Georgia Sales Tax and 501(c)(3)s

Transcription

1 Georgia Sales Tax and 501(c)(3)s Mace Gunter Delta Robyn Miller Pro Bono Partnership of Atlanta December 13, 2017

2 Mission of Pro Bono Partnership of Atlanta: To provide free legal assistance to communitybased nonprofits that serve low-income or disadvantaged individuals. We match eligible organizations with volunteer lawyers from the leading corporations and law firms in Atlanta who can assist nonprofits with their business law matters.

3 Pro Bono Partnership of Atlanta Eligibility & Other Information In order to be a client of Pro Bono Partnership of Atlanta, an organization must: Be a 501(c)(3) nonprofit. Be located in or serve the greater Atlanta area. Serve low-income or disadvantaged individuals. Be unable to afford legal services. Visit us on the web at We host free monthly webinars on legal topics for nonprofits To view upcoming webinars or workshops, visit the Workshops Page on our website Join our mailing list by ing rla@pbpatl.org

4 Legal Information: This workshop presents general guidelines for Georgia nonprofit organizations and should not be construed as legal advice. Always consult an attorney to address your particular situation All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership of Atlanta.

5 AGENDA Overview of Sales Taxes Overview of Use Taxes Administration of Tax Exemptions From Tax Analysis of Representative Transactions Useful Forms and Websites

6 Overview of Sales Tax Transaction Tax Retail Sale A sale occurs in Georgia when either title or possession of tangible personal property (TPP) transfers in the state to an end-user Sale for Resale Nonprofit Organizations Not exempt

7 Overview of Sales Tax Items Subject to Tax Tangible Personal Property Examples Certain Enumerated Services Admissions to Places of Amusement Participation in Games & Amusements Activities

8 Sales Price Overview of Sales Tax Gross proceeds from a sale without any deductions for the cost of the materials used, labor, services, transportation charges, or any other expenses Does not include cash discounts Collection Collected by the seller from the buyer Rate Seller Adds Tax to Invoice Tax Included Issue Seller Files Monthly Report Delivery Location (Out-of-State / In-State Differences) Includes a state rate of 4% Includes a local rate, depending on where the sale takes place, up to an additional 4% for a potential combined rate of 8%

9 Overview of Sales Tax Local Rates Vary by County MARTA Local Opt. Sp. Purpose Educational Homestead City of Atlanta TSPLOST Delivery Address for Rate

10 Overview of Use Tax Complements Sales Tax Use tax applies to the consumption, distribution, and storage of TPP and generally applies when the property was purchased without the payment of sales tax Items Subject To Tax Tangible Personal Property Focus on Out-of-State/Remote Sellers Internet seller No nexus with Ga.

11 Overview of Use Tax Collection Responsibility When sales tax is not collected by the seller on a taxable retail sale, a use tax imposed at the same rate as the sales tax The base for the use tax is the cost price of the taxable property or service The use tax is designed to capture sales that would otherwise escape the sales tax

12 Administration of Tax in Georgia Nonprofits making taxable sales must register as dealers with the Georgia Department of Revenue and get a sales tax number All entities must register through the Georgia Tax Center The nonprofit will be required to file sales/use tax returns on a monthly, quarterly, or annual basis, depending on the volume of sales (monthly filing is the default) These filings are through the Georgia Tax Center

13 Georgia Tax Center

14 Administration of Tax in Georgia The nonprofit must track where sales take place and allocate proceeds amongst the various sales locations and track varying local sales tax rates When making a purchase or property for resale, the nonprofit must provide the vendor a sale for resale certificate Exemption Certificate (e.g., Form ST-5)

15 Exemptions Certificates Retail Sale Presumed Properly Completed ST-5 Good-faith No Certificate? Collect Tax!

16 Administration of Tax in Georgia When making a sale to a customer, the nonprofit must collect sales tax on retail sales of TPP or taxable services unless the customer provides the nonprofit with a valid exemption certificate Sales Tax Numbers Can Be Checked on the DOR Website Who Can Obtain an Exemption Certificate? A valid exemption certificate should contain the buyer s Georgia sales tax registration number An exemption certificate is only valid if accepted in good faith by the seller

17 Exemptions General Rules Generally Found in Statutes - Not Regulations Types Entities Uses Products Construed Narrowly

