Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 390.0086

390.0086 Gift Wrap Material and Gifts Sold by PTAs. A taxpayer sells gift wrap, gift wrapping accessories and gift items to nonprofit, qualified Parent-Teacher Associations (PTAs). The taxpayer provides the PTA with a brochure of its products (with order form attached) that identifies the product by trade name only. The brochure is pre-priced as requested by the PTA. The PTA solicits orders in its own name. The taxpayer's name only appears as a trade name on the brochure.

The brochure has a text on the back cover that reads: "Thank you for supporting our fundraising sale," followed by a blank space in which the "school/organization name" is supposed to be entered. The next sentence reads: "Please call your school or organization if you have any questions." On the order form contained in the catalog, the purchaser is advised at the top and again at the bottom of the page to "make checks payable to your school or organization."

The contract between the taxpayer and the school/organization provides that the school/organization's payment for the merchandise must be made by a check issued by the school/organization (no personal checks). The contract also provides that the school/organization is purchasing the property on its own account for resale to its customers, and is not acting as the taxpayer's agent or representative when making sales to its customers.

Based on the facts presented, the non-profit parent-teacher associations would be considered as buying and selling for their own account since they meet all of the four factors required in Regulation 1597(h). The PTA will be required to obtain a permit and will be considered the retailer unless the taxpayer (supplier) has been classified by the Board as a retailer under section 6015, or the PTA is regarded as a "statutory consumer" under subsection (d), (e), or (f) of Regulation 1597. If the PTA is buying and selling for its own account and qualifies as a statutory consumer, the taxpayer (supplier) would be the retailer and it would owe sales tax, or must collect use tax, on the retail selling price of the property to the PTA. 4/25/96.