Contact Person/Dept.: Tax Research & Analysis Section
Agency: Arizona Dept. of Revenue
Tel. No.: (602) 716-6803
Fax No.: (602) 716-7995
Public Schools (K-12) - Exempt
Private Schools (K-12)
School Groups (e.g., clubs, bands, teams) -Exempt
Other parent groups(please identify)
Youth Sports League
501 (c)(3) organizations - Exempt
501 (c)(6) organizations
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.
Arizona's transaction privilege (sales) tax is a tax on the privilege of conducting business in the state. It is a tax on the seller, not on the purchaser. Every person engaging in a taxable activity is subject to tax. The statutory definition of "person" specifically excludes a school district. [A.R.S. § 42-5001(8)] Therefore, all sales by a public school are excluded from taxation.
The tax does not apply to sales by any nonprofit organization organized and operated exclusively for charitable purposes and recognized by the United States Internal Revenue Service as such a nonprofit organization for charitable purposes. [A.R.S. § 42-5061(A)(4)] Therefore, sales made by an organization that is designated as a 501(c)(3) organization by the IRS are not subject to tax.
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?
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.
In addition to the exemptions discussed under question 1b for sales by certain organizations, an exemption is provided for sales of food for home consumption.
[A.R.S. § 42-5061(A)(15), 42-5101,42-5102 and A.A.C. R15-5-1860]
The organization should maintain a copy of the letter of qualification received from the I.R.S. in its records.
Sales of "food" for home consumption are not subject to tax. "Tax exempt foods" are generally those items of food intended for home consumption which, if purchased from an eligible grocery business, would be eligible to be purchased with food coupons issued by the United States Department of Agriculture. [A.A.C. R15-5-1860] The USDA makes determinations as to whether a product qualifies for purchase with food stamps.
The "seller" bears the burden.
If the fundraising group is making sales on their own behalf, they are responsible for payment of the tax. If the fundraising group is making sales as an agent of the company furnishing the goods, the company furnishing the goods is responsible for payment of the tax. The facts and circumstances of each situation will determine who the seller/taxpayer is.
Price paid by consumer to fundraising group. The tax base is the amount paid by the consumer, regardless of whether it is the fundraising group or the distributor that is responsible for payment of the tax to the department.
The preceding information is provided for general guidance only and is not intended to address a taxpayer's specific circumstance. Specific questions should be directed to the department.