When finalizing your event calendar for the year, remember to take advantage of two one-day tax-free sale days. Although an organization is exempt from paying sales tax based on IRS designation (501 c 3, 4, 8, 10 or 19), you must collect and remit sales tax on non-food items sold outside of designated days. By planning your fundraiser, auction, rummage sale, school spirit wear or uniform sale on a designated tax-free day, you can promote the ‘no sales tax’ benefit. You have the flexibility to choose which 24-consecutive hour tax-free days you want, but the days may not be back-to-back. Items sold for over $5,000 don’t qualify unless the item is manufactured by the organization or the item is received as a donation and not sold back to the donor.
Student organizations affiliated with colleges or universities can hold a one-day, tax-free sale each month to raise funds for the organization. The tax-free day doesn’t apply for student business for profit or for items sold for over $5,000 unless the item is manufactured by the organization or the item is received as a donation and not sold back to the donor.
Like most tax rules, the details and exceptions are important to recognize. Be sure to check with your tax professional to be certain that your organization and activity are covered.