Wisconsin purchases made by charitable organizations

August 30, 2016|Sarah Evans

The Wisconsin Department of Revenue recently provided guidance for tax exempt organizations on how to make purchases that are exempt from sales tax. This information is also important for all businesses that work with nonprofits.

Background

Certain nonprofit organizations that hold a Certificate of Exempt Status (CES) number are allowed to make purchases of taxable products and services without sales or use tax. The purchaser must provide its CES number or a fully completed exemption certificate to the seller to claim the exemption.

A qualifying nonprofit organization located out-of-state is also exempt from tax on its purchases. The out-of-state organization should use the Wisconsin sales and use tax exemption certificate, Form S-211, to purchase without tax even though it has not been issued a Wisconsin CES number. There is one exception to this rule, however: Lodging furnished to governmental agencies of states other than Wisconsin is subject to sales tax. This includes out-of-state counties, municipalities and school districts.

Be careful when using personal funds

The nonprofit exemption only applies to sales made to the qualifying organization. If you make a purchase on behalf of an exempt organization and the invoice or billing document identifies the organization as the purchaser, the purchase is exempt from Wisconsin sales and use tax provided you give the seller the organization's CES number, or a properly completed exemption certificate.

Often payment is made by an individual using personal funds or a personal credit card. In these instances, you must also provide the seller a written statement from the organization indicating you are authorized to make the purchase on behalf of the organization and that the organization will reimburse you for the purchase. The seller must keep the written statement along with the invoice and exemption certificate (or record the CES number on the copy of the invoice they keep).

Any sale made to an individual without the proper documentation is subject to sales tax, even if the products or services purchased are intended for the exempt organization and you are reimbursed by the organization for the purchase.

Questions?

For more information about sales and use tax on nonprofit purchases, visit the Wisconsin DOR website or contact Sarah Evans, State and Local Tax manager at sarah.evans@schencksc.com or 414-465-5561 or ask for any member of the Schenck State and Local Tax team at 800-236-2246.


Sarah Evans, CPA, has more than 25 years of state and local tax experience. Her experience includes coordination of sales tax audits and reverse audits as well as research, planning and compliance related to sales and use, property, income and franchise taxes.