We have received some clarification in relation to the current Kentucky sales tax law as it applies to nonprofit fundraising.
For a fundraising event such as an annual dinner or golf outing:
- Fee for admission to the dinner or golf outing – taxable
- Fee for table/hole sponsorship – nontaxable if separately stated/billed and does not include admission to the dinner or golf outing
- Bundled charge for table/hole sponsorship which also provides admission – taxable
- Extra charges for participation (even if voluntary) – i.e. buying mulligans – taxable
- Raffle tickets – nontaxable
- Silent auction – depends on the character of the item and the essence of the transaction
For example, if silent auction items would normally be subject to Kentucky sales tax if purchased from a store, they will be taxable:
- Golf bag – taxable
- Gift cards – nontaxable
- Basket of spaghetti, pasta sauce, bread and gift card to wine store – nontaxable (although the basket itself would be taxable, the essence of the transaction is the food and gift card which are nontaxable, so the basket is considered nontaxable)
The nonprofit cannot issue its purchase exemption certificate to purchase the golf or dinner from the golf course or banquet hall without sales tax. This can only be done if the event is part of the nonprofit organization’s purpose (for example, a nonprofit that works with special needs children and has a golf event for the children to participate in).
If the nonprofit only has events such as these a few times a year and does not have ongoing regular activities that would require the collection of sales tax, in lieu of registering for a sales tax license, the organization can contact their local Kentucky Department of Revenue field office to obtain a temporary event permit.
For a bingo hall:
- Charges for admission (fees for cards, etc.) – taxable
- Raffle tickets – nontaxable
- Pull-tabs – nontaxable
- Food and drinks – taxable if normally taxable under Kentucky sales tax law
The Kentucky Department of Charitable Gaming is working with the Kentucky Department of Revenue to come up with guidance to assist nonprofits with bingo halls in applying the new sales tax law.
Contact our professionals if you have any questions or specific scenarios that you would like to discuss 859-331-1717.
