Nonprofit Organization Occasional Sales

Exempt from Sales Tax

By Lawrence Gebhard, CPA

Most people are aware that nonprofit organizations that have obtained a Certificate of Exempt Status (CES) from the Wisconsin Department of Revenue (DOR) are exempt from sales and use tax on all purchases of tangible personal property or taxable services. But under what circumstances is a nonprofit organization exempt from charging sales tax on sales of tangible personal property and taxable services?

There are three standards that must be met in order to qualify as exempt occasional sales:

1. The nonprofit organization is not engaged in a "trade or business." For a nonprofit organization to be considered engaging in a trade or business, the organization must:

• have sales of tangible personal property and/or taxable services on more than 20 days during the calendar year*, AND

• have more than $25,000 in sales for the calendar year.

 * For events involving the sale of tickets, only the day of the event is counted towards the 20 day standard.

      2.  Entertainment is not involved at an event for which charges

           constitute admissions. This is the standard for which you

           should really take note. "Entertainment" means entertainment

           provided at an "admission" event by all persons or groups

           who are paid an aggregate more than $500 per event by all

           persons for performing. For purposes of this standard,

           celebrity appearance fees are considered entertainment.

           "Admissions" means access to the event involving

           entertainment is generally restricted to only those who pay a

           required fee, make a "required donation," or who must make

           a purchase of some kind (e.g., meal or raffle ticket).

     3.  The nonprofit organization does not have and is not required

          to have a seller's permit. A nonprofit organization that would

          otherwise qualify for exempt occasional sales, except for the

          involvement of entertainment, may do the following: 

• Obtain a seller's permit from the DOR for the day or days of the event involving entertainment,

• Pay the sales tax on sales of tangible personal property and services on these days, and

• Request inactivation of the seller's permit after the event by contacting the DOR. This last step is very important because until the inactivation of the seller's permit is requested, all sales of taxable products and services must be charged sales tax, regardless of the number of days and dollar amount of its sales.

If the above three steps have been taken, the nonprofit organization may still make exempt occasional sales on days not covered by the permit.

Note: Days and sales from events involving admissions to entertainment for which a seller's permit was obtained ARE included with all other sales for purposes of the 20-day test and the $25,000 taxable sales test in Standard 1.

Please contact anyone on the non-profit team at Winter, Kloman, Moter & Repp, S.C. if you have any questions regarding sales tax.