Sales Tax MISD Activity Fund Sales Tax

Exempt Organizations • Exempt Organization - an organization exempt from sales tax

on their purchases of taxable goods and services.

• Exempt organizations are not required to pay sales tax on the purchase of tangible personal property or taxable services if the property or service is to be used exclusively for public purposes.

• All items purchased by a public school for the school’s own use qualify for an exemption from sales tax if the items purchased relate to the educational process.

Purc

hasin

g

2

Taxable Items • Taxable Item - tangible personal property and taxable

services.

• Tangible Personal Property - something that can be seen, weighed, measured, felt or touched, or that is otherwise perceptible to the senses.

• Taxable Services - include but are not limited to amusement services; specified personal services; repair, remodeling, maintenance and restoration of tangible personal property; information services; data processing services; and real property repair and remodeling services.

Purc

hasin

g

3

Texas Sales and Use Tax Exemption Certificate

• School purchases, supplies, materials, and services for educational or instructional use, or for use necessary to the function of the school (e.g., office supplies and copy paper) are exempt from state and local sales tax. The school should provide the vendor with a Texas Sales and Use Tax Exemption Certificate. • Purchasing taxable items that will become the possession of the campus. • Purchasing taxable items for the use of the campus.

• Schools may issue an exemption certificate in lieu of paying tax when

purchasing taxable items for their use or for giving away to students as part of a course of instruction. (e.g., a piece of paper used in art class to make a paper plane.) • Purchasing trophies, ribbons, awards earned by students • Meals on school trips • Hotel state tax in Texas

Purc

hasin

g

4

Texa

s Sal

es a

nd U

se T

ax

Exem

ptio

n Ce

rtifi

catio

n

Purc

hasin

g

5

DO NOT use an Exemption Certificate • A Texas Sales and Use Tax Exemption Certificate may not be

issued to secure exemption from sales tax for the purchase of items to be used for personal benefit (e.g., planners, cheerleader uniforms, drill team purchasing makeup/earrings.)

• Exemption certificate may not be issued by the campus for

purchases by parents, patrons or outside organizations (e.g., PTA's and booster clubs).

• It is a criminal offense to use the certificate for

the purpose of evading tax.

Purc

hasin

g

6

Texas Sales and Use Tax Resale Certificate

• In cases where the campus is purchasing items using activity funds, and the items will be resold to individuals, the campus should issue a Texas Sales and Use Tax Resale Certificate that then allows the campus to make a non-taxable purchase (i.e., because the intent is to resell the items to individuals).

• In these cases the campus must collect, report and submit sales

tax when individuals buy the items that were purchased tax-exempt, unless a One-Day Tax-Free day is used.

• Should be used to purchase items for the purpose of resale.

Purc

hasin

g

7

Texa

s Sal

es a

nd U

se T

ax

Resa

le C

ertif

icat

ion

Purc

hasin

g

8

Purchasing Exercise Which exemption form to give to vendor?

1. Purchase t-shirts for choir from the 461 GA Choir account. Students will pay for their shirt.

Texas Sales and Use Tax Resale Certificate

2. Purchase additional volleyball jerseys from 461 GA Volleyball account. Texas Sales and Use Tax Exemption Certificate

3. Purchase Activity Fund checks from 461 GA General Operating account. Texas Sales and Use Tax Exemption Certificate 4. Purchase carnations for valentine-grams from 865 SA Student Council

account. StuCo will sell carnations in February. Texas Sales and Use Tax Resale Certificate

Purc

hasin

g

9

5. Purchase planners from the campus fundraiser account. Planner will be given to all students. Students will not pay for their planner.

No form can be used. Must pay tax directly to vendor.

6. Purchase earrings from 865 SA Drill Team account. Students will not pay for the earrings.

No form can be used. Must pay tax directly to vendor.

7. Purchase letter jackets and letters that will be given to students that earned the award.

Texas Sales and Use Tax Exemption Certificate Same is true with Trophies, Ribbons, Medals The key word here is EARNED

Also UIL has specific rules about awards for UIL involvement. • Not to exceed $70 per student for all years enrolled. • 1 additional award per interschool activity per year not to

exceed $10.

