Multistate Tax Commission/Association of Fund-Raising Distributors & Suppliers   California

Agency: California State Board of Equalization

Contact Person/Department: Information Center

Tel. No.: (800) 400-7115

Web Site: www.boe.ca.gov

  1. If your State exempts fundraising sales by certain groups from sales or use taxes, please indicate which of the following are exempt in your State.

Public Schools (K-12) - See 1(b)(3) below

Private Schools (K-12) - See 1(b)(3) below

School Groups (e.g., clubs, bands, teams) - See 1(b)(2) below

PTAs - See 1(b)(1) below

PTOs - See 1(b)(1) below

Other parent groups (please identify) - See 1 (b)(1) below

Church Groups - See 1 (b)(4) below

Youth Sports League - See 1(b)(2) below

501 (c)(3) organizations - See 1(b)(5) below

501 (c)(6) organizations - Generally Not Exempt

Certain Qualified 501 (c) organizations - See 1(b)(2) below

Certain Sales by Veterans Groups - See 1(b)(6) below

Other - certain qualified 501(c) youth organizations, See 1(b)(2) below. Certain sales by veteran's groups. See 1(b)(6) below.

1a Are local sales and use taxes in your State applied to these groups in the same manner as State sales and use taxes are applied to these groups?

1b Please set forth any comments including a list of groups not listed above whose fundraising activities are exempt from sales and use taxation in your State.

California does not exempt any specific group from tax on their fundraising sales. However, certain groups are statutory consumers when they meet certain conditions. As a consumer, the organzation must pay tax on their purchases of tangible personal property, however their sales are not taxable. In general, the profit from the organization's sales must be used exclusively to further the organization's purpose. Groups that may qualify for consumer status include:
  1. Nonprofit Parent-Teacher Associations (PTA) and equivalent organizations authorized by school authorities to perform the same type of service for public or private schools (Regulation 1597, subdivision (f)). Also, nonprofit parent cooperative nursery school associations (Section 6370).
  2. Certain nonprofit youth sports groups, youth groups affiliated with a qualified educational institution, and qualified youth organizations. Consumer status applies only to food products, nonalcoholic beverages, and tangible personal property created by members of the organization, which are sold on an irregular or intermittent basis (Regulation 1597, subdivision (e))
  3. Public or private schools when selling yearbooks to students (Publication 18 chapter 2).
  4. Religious organizations when selling meals and food products at social gatherings. The purpose of furnishing the meals and food products must be to raise funds for the organization (Publication 18 chapter 6)
  5. Certain nonprofit organizations whose primary purposes are to provide services to individuals with developmental disabilities or children with severe emotional disturbances. The items sold must be a handcrafted or artistic nature and designed or made by the individuals the organization provides services for, the sales price of each item must be no more than $20, and the sales must be made on an irregular or intermittent basis (Regulation 1597, subdivision (d)).
  6. Nonprofit veteran's groups when selling American flags and sales of "Buddy Poppies" by the Veterans of Foreign Wars (Publication 18, chapter 2) Also, certain nonprofit organizations when selling American prisoner of war bracelets (Regulation 1597, subdivision (c)).

 

  1. If your State exempts fundraising sales of certain products from sales and use tax, please indicate which of the following products are exempt.

2a Are local sales and use taxes in your State applied to these products in the same manner as State sales and use taxes are applied to these products?

Yes

2b Please set forth any comments including a list of products not listed above that are exempt from sales and use taxation for fundraising purposes in your State.

