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Non-profit Park Wants To Sell T-shirts

Business Law discussions

Non-profit Park Wants To Sell T-shirts

Postby Rally » Sat Oct 15, 2016 7:42 am

How would this work? Will the Nature Park have to collect sales tax on each item. How would the profits have to be listed, etc. etc.! Various merchandise is being considered, but don't want to lose non-profit status.
Rally
 
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Joined: Wed Mar 05, 2014 9:48 am

Non-profit Park Wants To Sell T-shirts

Postby Mansell » Mon Oct 17, 2016 2:06 am

How would this work? Will the Nature Park have to collect sales tax on each item. How would the profits have to be listed, etc. etc.! Various merchandise is being considered, but don't want to lose non-profit status.
Mansell
 
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Joined: Sun Mar 02, 2014 12:10 am

Non-profit Park Wants To Sell T-shirts

Postby Brendan » Tue Oct 18, 2016 5:32 am

I am assuming that the Nature Park is a 501(c)(3) organization. I have in my profile that this free forum is only for general questions relating to IRS federal exemption issues of 501(c)(3) organizations. If t-shirts have prominent messages in pursuance of the exempt purposes of the Nonprofit Park, such as "Save the Environment", then the t-shirts are considered by the IRS as related activity and not taxable.  

Otherwise, IRS Publication 598 "Tax on Unrelated Business Income of Exempt

Organizations" at

www.irs.gov/pub/irs-pdf/p598.pdf

explains that,  if products or services are not directly related to

the charitable, educational, religious or other purpose or function

constituting the basis for its exemption(other than for production

of income), then the activities are generally taxable.

The IRS has declared, "Nonprofit organizations that are granted

Federal tax exemption based on their mission-related purposes

are allowed by the IRS, within certain limits, to generate income

from unrelated business activities."

www.irs.gov/pub/irs-soi/97eounrl.pdf on pdf page 1

The organization could, if it has more unrelated activities than

the IRS's vague "certain limit", be jeopardizing its exemption

depending upon the facts and circumstances. Two of the main factors

is the gross income of the activity in relation to the gross income

of the organization's total income and staff time spent on the

activity.

As for the sales tax, that issue is controlled by state law and states may differ somewhat with how they would treat such issues. Even though this forum is not for such state law issues, if you give me your state I may be able to direct you. I will inform you now, however, that all states that I have reviewed would require the sales tax for such sales. Thank you for asking.

Harvey Mechanic, Attorney at Law - [email protected]
Brendan
 
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Joined: Fri Feb 21, 2014 12:42 am


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