selling otherwise exempt items, a nonprofit must apply for an exemption
certificate for each fundraising event. If the Department approves the application, it will issue an
exemption certificate for the specific event. The certificate will evidence the Department’s
approval that tax need not be collected on otherwise taxable sales occurring during the eligible
event.
The requirements for nonprofit organizations to make tax-free sales at fundraising events
are detailed in LAC 61:I.4418. It is not the purpose of this policy statement to address all the
requirements. However, examples of some common types of events–especially by school groups
and youth organizations – are discussed below.
EXAMPLE 1: ORGANIZATION SELLS FOOD
Facts
Sales of food items are popular fundraising events for school and youth organizations.
Such sales include cookies, popcorn, candy and other prepared food items. Other organizations
run concession stands at festivals or school fairs where the sale of hamburgers, hot dogs, nachos,
and other food items is common. Still, others offer the sale of prepared meals, such as jambalaya
or barbeque dinners.

Revenue Ruling 13-002
Page 2 of 4

Analysis/Discussion
La. R.S. 47:301(10)(h) excludes from taxation sales of food items by “youth serving
organizations chartered by congress.” Congressionally chartered youth serving organizations
include Girl Scouts of the USA, Boy Scouts of America, and 4-H Clubs. As such, the sales of
Girl Scout cookies, Boy Scout popcorn, and other food items held for sale by such organizations
are exempt from the requirement to collect state sales tax without the necessity of applying for
the exemption found in La. R.S. 47:305.14.
Absent qualification for the exemption found in La. R.S. 47:305.14, the sales of prepared
food items by all other groups are subject to the collection of sales tax. This includes the sale of
packaged food items, such as cookies, popcorn, and candy, as well as prepared food items, such
as hamburgers, nachos, jambalaya and barbeque dinners.
EXAMPLE 2: ORGANIZATION TAKES ORDERS FOR THE PROMOTER
Facts
Often, schools and religious institutions raise money by taking orders and collecting
money on the sale of various items, such as candles, Christmas cards, and wrapping paper.
Typically, the items sold are that of a single, third-party vendor. Afterwards, the sales are
compiled and an order is submitted to the third-party vendor, along with the funds collected, less
the nonprofit’s share of the funds collected. The third-party vendor ships the goods that were
ordered to the nonprofit and the students deliver them to the purchasers.
Analysis/Discussion
La. R.S. 47:305.14(A)(2) provides that the exemption does not apply to any event
“intended to yield a profit to the promoter …” An individual, group or organization will be
considered a “promoter” if the individual, group or organization shares in the net proceeds of the
event with the nonprofit or if the individual, group or organization bears a risk of financial loss
or gain that is dependent on the success or lack of success of the event. While this provision does
not preclude the Department’s approval of the tax collection exemption for an otherwise eligible
event solely because the nonprofit acquires the items it is selling from a third-party vendor, the
presence of a single vendor that provides order forms, sets the terms of sale, and provides
promotional materials and sales incentives (such as prizes and awards for top sellers), will render
the vendor a promoter. Such a finding is attributed to the risk of financial gain or loss that is
borne by the third-party vendor and is dependent on the success or lack of success of the event.
Accordingly, events which can be classified under this scenario will not qualify for the
exemption and sales tax should be collected on any and all items held for sale by the nonprofit
during the event.
EXAMPLE 3: ORGANIZATION TAKES ORDERS; NO PROMOTER IS INVOLVED
Facts
A nonprofit may have a fundraiser similar to the one described above without using a
promoter. In such a scenario, the nonprofit solicits orders and then purchases goods to fill the
orders from a third-party vendor, such as Sam’s Club. The third-party vendor plays no role in
promotion of the event.

