It’s summertime, and many youth sports groups are in full swing. Good news for these groups, and other nonprofit organizations, is that the state of Minnesota has doubled their sales tax exemption this year.
As of January 1, 2015, the annual fundraising exemption for qualifying youth and senior citizen nonprofit groups increased to $20,000 from the previous limit of $10,000. This exemption, along with some clarification of state tax laws for nonprofits, is outlined in a fact sheet released from the Minnesota Department of Revenue in June 2015.
State law provides a sales tax exemption for certain nonprofit organizations that receive formal authorization from the state. To receive authorization, eligible nonprofit organizations must apply for the exemption by completing Form ST16, “Application for Nonprofit Exempt Status – Sales Tax.” Qualifying for the federal income tax exemption does not automatically exempt a nonprofit organization from paying MN sales taxes.
This exemption applies to purchases made by the organization. It does not allow the nonprofit to sell items without collecting sales tax unless it is the sale of a qualifying nonprofit admission ticket (this is explained in the fact sheet).
Examples of organizations that may qualify:
- Youth groups, including scouts and youth sports associations
- Senior citizen groups
- Private schools, colleges, and universities
- Volunteer fire departments
Examples of organizations that do not qualify:
- Chambers of commerce
- Knights of Columbus and Masonic Lodges
- City-run celebrations
- Homeowners’ associations
Adult sports clubs
More detail can be found on the fact sheet, posted on the Department of Revenue website: http://www.revenue.state.mn.us/businesses/sut/factsheets/FS180.pdf