18 Exemptions Application to Nonprofits Georgia sales tax law does not broadly exempt nonprofits from taxation Some organizations are exempt from paying sales tax on purchases Very specific exemptions Letter of Authorization may be required Some organizations are exempt from collecting sales tax on TPP sold Very specific exemptions Letter of Authorization may be required Other kinds of nonprofits, including organizations exempt from federal income tax under IRC 501(c)(3), are generally subject to sales/use tax in Georgia

19 Exemptions Nonprofits (Framework for Analysis) What Is The General Rule? Taxable or Not Taxable What If The Organization Is Exempt? Application & Certification What Is Exempt? Sales to versus Sales by

20 Exemptions Purchases Most nonprofits can t buy items tax-exempt Churches Charitable orgs. Civic orgs. Must pay sales tax on purchases for own use DOR Info. Bull Some exemptions allow specific entities to buy tax-exempt

21 Exemptions Purchases Entities Exempt Only on Purchases: American Red Cross Ga. State Society of Daughters of Am. Rev. Girl Scouts Food Purchases - used for fundraising Boy Scouts Food Purchases used for fundraising 501(c)(3) w/dor Comm r Letter In-patient nursing homes In-patient hospice In-patient mental hospital

22 Exemptions - Sales By Nonprofits Some Entities Are Exempt on Their Sales: PTA Private/Public School Events Girl Scout Sales of Food/Food Ingr. (cookies) Boy Scout Sales of Food/Food Ingr. (cookies) Religious Institution Fundraising

23 Representative Transactions Taxable Sales Sales of TPP Sales of T-shirts, Mugs, Hand-Crafted Items, Etc. Prepared Food Internet Sales Sales to Georgia residents are subject to Georgia sales tax Sales to nonresidents De Minimus Sales

24 Representative Transactions Donated Items & Thank You Gifts Items Gifted/Donated to Nonprofit Donor must pay sales tax on purchase No tax on the transfer of item to nonprofit Nonprofit must collect tax on sale of item Thank You Items that Nonprofit Gives to Donors Org. is end-user must pay sales tax on purchase Records to keep

25 Representative Transactions Nontaxable Services Nontaxable Transactions Car wash and other service transactions where no TPP is sold to buyers Reimbursements for expenses are generally not deemed to be taxable sales

26 Representative Transactions Silent Auctions Donation of Item for Auction Individual donation Business removal from inventory Winning Bidder s Payment Bifurcate Note Fair Market Value ( FMV ) of item Winning bidder pays tax on FMV Excess of winning bid over FMV = contribution

27 Representative Transactions - Admissions Participation in Games and Amusement Activities including Sporting Events E.g., 5k/10ks, tennis tournaments, golf tournaments, carnivals, music festivals, tour of homes, dance contests Taxable unless spectators pay a fee to watch, then spectators charged sales tax Dinners/Galas, Balls, Fashion Shows fundraising events may be considered entertainment May be taxable

28 Representative Transactions - Raffles Raffle Tickets Ticket NOT taxable Nonprofit purchase of item = taxable See Infor. Bull. SUT

29 Representative Transactions Uncollected and Unremitted Sales Tax Uncollected Sales Tax Prospective Compliance Voluntary Disclosure Agreement Anonymous Application Penalty Waiver Pay Interest Amnesty Collected, But Unremitted, Sales Tax

30 Useful Forms and Websites Georgia Department of Revenue - sales tax information: Georgia sales tax return (Form ST-3): _Effective_ pdf Sale for resale/misc. exemption certificate (Form ST-5): TP/Form/ST-5_Certificate_of_Exemption% pdf Out of state sellers: Out of state delivery using own vehicle: ATP/Form/ST-6_Certificate_of_Exemption-Out_of_State_Delivery.pdf

31 Useful Forms and Websites Articles on Sales tax: Paying Sales and Use Tax in Georgia PAYING-SALES-AND-USE-TAX-IN-GEORGIA.pdf Sales and Use Tax Exemptions in Georgia GEORGIA-SALES-AND-USE-TAX-EXEMPTIONS-FOR- NONPROFITS.pdf

32 For More Information: If you would like more information about the services of Pro Bono Partnership of Atlanta, contact us at: Phone: