Current through August 26, 2024
(1) SCOPE. This
section describes the occasional sales exemption for nonprofit organizations as
provided in s.
77.54(7m),
Stats.
(2) DEFINITIONS. In this
section:
(a) "Admission event" means that
access to the event involving entertainment is generally restricted to only
those who pay a required fee, who make a required donation or who are required
to make a purchase of some kind such as a meal or raffle ticket.
(b) "Entertainment" means entertainment
provided at an admission event by all persons or groups who are paid in the
aggregate more than $10,000 per event by all persons for performing, for
reimbursement of expenses or for prize money.
(c) "Nonprofit organization" includes a
neighborhood association, church, civic group, garden club, social club or
similar organization not operated or organized for profit where no part of the
net income inures to the benefit of any private shareholder or individual. A
governmental unit described in s.
77.54(9a),
Stats., is considered a "similar organization" for purposes of this
paragraph.
(d) "Sales price" means
sales price as defined in s.
77.51(15b),
Stats., from all sales in Wisconsin of otherwise taxable tangible personal
property, items, property, or goods under s.
77.52(1) (b), (c), or (d), Stats., and services after
subtracting allowable exemptions.
(3) GENERAL. A nonprofit organization shall
charge Wisconsin sales tax on sales of tangible personal property or items,
property, or goods under s.
77.52(1) (b), (c), or (d), Stats., and taxable services, unless
the sales qualify as exempt occasional sales or are otherwise exempt. The
occasional sales exemption does not apply to the sales price from the sale of
bingo supplies to players or to the sale, rental or use of regular bingo cards,
extra regular cards and special bingo cards.
(4) STANDARDS. Under s.
77.54(7m),
Stats., a nonprofit organization shall meet all of the following standards for
its sales to qualify as exempt occasional sales:
(a) The organization is not engaged in a
trade or business.
(b)
Entertainment is not involved at an event for which charges by the organization
constitute admissions.
(c) The
organization does not have and is not required to have a Wisconsin seller's
permit, except for conducting bingo.
(5) NOT ENGAGED IN A TRADE OR BUSINESS. A
nonprofit organization is not engaged in a trade or business for purposes of
sub. (4) (a) if it meets at least one of the following:
(a) Its sales of otherwise taxable tangible
personal property, items, property, or goods under s.
77.52(1) (b), (c), or (d), Stats., or services or its events
occur on 75 days or less during the calendar year, regardless of the dollar
amount of sales. For events involving the sales of tickets, only the actual
days of the events are counted, not the days of ticket sales.
Example: A boy scout troop takes orders for
Christmas wreaths from August 1 through November 1. The wreaths are delivered
by the troop on December 15 and 16. For purposes of determining whether its
events meet the 75-day test, the troop should use the days of delivery rather
than days orders are taken.
(b) Its taxable sales price for tangible
personal property, items, property, and goods under s.
77.52(1) (b), (c), or (d), Stats., and taxable services for the
calendar year are $50,000 or less, regardless of the number of days on which
its sales or events occur. Sales that are nontaxable are not included for
purposes of the $50,000 sales price test.
Examples:
1) A church sells frozen pizzas. Since sales
of frozen pizzas are exempt from sales tax, the sales of the frozen pizzas are
not counted as part of the sales price for purposes of the $50,000 receipts
test.
2) A nonprofit organization,
which sells hundreds of Christmas trees, sells 5 Christmas trees for $100 to a
public school. Although Christmas trees are taxable tangible personal property,
a public school can purchase tangible personal property and items, property,
and goods under s.
77.52(1) (b), (c), and (d), Stats., exempt from sales tax. As a
result, this $100 exempt sale to the school is not counted as part of the sales
price for purposes of the $50,000 receipts test.
(6) ENTERTAINMENT.
(a) For a nonprofit organization's sales to
qualify as exempt occasional sales, entertainment may not be involved at an
event for which charges by that nonprofit organization constitute admissions.
Examples:
1) Four different bands are paid $3,000 each
to perform at various times during a 3-day event. There is an admission charge
for access to the event. Since the total payment for entertainment ($12,000)
exceeds the $10,000 limit in sub. (2) (b), entertainment is deemed to be
involved. As a result, receipts from the event are taxable.
2) Two nonprofit organizations co-sponsor an
admission event at which a band is hired to perform. Each organization pays the
band $5,500. Since the total payment for entertainment ($11,000) exceeds the
$10,000 limit in sub. (2) (b), entertainment is deemed to be involved. As a
result, receipts from the event are taxable.
3) A nonprofit organization sponsors a dinner
and dance in the high school gymnasium. The dance band is paid in excess of the
$10,000 limit in sub. (2) (b). There is no separate admission charge. However,
access to the dance is restricted to those who have purchased the meal. The
"meal" charge constitutes an admission charge to an event involving
entertainment. Therefore, sales by the nonprofit organization at this event are
taxable.
4) A nonprofit
organization holds a pig roast at the city park and hires a band to play at the
park gazebo so that patrons, if they so wish, can be entertained while they
eat. There is no admission charge and access to the band is open to anyone,
whether they purchase the meal or not. Entertainment is deemed not to be
involved. Therefore, the sales by the nonprofit organization may still qualify
as exempt occasional sales.
5)
Nonprofit Organization A sponsors an admission event at which a band is hired
to perform. The band is paid more than $10,000. Nonprofit Organization A allows
Nonprofit Organization B, a separate entity, to sell soft drinks and food at
the event for consumption on the premises of the event. Although Nonprofit
Organization A's sales at the event do not qualify for the occasional sales
exemption, Nonprofit Organization B's sales at the event may qualify as exempt
occasional sales. The admission charge to the event involving entertainment is
made by Nonprofit Organization A, not Nonprofit Organization
B.
(b) A nonprofit
organization that would otherwise qualify for exempt occasional sales, except
for the involvement of entertainment, may obtain a seller's permit from the
department for the day or days involving entertainment, pay the sales tax on
that event and request inactivation of its seller's permit after the event, and
still have exempt occasional sales on days not covered by the seller's permit.
Days and receipts from events involving admissions to entertainment for which a
seller's permit was obtained are included with all other sales in determining
the 75-day test and the $50,000 taxable receipts test described in sub. (5). A
nonprofit organization that obtains a seller's permit for an event and does not
request inactivation of its seller's permit after the event does not qualify
for the occasional sale exemption while the seller's permit is active,
regardless of the number of days and dollar amount of its sales.
Examples:
1) A nonprofit organization plans 5 events
covering 3 days each for the year for a total of 15 days. Entertainment will be
involved at one event only. The sales by the nonprofit organization would
qualify as exempt occasional sales, except for the involvement of entertainment
at the one event. The nonprofit organization may obtain a seller's permit for
the one event involving entertainment and request inactivation of its seller's
permit after the event; thus allowing the other 4 events to qualify as exempt
occasional sales.
2) A nonprofit
organization holds several events during the year. For one of the events, the
nonprofit organization obtains a seller's permit because entertainment is
involved, collects sales tax on its receipts of $5,000 from that event and
requests inactivation of its seller's permit after the event. Taxable receipts
from its other events must be combined with the $5,000 of receipts from the
event for which it held a seller's permit for purposes of determining whether
the $50,000 taxable receipts test is met.
(7) HOLDING A SELLER'S PERMIT.
(a) A nonprofit organization is not required
to hold a seller's permit if its sales are exempt from sales and use taxation
by meeting the provisions of sub. (4) (a) and (b). However, an organization
required to hold a seller's permit solely for the purpose of conducting bingo
games may still qualify for the occasional sales exemption on nonbingo sales if
it otherwise qualifies under the provisions of sub. (4) (a) and (b).