There is no specific exemption for fundraising product sales. Sales of certain products are exempt by statute, whether sold for fundraising purposes or not. Sales of other products are taxable unless the transaction itself is considered nontaxable (e.g., resale or interstate commerce). Corresponding to the items noted in question 2:
  1. Sales of cold food products intended for human consumption are generally not subject to tax (Publication 18, Chapter 6). Also, as noted in 1(b), qualified youth organizations are consumers of food products and nonalcoholic beverages which are sold on an irregular or intermittent basis.
  2. The sale of magazines is generally taxable. However, tax does not apply to the sale of magazines which are published from four to 60 times a year, sold by subscription, and delivered by mail or common carrier (Publication 18, Chapter 5).
  3. Sales and uses of a "Buddy Poppy" or any other symbolic, impermanent lapel pin that memorializes United States military veterans killed in foreign wars are exempt (See 1(b)(6) above) Also, medical identification tags sold by qualifying organizations (Publication 18, Chapter 1)
  4. The sale of seeds is generally not subject to tax if the seeds or the plants grown from them are used as food. The sales of plants are generally not taxable if the plants produce food items that people eat, such as vegetables, fruit, berries and nuts (Regulation 1588, subdivision (a))

 

  1. If some or all fundraising groups or products qualify for exemption from sales and use tax in your State, please indicate any exceptions to or limitations on such exemptions.

    See 1 (b) and 2 (b) and linked regulations and publications

     

  2. If some or all fundraising groups qualify for exemption from sales and use tax in your State, please set forth the procedure through which a group may establish its qualification for the exemption. Attach relevant statutes, regulations, procedures, etc.

    See 1 (b) and linked regulations and publications

     

  3. If some or all fundraising products qualify for exemption from sales and use tax in your State, please set forth the procedure for establishing a product’s qualification for the exemption. Attach relevant statutes, regulations, procedures, etc.

    See 2 (b) and linked regulations and publications

     

  4. In instances where a fundraising product or group is not exempt from sales or use tax, please indicate who bears the responsibility for collecting and remitting the tax.

    The person who is considered the retailer of the merchandise is responsible for reporting tax. Whether a qualified nonprofit organization is the retailer of the property they sell, or is acting as the agent of the fundraising company, depends on how the sale is conducted. In general, the nonprofit organization is presumed to be buying and selling on its own account if all of the following factors are present:

    • The organization solicits the orders from the public in its own name,
    • The organization collects the sales price from the customer in its own name,
    • The organization is responsible for and pays the supplier for the merchandise, and
    • The contract between the organization and the supplier clearly identifies the fact the organization will purchase and resell the products to its customers.

    As the retailer, the organization would be responsible for obtaining a seller's permit and paying the sales tax on the selling price to the end consumer. However, when a group is buying and selling on its own account and is the consumer based on a specific statute, then the supplier is the retailer and tax is due on the selling price to the fundraising group.

    If the organization merely takes orders for the merchandise and then submits the orders to a fund raising company for later delivery to the purchaser, the Board considers the fundraising company to be the retailer. The fundraising company would be responsible for reporting tax on the retail selling price of the merchandise.

     

  5. In instances where a fundraising product or group is not exempt from sales or use tax, what is the basis for calculating the sales/use tax?

    If the group is buying and selling on its own behalf, and it is deemed a consumer under a specific statute, the measure of tax is the price paid by the fundraising group to the supplier. Otherwise, the measure of tax is the price paid by the ultimate consumer.

     

  6. Provide any additional information regarding the sales and use tax treatment of fundraising transactions and/or groups in your State. Also set forth any statements, disclosures, disclaimers, etc., to be provided as part of the clearinghouse regarding your State’s practices and procedures. Attach additional sheets if necessary.

    The information provided in this survey is current as of September 2005. However, changes in the law or regulations may have occurred since that time. If there is a conflict between the information in this survey and the California Sales and Use Tax Law, the law is controlling.

    In addition, the responses to this survey are intended to provide general information only. For your protection, it is best to get tax advice in writing. You may be relieved of tax, penalty, or interest charges that are due on a transaction if the Board determines that it gave you inaccurate written advice regarding the transaction and that you reasonably relied on that advice in failing to pay the proper amount of tax. For this relief to apply, a request for advice must be in writing, identify the taxpayer to whom the advice applies, and fully describe the facts and circumstances of the transaction.

    To obtain the most current information on a sales and use tax issue visit the Board's website at www.boe.ca.gov or telephone the Board's Information Center at 1-800-400-7115

    7. Last Update: September 2005