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

Agency: Michigan Dept. of Treasury, Tax Policy Division

Contact Person/Department: Glenn R. White, Administrator

Tel. No.: (517) 373-9600

Fax No.: (517) 241-3825

E-mail: WhiteGRR@michigan.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)

    Private Schools (K-12)

    School Groups (e.g., clubs, bands, teams)

    PTAs

    PTOs

    Other parent groups

    (please identify)

    Church Groups

    Youth Sports League

    501 (c)(3) organizations

    501 (c)(6) organizations

    Other (specify:__________________)

    Public Act 156 of 1994, as amended, exempts from sales tax the sale of tangible personal property for fund-raising purposes by certain organizations, if aggregate sales at retail for the calendar year are less than $5,000. However, if sales are $5,000 or greater, tax is required to be paid on all taxable sales. Nonprofit organizations making sales at retail are still required to register and obtain a sales tax license even if their total sales for the calendar year are less than $5,000 and they have no tax liability. The organization would be placed on an annual reporting basis

    See enclosed Revenue Administrative Bulletin (RAB) 1995-3.

    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?

    N/A

    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.

    N/A

  2.  

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

    Candies and Confections*

    Cookies and Other Baked Goods*

    Cheese Products*

    Meat Products*

    Nuts, popcorn and other snack food*

    Other edible items (please identify)*

    Magazine subscriptions*

    Paper products (e.g., calendars, cards - Not Exempt

    stationery, books, gift wrap)

    Decorative tins, baskets, other containers**

    Decorative novelties (mugs, ornaments)**

    Sundry items (please specify item below) - Not Exempt

    Clothing and accessories - Not Exempt

    Jewelry- Not Exempt

    Plant and seeds***

    Other hard good items - Not Exempt

    Food or food ingredients: The Michigan sales Tax Act MCL 205.54g, exempts from tax food and food ingredients for human consumption. Retail sales of food and food ingredients for human consumption normally considered as grocery items for home consumption are tax exempt. This would include candies, baked goods, cheese products, meats, nuts, popcorn etc. This exemption does not include prepared food intended for immediate consumption. Please refer to the enclosed Revenue Administrative Bulletin 1991-19, which discusses the taxability of prepared foods sold at fund raising events.

    Magazines: Publications are exempt if they have been determined to be periodicals by the United States Postal Service.

    According to the General Sales Tax Act, MCL 205.54a(f) one of the exemptions allowed for publications is if the publication is "admitted under present federal postal regulations" as second class postal matter. The Act states the regulations are effective September 1, 1985. Due to reform changes within the Postal Service, effective July 1, 1996, "second class" has been renamed "periodical". "Periodical" is designed for newspapers and other periodical Due to this change, Michigan’s Sales and Use Tax Acts will need to be amended. However, until such time as amendments are made, the Department will allow the new "periodical" designation to be exempt from sales and use tax the same as the publications formerly known as "second class" mail matter.

    A specific magazine that has been classified by the postal service as a "periodical" will state within the first five pages that it has been so classified. If the magazines sold are so designated they would not be subject to tax.

    ** See Letter Ruling 87-16

    *** Sales of fruit / vegetable plants / seeds are exempt when made by a business authorized by the U.S. Department of Agriculture to accept food stamps, or by a business that has applied for authorization to accept food stamps and provides proof of denial of authorization. MCL 205.54g(1)(d) and 205.94d(1)(d)

    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?

    N/A

    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.

  4.  

  5. 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. (Check all that apply and specify the limitation.)

    See RAB 1995-3

    Limits on number of fundraiser events per year

    Limits on duration of fundraisers

    Limits on dollar amount of each item

    Limits on total amounts raised per year

    Other_________________________________

  6.  

  7. 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 RAB 1995-3

  8.  

  9. 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 comments in letter.

  10.  

  11. 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 fundraising group (e.g., school, PTA, church) and the company distributing goods to the fundraising group.

    When sales are made by schools and other nonprofit organizations, tax must be remitted on taxable sales. To help schools and other nonprofit organizations with their responsibilities when conducting fun-raising sales, the Department gives them the choice of two ways to pay the tax. The organization may register with the Department to collect and remit tax that is due, or it may remit tax directly to the supplier. If the organization chooses to remit tax to the Department, it must become registered with a sales tax license, and present an exemption certificate to the supplier. If the organization chooses instead to pay the tax to the supplier, tax must be paid based on the retail selling price of the items.

  12.  

  13. 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?  

    Price paid by consumer to fundraising group.

  14.  

  15. 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.

See RAB 1995-3

Last Updated: September 2005