All nonprofit organizations are required to charge Wisconsin sales tax on the sale of certain types of tangible personal property, items, property, goods, and services. This includes rentals and certain leased property and parking, lodging, and admissions to certain athletic or recreational events. Certain exceptions and exemptions apply.
One particular exemption that may be available to nonprofit organizations is the occasional sale exemption.
Qualifications for occasional sale exemption – current standards
The following standards must be met for sales by nonprofit organizations to qualify as exempt occasional sales:
- The organization is not engaged in a trade or business. A nonprofit organization is not considered to be engaged in a trade or business if its receipts from sales of otherwise taxable products or services for the calendar year are $25,000 or less or the sales occur on 20 days or less during the calendar year. Both the receipts and day standards must be exceeded before a nonprofit organization is considered to be engaged in a trade or business.
- Entertainment is not involved at an event for which charges by the organization constitute admissions. Entertainment is considered to exist if the individuals or groups providing it are paid more than $500 per event.
- The organization does not have and is not required to have a seller’s permit.
Changes effective January 1, 2017
- The dollar threshold for receipts from sales has increased from $25,000 to $50,000 per calendar year.
- The number of days threshold will increase from 20 days to 75 days in the calendar year.
- The entertainment threshold will increase from $500 to $10,000.
Transitioning from the 2016 standards to 2017 standards
Nonprofit organizations that hold a seller’s permit as of December 31, 2016, but expect (in good faith) that sales occurring in 2017 will qualify for the occasional sale exemption due to the increase in the above thresholds, may request inactivation of their seller’s permit effective on or after January 1, 2017.
Any sales made in 2017 prior to inactivating the seller’s permit do not qualify for the exemption since the third standard above will not have been met. Alternatively, if a seller’s permit is inactivated and during 2017 the thresholds above are exceeded due to unforeseen circumstances, only the sales occurring after the standards are exceeded are subject to sales tax and the organization would need to obtain a seller’s permit.
There are various rules and exceptions related to Wisconsin sales taxes and available exemptions for nonprofit organizations. Contact us and we can help you navigate through them. Contact SVA if you have questions on the changes for 2017.