Sales Tax for Booster Clubs: Fundraiser Sales and Purchases

Key Terms

• Sales tax. A tax on retail sales of goods and some services, collected by the seller from the buyer and paid to the state.
• Use tax. The matching tax on taxable purchases where no sales tax was collected, such as many online or out-of-state purchases.
• Seller’s permit (sales tax permit). State registration that allows the club to collect and remit sales tax.
• Exemption certificate. A state form a qualifying organization gives a seller to buy without paying sales tax.
• Resale certificate. A state form a registered seller gives its supplier when buying goods it will resell, so tax is collected only on the final sale.

Buying and Selling Are Separate Questions

The Texas Comptroller puts the central point in one sentence: the exemption from sales tax is for items an organization buys, not for the items it sells. A club can be exempt on purchases and still owe tax on sales, or the reverse. The California Department of Tax and Fee Administration (CDTFA) states that there is no general sales and use tax exclusion for nonprofit organizations and that a nonprofit’s sales and purchases are generally taxable.

How States Treat Fundraiser Sales

Classification matters. California, for example, treats qualifying school-wide parent groups as consumers of the products they sell, so they generally need no seller’s permit, but it excludes athletic booster clubs from that rule because their efforts are directed toward a select group of students rather than all students. It also taxes food sold at events where admission is charged, such as athletic events, even when held at a school.

Common Booster Club Sales

Product Fundraisers Through a Company

When a booster club markets a company’s products, collects the money, and sends the company its share plus the tax, the contract often makes the company the seller. Texas says that in this arrangement the fundraising company reports the sales tax and the sale does not count as the organization’s. The club should read the contract and confirm in writing who is the seller and who remits the tax before the sale starts.

Texas also requires that if tax is included in the price, the customer must be told. Pricing items at round numbers “tax included” is common, but the club must still know what portion is tax and remit it.

Buying Without Paying Tax

1. Exemption certificates. In states that exempt purchases by qualifying nonprofits, the club usually applies first. Texas requires the organization to qualify with the Comptroller, then give sellers Form 01-339. Sellers are not required to accept it.
2. Resale certificates. A club registered as a seller can usually buy goods it will resell, such as spirit wear inventory, without tax by giving the supplier a resale certificate. A club treated as a consumer cannot.
3. Only the club’s own certificate. The school’s or the district’s exemption belongs to the school. A booster club is a separate entity and cannot use it.
4. Agents and cards. Texas allows an authorized agent to buy tax-free with a certificate in the organization’s name. Rules for volunteers buying on personal cards vary by state.

Use Tax

When a club buys taxable goods online or out of state without paying sales tax, and the state does not exempt its purchases, the club may owe use tax directly to the state. California describes use tax as the complement to sales tax: when one applies, the other does not.

Getting Set Up

1. Open the club’s state page and identify the revenue agency and its nonprofit guidance.
2. List every sales activity planned for the year.
3. Decide which sales are taxable, exempt, or handled by a fundraising company.
4. Register for a seller’s permit before the first taxable sale, if required.
5. Apply for a purchase exemption, if the state offers one.
6. Set prices and point-of-sale settings to collect the correct tax, including local rates.
7. File sales tax returns on the schedule the state assigns.
8. Keep sales records by activity, tax collected, and copies of every certificate given or received.

Point-of-sale and accounting software built for small nonprofits can apply the correct tax rate and separate tax collected from fundraising revenue.