Revenue Ruling 13-002
Page 3 of 4

Analysis/Discussion
Here, the third-party vendor does not appear to bear a financial risk of loss or gain that is
dependent on the financial success or lack of success of the event. As such, assuming the absence
of a profit-sharing agreement between the non-profit and the third-party vendor and compliance
with any and all other requirements provided in La. R.S. 47:305.14 and LAC 61:I.1944, the
event would be eligible to receive the exemption.
EXAMPLE 4: ORGANIZATION PURCHASES AND RESELLS MERCHANDISE
Facts
In lieu of taking orders, schools and other nonprofits often have their students or
members sell various items, such as calendars or caps. The money collected is turned in to the
nonprofit directly. The sale of the items is filled with pre-existing inventory which has been
purchased by the nonprofit beforehand from a third-party vendor as a sale for resale. As such, the
nonprofit alone bears the risk of loss associated with having unsold inventory.
Analysis/Discussion
Although the third-party vendor may recognize a profit, none of it is contingent on the
success of the fundraiser. Further, the third-party vendor plays no role in promotion of the
fundraiser and no profit-sharing agreement exists between the third-party vendor and the
nonprofit. As such, the third-party vendor is not a “promoter” and the exemption would apply
assuming compliance with any and all other requirements provided in La. R.S. 47:305.14 and
LAC 61:I.1944.
EXAMPLE 5: ORGANIZATION SPONSORS MERCHANDISE FAIR
Facts
The most common type of merchandise “fair” is the school book fair. Typically, the
bookseller delivers books and other merchandise to the school, along with planning materials,
promotional tools, and merchandising displays. Often, the bookseller’s employees come to the
school to help organize the fair and arrange displays. Teachers and parent volunteers work the
fair. Students and others make purchases at the bookseller’s list prices. After the fair, unsold
merchandise is shipped back to the bookseller. All payments are transmitted to the bookseller.
An accounting is done, and the school is given an agreed upon percentage of the books sold with
the bookseller keeping the remaining portion of the profits.
Analysis/Discussion
In the above scenario, there exists a profit-sharing agreement between the bookseller and
the nonprofit. Such an agreement is clearly not in compliance with the requirements of La. R.S.
47:305.14(A)(2), which provides that the exemption does not apply to any event “intended to
yield a profit to the promoter ….” Further, the bookseller bears a risk of gain or loss, as the size
of its profits depend upon the success or lack of success of the event. Accordingly, the event will
not qualify for the exemption and sales taxes should be collected on any and all sales during the
event.

Revenue Ruling 13-002
Page 4 of 4

EXAMPLE 6: ORGANIZATION HOST THIRD-PARTY VENDOR
Facts
Often, schools and various nonprofits host or facilitate the sale of merchandise from
third-party vendors. This scenario is most commonly seen in the sale of class rings, class photos
and yearbooks. Typically, the third-party vendor of the rings or the third-party photographer
comes to the school to market and sell its product to the students. Employees alone from the
third-party vendor often frequent the school to distribute marketing materials and/or to take
orders and hold photo sessions. After the third-party vendor collects the monies due and delivers
the orders, it may give the school or other nonprofit a share of its profit derived from its sales.
Analysis/Discussion
The third-party vendor in the above scenario will be classified as a “promoter” as it bears
the entire risk of gain or loss that is dependent upon the success or lack of success of the event.
Further, the event is clearly intended to yield a profit to the promoter of the event-the third-party
vendor. Finally, the above scenario often involves a profit-sharing agreement between the thirdparty vendor and the school or other nonprofit, further disqualifying the event. For all of these
reasons, the event described in the above scenario will not qualify for the exemption and sales
tax should be collected on the entirety of all sales made during the event.
CONCLUSION
The above examples are intended to provide guidance and constitute an illustrative list of
how the provisions of La. R.S. 47:305.14 and LAC 61:I.4418 may be applied to common
scenarios. Nonetheless, the qualification of each event for the exemption contained in La. R.S.
47:305.14 will be governed by the particular facts and circumstances of each case and may vary
from those demonstrated above.

Tim Barfield
Executive Counsel

A Revenue Ruling is issued under the authority of LAC 61:III.101 C. A Revenue Ruling is written to provide guidance
to the public and to Department of Revenue employees. It is a written statement issued to apply principles of law to a
specific set of facts. A Revenue Ruling does not have the force and effect of law and is not binding on the public. It
is a statement of the Department’s position and is binding on the Department until superseded or modified by a
subsequent change is statute, regulation, declaratory ruling, or court decision.