Sales tax reporting question for 501c3

[JetCityWoman]

I volunteer as bookkeeper for a very small 501c3 non profit in Virginia. I'm trying to decide if we should - or must - collect and report sales tax on the very small amount of stuff we sell to raise money. Would like some advice from professionals.

We're based in Virginia and I did look up the VA sales and use tax requirements and it doesn't look like there are any exemptions that we qualify for. We should register and start collecting/reporting, I think. But here's the "kink": we only sell merchandise (pet products) in very small amounts at fairs and social events a couple times a year. Our in-state sales are around $300/year. I don't know if that's worth the hassle.

But here is another rub: we also go to similar events in other states: Massachusetts, Tennessee, North Carolina, Texas. I don't know if it's worth the hassle to register with those states to collect and remit sales taxes for sales revenue less than $150/year in each state.

At the same time I want to be legal so that we don't get in trouble. Advice or opinions?

 

[kirby]

Retail Sales and Use Tax Exemptions for Nonprofit Organizations -- Commonwealth of Virginia Department of Taxation

Click on above to go to Virginia's site on this



There are similar sites for the other states. But before you go to file in those, I suggest you ask the Board if they want you to do so. Let decision be on them.

 

[JetCityWoman]

Sorry for the very late reply to this. I read the info at your link. It's just information for VA, which is partly helpful.

Given the recent push by the state governments to get sales tax for online sales, I'm a bit leery about what we are doing for our event sales in other states. Are we really expected (legally) to register with every state now, either to record our exemption status or to start filing for tax collection/remittance? That's quite a lot of work for small organizations to deal with.

I keep going back and forth between wanting to adhere to the letter of the law and just being overwhelmed by it. Even if we do tax just for our home state and ignore the rest, I think I'd have to keep track of which state each sale was made in so that I don't remit tax to Virginia for sales that happened in Tennessee, for example. We also now have an online store via the SquareUp site, which opens us up to all 50 states. (For now, they are thinking about adding support for Canadian sales in the future.) Am I over-thinking it?

(BTW, I'm on our board, but have been discussing it with them. We are a very small organization with four people on our board, no paid staff and all volunteers.)

 

[kirby]

You are experiencing "analysis paralysis". If you tried to comply with every single local, state, and federal law you'd forever be doing the research as there are just too many laws and some conflict with each other. I really doubt you are going to the big house over the approximately $18 bucks sales tax in VA on $300 in sales. Make a decision on this and go forward.

 

[Samir]

I owned an auto parts distribution company that faced a similar issue in our state. Each county and municipality had its own tax as well as its own license. So there were literally 10,000 tax forms and licenses to obtain to do business in the state! Too much for a small business with just two people.

Luckily, we had a decent system which collected taxes for each county and municipality. And once we remitted it, we were okay. It was just a pain to have to file zero returns every month that we didn't sell anything taxable to that county/municipality.

It took a large spreadsheet and about 48hrs to figure everything out and file everything the first time. By the time we got out of the business, I could file over 40 returns in less than 45mins.

Just talk to the auditing department of each state and see what their policy would be during an audit. Then you know what you're up against. And then make a decision. $300 isn't much to lose sleep over.