Indiana Sales Tax Changes for Nonprofits

Currently the sales of tangible personal property by nonprofit organizations carried on for a total of not more than 30 days in a calendar year and engaged in as a fundraising activity to raise funds to further the qualified nonprofit purposes of the organization are exempt from sales tax.  Each day in which the selling activities are conducted counts as a “selling day”.  If an organization conducts sales activities for 31 or more days (not necessarily consecutive) in a calendar year, the organization must collect and remit sales tax.

Effective July 1, 2022, this will change. 

S.B. 382 approved on March 15, 2022, makes numerous amendments to the Indiana tax law, one of which is applicable to nonprofits and sales tax.  Beginning July 1, 2022, the threshold for nonprofit sales will no longer be based on the number of days of selling activities but by the dollar amount.  If an organization has less than $20,000 in sales during a calendar year, it is exempt from collecting and remitting sales tax.  If an organization makes $20,000 or more in sales during a calendar year, it will need to collect sales tax.

In addition, in order to be exempt from paying sales tax, nonprofits must file an exemption no later than 120 days after the entity’s formation and file a report with the Indiana Department of Revenue by the fifteenth day of the fifth month every 5 years following the date of formation.  The report must be filed electronically.  Failure to file this form could result in the loss of exempt status. 

Additional guidance on these changes from the Indiana Department of Revenue is still to come. 

Contributed by: Carrie Minnich, MAcct, CPA | Partner | DWD CPAs & Advisors