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

Agency:  Division of Taxation

Contact Dept.:  Tax  Services Branch

Tel. No.:  (609) 292-5994

Fax No.:  (609) 989-0113

  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) - Exempt

    Private Schools (K-12) - Exempt

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

    PTAs - Exempt

    PTOs - Exempt

    Other parent groups - Not Exempt

    (please identify)

    Church Groups - Exempt

    Youth Sports League - Exempt

    501 (c)(3) organizations - Exempt

    501 (c)(6) organizations - Not Exempt

    Other (specify): Veteran's Organizations - Exempt (NOTE:  The exemption applies only if the organization is either a govermental entity or has completed the REG-1E and has been issued an ST-5 from the Division. )



    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.

    Organizations whose fundraising sales are exempted from the tax are those that have applied for and been granted a Sales and Use Tax Exempt Organization Permit. Qualified organizations include 501(c)(3) type nonprofits and volunteer fire and rescue squads.

  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- Not Exempt

    Cookies and Other Baked Goods - Exempt

    Cheese Products - Exempt

    Meat Products - Exempt

    Nuts, popcorn and other snack food - Exempt

    Other edible items (please identify) - Exempt

    Magazine subscriptions - Exempt

    Paper products (e.g., calendars, cards

    stationery, books, gift wrap) - Not Exempt

    Decorative tins, baskets, other containers - Not Exempt

    Decorative novelties (mugs, ornaments) - Not Exempt

    Sundry items (please specify item below) - Not Exempt

    Clothing only - Exempt

    Jewelry- Not Exempt

    Plant and seeds - Not Exempt

    Other hard good items - Not Exempt

    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.

    The clothing exemption does not include fur items and does not include accessories such as handbags, wallets, umbrellas, etc. Beverages are included in the food exemption except for carbonated beverages.

  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.)

    Limits on number of fundraiser events per year

    Limits on duration of fundraisers

    An exempt organization is not considered to be engaged in a trade or business in substantial competition with privately operated nonexempt business entities (taxable sales) to the extent sales are made by such organizations through fundraising events or activities which are of relatively short duration and are not held on a regular basis during a calendar year; provided that all proceeds inure to the benefit of the exempt organization.

    Also See #8.

  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.

    An exempt organization must apply for Sales and Use Tax Exempt Organization status. They must complete form REG-IE and send Articles of Organization, Bylaws and IRS 501(c)(3) letter. If they qualify they will receive an ST-5 Exemption Certificate, a copy of which is provided to the vendor to document an exempt purchase.

  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.

    The only products exempt in fundraising sales are those products specifically exempted in all sales by the Sales and Use Tax Act. This includes clothing and most food except candies, confections and carbonated beverages. Also magazine subscriptions are tax exempt.

  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 company distributing goods to the fundraising group. When purchases for fundraising purposes are made of taxable items by certain school affiliated groups that are not exempt organizations and are not registered to collect sales tax, such as school parent groups, sales tax must be paid to the vendor who is responsible for collecting and remitting the tax. The subsequent resales of these items by the groups or students which are conducted for occasional fundraising purposes and not through a shop or store would not be subject to the tax.

  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 fundraising group to distributor. In instances as outlined in question #3 the tax would be based on the price paid by the fundraising group to the distributor.

  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.

An organization, such as a private school or PTA, holding a valid New Jersey sales and use tax exempt organization permit may make tax exempt purchases in New Jersey by issuing to the vendor a copy of their ST-5 Exempt Organization Certificate and making payment from the funds of the organization. The exempt organization must be the direct payor for the exemption to apply.

When conducting occasional fundraiser sales the school or PTA (or any of its agents, whether they are members, students, parents, etc.) may sell the items on behalf of the PTA or school without collecting tax if payment is by cash or checks made payable to the PTA or school. If the checks are made payable to the vendor/supplier it is a direct purchase from a nonexempt entity and, therefore, a taxable sale regardless of whether a percentage of the sales revenue is subsequently shared by the vendor with the PTA or school. No exemption can apply if the exempt organization is eliminated as the purchaser/seller. Certain organizations, although nonprofit, do not qualify for sales and use tax exemption status, such as social/fraternal organizations, e.g., parents booster clubs, alumni associations, etc. Their purchases of fundraising items, even if conducted with the students, would be taxable as they would not have a valid ST-5 to issue to the vendor and they cannot use the exempt status of the school. The student/sellers, in this instance, would not collect the tax on their occasional fundraising sales.