Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013
 

Sales and Use Tax Annotations


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S

505.0000 SALES TO THE UNITED STATES AND ITS INSTRUMEN-TALITIES—Regulation 1614

Annotation 505.0332

(a) IN GENERAL—AGENCIES QUALIFYING FOR SALES TAX EXEMPTION

505.0332 Sales by the American Red Cross. The following sales or activities conducted by the American Red Cross and its chapters together with a discussion of the application of tax to these functions are set forth below.

(1) Health, Safety, and Emergency Preparedness Materials. In connection with its health, safety, and emergency preparedness training, the Red Cross sells instructional books, pamphlets, disaster kits, and first aid kits. It also sells devices to prevent the transmission of disease, e.g., face shields, pocket marks, and mouth barriers, as an integral part of CPR training. section 6409 provides an exemption for the use of health and safety educational materials and insignia "routinely sold in connection with health and safety and first aid classes," sold or purchased by a qualified organization such as the Red Cross. The term "in connection with" is regarded as much broader than a phrase such as "related to." It does not imply that the purchase or sale of such materials must be made as part and parcel of the classes which is implied by the latter phrase but rather that those purchases or sales must be associated with or pertinent to such classes. It is concluded that sales of such items made as a direct result of specific Red Cross training and educational programs fall within the exemption provided by section 6409.

(2) Insignia/Recognition Items. The sales of T-shirts, hats, sweats, pens, patches, nameplates/tags all bearing the Red Cross emblem are primarily sold to Red Cross volunteers and paid staff for the express purpose of identification when on a Red Cross assignment. The Red Cross customer's purchases of the above items are not subject to use tax as long as they bear the Red Cross emblem.

(3) Promotional Items. Items such as mugs, ball point pens, ties, scarves, backpacks, watches, key chains, greeting cards, special event T-shirts all bearing the American Red Cross emblem are frequently purchased by the chapter for the purpose of recognizing a volunteer. They may also, however, be made available for purchase in some chapters as a promotional item. Similar to insignia/recognition items, the customer's purchases of promotional items from the Red Cross are not subject to the use tax as long as they bear the Red Cross emblem.

(4) Auctions/Fundraising Events. Some chapters may be involved in fundraising auctions. Sometimes these are held on behalf of someone else on non-Red Cross property, other times these events are held at the Chapter, or there may be a combination of these two situations. The items are donated to the organization with the understanding by the donor that the item will be auctioned off to the highest bidder with the proceeds of said auction benefiting the humanitarian work of the American Red Cross. The exemption provided by section 6409 does not extend to donated items with the intent that they be sold to raise money. Sales for the purpose of fund raising do not qualify for the general exemption for sales by charitable organizations under Regulation 1570. The Red Cross must collect use tax on its customers' purchases of such donated items at such sales. If items bearing the Red Cross emblem are sold at auction, the purchases of these items from the Red Cross are not subject to the use tax.

(5) Special Events. Red Cross chapters frequently participate in special events like health fairs and community events for the express purpose of building health and safety awareness by providing health and safety information, materials, and recognition items, often for sale. The chapters need not have a seller's permit to sell items of a type that regularly bear the Red Cross emblem, e.g., T-shirts, pencils, jackets, etc. When selling donated items and items that are not of a type normally bearing the Red Cross emblem (e.g., a chapter cannot put the emblem on a donated car in order to try to get the exemption) at auctions, fundraising and special events, the chapter must obtain a temporary permit for that event. If the chapter participates in a large number of these events during the year, it may be more efficient to obtain a seller's permit rather than many temporary permits. A Red Cross chapter may issue resale certificates to vendors for items whether or not the chapter's resale of the items is subject to use tax. 10/29/93.