(b) If a nonprofit organization holds a
seller's permit in the current year, but intends or believes in good faith that
its activities in the following year would qualify as exempt occasional sales
except for its holding of a seller's permit, it may request inactivation of its
seller's permit and its sales in the following year will qualify as exempt
occasional sales provided it meets the standards in sub. (4) (a) and (b) in
that following year.
Example: A nonprofit organization has held
nineteen 4-day events for a total of 76 days each year for the past 5 years.
Receipts were always over $50,000, and there were no admissions to
entertainment events. One event has lost money for the past 2 years. The
organization intends to discontinue that event for the following year; thus, it
may anticipate coming under the 75-day standard and request inactivation of its
seller's permit in good faith.
(c) If a nonprofit organization did not hold
or was not required to hold a seller's permit or requested inactivation of its
seller's permit in good faith but later, due to unforeseen circumstances,
exceeds the standards, only the sales occurring after the standards are
exceeded do not qualify as exempt occasional sales and are subject to tax.
Examples:
1) A church held 73 days of events or sales
in the current year. Receipts for the events equaled $70,000 and no
entertainment was involved. The church expects to hold the same 73 days of
events in the following year. It requests inactivation of its seller's permit.
However, in the middle of the following year, the church garage is destroyed by
fire. An additional 4-day event is held to raise funds to help replace the
garage. Only the receipts from days 76 and 77, the days exceeding the standard,
are subject to sales tax.
2) A
garden club is organized in the current year. The garden club is not required
to hold a seller's permit and does not apply for one. In the following year,
the garden club holds 77 days of events with taxable receipts from the events
of $70,000. Only receipts from days 76 and 77, the days exceeding the standard,
are subject to sales tax.
(d) If a nonprofit organization has sales in
the current year and then requests inactivation of its seller's permit, sales
made in the current year before requesting inactivation of the seller's permit
do not qualify as exempt occasional sales, even if the standards for exempt
occasional sales in sub. (4) (a) and (b) are met.
Example: A nonprofit organization holds 70 days
of sales in the current year. The organization holds a seller's permit, files
sales and use tax returns and pays sales tax on all its receipts in the current
year. At the end of the current year, the organization realizes that its sales
would have qualified as exempt occasional sales except for its holding of a
seller's permit. The organization may not claim a refund of taxes paid while it
held a seller's permit.
(8) WHEN SALES DO NOT QUALIFY FOR OCCASIONAL
SALES EXEMPTION. If a nonprofit organization has sales of tangible personal
property, items, property, or goods under s.
77.52(1) (b), (c), or (d), Stats., or taxable services, and the
sales do not qualify as exempt occasional sales, it is required to obtain a
seller's permit and collect and remit sales tax on its taxable sales.
To obtain a seller's permit, a nonprofit organization
shall file Wisconsin form BTR-101, Application for Business Tax Registration,
with the department. Form BTR-101 may be obtained from any department of
revenue office, or by writing or calling Wisconsin Department of Revenue, P.O.
Box 8902, Madison, WI 53708-8902, telephone (608) 266-2776.
The interpretations contained in s. Tax 11.35 became
effective January 1, 1989, pursuant to 1987 Wis. Act 399, except: (a) the
$25,000 receipts standard and the $500 entertainment standard became effective
January 1, 2006, pursuant to 2005 Wis. Act 25; (b) The change of the term
"gross receipts" to "sales price" and the separate impositions of tax on coins
and stamps sold above face value under s.
77.52(1) (b), Stats., certain leased property affixed
to real property under s.
77.52(1) (c), Stats., and digital goods under s.
77.52(1) (d), Stats., became effective October 1,
2009, pursuant to 2009 Wis. Act 2; and (c) the 75 day standard, the $50,000
receipts standard, and the $10,000 entertainment standard became effective
January 1, 2017, pursuant to 2015 Wis. Act 364.
Section Tax 11.35 interprets ss.
77.51(9) and
77.54(7m),
Stats.
