Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013
 

Sales and Use Tax Annotations


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N

390.0000 NONPROFIT ORGANIZATIONS

Annotation 390.0084

390.0084 Fund-Raising Program—PTA. A taxpayer is in the business of providing Parent Teacher Associations (PTA) with merchandise that the PTA sells as a part of its fund-raising activities. Under the taxpayer's agreement with the PTA, the PTA is purchasing the property for resale and selling on its own account. The taxpayer provides the PTA with brochures and materials, an optional incentive program that awards prizes to the students that participate, and the products to be sold.

In the past, the taxpayer used generic brochures which list the products for sales. The taxpayer's name was not listed on either the brochures or sales materials used by the PTA. The taxpayer recently developed a specific marketing plan that will capitalize on a unique trade name and logo that the taxpayer has registered for use. This will enable the taxpayer to establish a better name identification with PTA customers. While the forms provide for the PTA to be prominently listed on the order form used by its student members, the taxpayer will be including its trade name and logo on the sales brochures and its logo on the sales order form that will be used by the PTA's members.

Under Regulation 1597(f), PTA and equivalent organizations are classified as consumers. If the taxpayer makes sales to the PTA, which, in turn, sells on its own account, the taxpayer's sales tax liability is measured by its gross receipts from sales to the PTA. On the other hand, if the PTA acts as an agent making sales on behalf of the taxpayer, the sales tax liability of the taxpayer is measured by the gross receipts of the sales to the ultimate purchasers. The mere presence of the taxpayer's trade names and logo on the sales brochures and the logo on the sales forms would not alone cause the PTA to be regarded as the agent of the taxpayer rather than buying and selling on its own account, provided the sales brochures and sales forms clearly show the PTA solicits the orders from the customers and collects the sales price from the customer in its own name, and the contract provides that the PTA is purchasing on its own account. 11/6/96.