Texas Sales Tax holidays

Entities operating in the State of Texas are required to collect and remit sales tax on the sale of certain products, merchandise, certain services, etc. that are subject to sales taxes. (The rules covering what products and services are subject to sales tax are extensive and varied and beyond the scope of this article.) This requirement to collect and remit sales tax does not distinguish between for-profit entities and not-for-profit entities that might be exempt from paying sales tax on its purchases.

However, for nonprofit organizations (NPOs), there is an exemption not available to for-profit entities. This exemption allows NPOs to choose two 24-hour periods per year where sales or auctions occur and exclude those sales from being subject to sales tax. (This exemption is in addition to the sales tax-free holiday weekend that occurs in the fall – typically before the start of the school year.)

You should note that there is one restriction on the sales tax exemption for NPOs; specifically any items sold (that were not donated to or manufactured by the NPO), in excess of $5,000, are not eligible for this exemption.

So, the key here is to identify when your NPO is going to have sales of what would otherwise be taxable items. And to the extent possible, you should consider “bunching” your sales into two 24-hour periods to take advantage of this exemption.