More Changes to Sales by Nonprofits (in Indiana)

Until July 1, 2022, sales of tangible personal property by qualified 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 were exempt from sales tax.

Effective July 1, 2022, the 30-day rule was repealed and replaced with a new “$20,000 rule.”  Sales of tangible personal property by qualified nonprofit organizations of not more than $20,000 in a calendar year used to raise funds to further the qualified nonprofit purposes of the organization were exempt from sales tax.

On May 4, 2023, Governor Holcomb signed Senate Bill 417, which changed the rules again.  Under Senate Bill 417, six specific types of nonprofit organizations are separated out.  These include the following:

• Churches
• Monasteries
• Convents
• Public schools
• Church and parochial schools regularly maintained by a recognized religious denomination
• Youth organizations focused on agriculture

These specific organizations are exempt from collecting and remitting sales tax regardless of the dollar amount of sales each year.

Under Senate Bill 417, all other organizations are required to collect sales tax if they sell more than $100,000 of tangible personal property in a calendar year (replacing the previous $20,000 limit).  Once an organization makes $100,000 in sales, it must register to collect sales tax.  The organization must continue to collect sales tax until it makes less than $100,000 in sales for two consecutive years.

An organization can register to collect sales tax at the State of Indiana INBiz website.  A nonrefundable application fee for a Retail Merchant’s Certificate is $25.  Going forward it must collect and remit sales tax on sales of ALL tangible personal property.  It is not liable for sales tax on sales made prior to meeting the threshold.  Once registered as a Retail Merchant, the organization will be required to file sales tax returns (Form ST-103) through INTIME.  If no tax is due for a particular period, a return must still be filed with zeros.

As it has been in the past, when an organization sells items, such as periodicals, books, or other property, that are intended primarily to further the educational, cultural, or religious purposes of the organization or for the improvement of the work skills or professional qualifications of the organization’s members, and the sales are not used in carrying out a private or proprietary business, the items may be sold exempt throughout the year (no sales tax is required to be collected).

You can find more information on the updated Indiana Department of Revenue Sales Tax Bulletin #10.

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