tax exempt?

[tjkmf]

What is the name of your state? CA

When a High School sports program holds a fundraiser, [i.e. car wash, food booth, vending machine, program sales, etc.] are they required to pay taxes on the money earned? Our High school district is taxing all money earned through sales, leaving the already underfunded programs with less. Is this correct? We've been told that all money from sales are taxed, yet all sales are the result of fundraising, donations, parental support.

[abezon]

The state collects sales tax on sales, but not on donations. However, the definition of sale is tricky.

If you're holding a charity auction with donated items (either personal possessions or company-donated things), sales tax has already been paid once on the item by the donor. Your group did not buy the item & do not owe any money to the donor regardless of whether you sell it or not. Therefore you are not reselling the donated item. In this situation, you do not owe sales tax on the auction proceeds. Note: you have to provide a charity receipt to the purchasor for the price paid minus the fair market value. A $100 item that auctions for $500 generates a $400 receipt.

The car wash is volunteered service -- the location was donated, the kids aren't paid. No sales tax is due on the car wash. Same thing for a bake sale -- the parents paid taxes on the ingredients & volunteered the time to bake & sell the items.

However, if the food sales are candy bars sold at games, sales tax might be due. But make sure you buy the bars with a tax-exempt number. If you don't, you should get a credit for taxes paid on supplies somewhere on the sales tax form. The same rules should apply to vending machines.

These are just general tax rules. For the rules specific to CA, find an athlete with a parent who is a lawyer/accountant/tax preparer and ask them to check to see if there are any CA laws applying specifically to non-profits.

[tjkmf]

Thanks for the insite. Can you provide anymore for the following sale conditions? Really appreciate it. When selling food, i.e food booth at local fair. If all food and supplies where donated by a local market/restaurant and parents donated their time serving and preparing, are taxes owed? Or Football program sold at games, we received a printing discount because we are a non-profit organization, booster club paid for the print cost, and program was put together at no charge. Do we pay sales tax?

[abezon]

The key is whether sales tax has been collected once already. Chances are the restaurants did not pay taxes when they bought supplies. Did the booster club pay sales taxes when it picked up the programs?