Purc

hasin

g

10

Purchasing Exercise Which exemption form to give to vendor?

Purc

hasin

g

Purchasing Exercise Which exemption form to give to vendor?

8. Purchase library books for from the 461 GA Library account. Texas Sales and Use Tax Exemption Certificate

9. Purchase t-shirts for student council from the 865 SA Student

Council account. Students will not pay for their shirt. No form can be used. Must pay tax directly to vendor.

10. Purchase Convocation t-shirts for staff using Dr. Pepper Commissions. Staff will not pay for their shirts.

No form can be used. Must pay tax directly to vendor. 11. Purchase pizza for student trip to Austin from the 865 SA Student

Council account. Students will not pay. Texas Sales and Use Tax Exemption Certificate

11

Sale by Exempt Organizations

• Sale – a “transfer of title or possession” or “performance of taxable service.”

• An exempt organization that sells taxable items is responsible for collecting and remitting tax on all sales of taxable items.

• Being an exempt organization does not relieve MISD from collecting sales tax on all sales.

Sa

le

12

Examples of Sales Nontaxable

• Fees and admission tickets to District events (athletics, theatre, prom, clinics, workshops)

• Ad sales (yearbooks, programs) • Concession stand food sales • Discount entertainment cards and

books • Parking permits (students, faculty,

staff) • Rental of real property (gym,

auditorium, library) • Magazine subscription for 6

months or longer • Car washes

Taxable • Sale/fee for materials when the

end product becomes the possession of the student (planners, calendars, art supplies)

• Yearbooks, football programs • School rings • Student artwork sale • Clothing, shirts and spirit items • Decals, Yard Signs • Pencils (pencil machines) • Parking permits (general public) • Magazines (single issue or

subscription less than 6 months) • Car carpet shampooing

Sale

13

Examples of Funds that are not Considered a Sale

• Collection of money from students to pay a company for admission or service. (Field Trips, PSAT test)

• Commissions (Dr. Pepper or Scholastic Book Fairs) • Donations • Fees – transcripts, instrument maintenance, lab, cleaning, iPads • Fines – textbooks, library books, iPads • Lost Items Fines – textbooks, library books, ID cards, iPads • Marathon fundraisers – Lift-A-Thon, Jump Rope for Heart,

Basketball Hoops • Student Club Membership Fees (not including a t-shirt) • Summer School tuition and fees

Not

a S

ale

14

Sale Exercise Taxable Sale, Nontaxable Sale or Not a Sale 1. Admissions tickets to the Valentine Dance

Nontaxable Sale 2. Fee for student transcript

Not a Sale 3. Fine for lost library book

Not a Sale 4. Replacement Fee for student planner

Taxable Sale (But we paid the vendor tax when purchased?) 5. Club membership which includes a t-shirt

Membership is Not a Sale but the shirt is a Taxable Sale 6. Pencil Machine

Taxable Sale 7. Fee to replace a lost student ID card

Nontaxable Sale (what about lanyards?)

Sale

15

Fundraiser Application and Recap

• A Fundraiser Application must be completed and approved for all sales and commissions prior to collection of funds. Even if a campus intends to not make a profit, a Fundraiser Application is needed.

• A Fundraiser Recap must be completed within one week of the fundraiser’s ending date of sale.

Do not forget to complete Applications for… • Pencil or pen machines for the year (it’s a sale) • Replacement fee’s for planners (it’s a sale) • Yearbooks (it’s a sale) • Yearbook Ads (it’s a sale) • T-shirts – even when the campus is not making a profit (it’s a sale) • Commissions (not a sale but must complete the application)

Sale

16

Tax-Free Sale • The District, each school and each bona fide student chapter, may

have two one-day tax-free sales each calendar year. (e.g., the organization is not required to collect sales tax on the sale price of taxable items sold.)

• Bona Fide Chapter - student groups recognized by the school and

organized by electing officers, holding meetings and conducting business. • One-day - is a consecutive 24-hour period and a calendar year is the 12-

month period from January through December. An organization may hold the two tax-free sales consecutively.

• If two or more chapters jointly hold a tax-free sale, each is considered to

have held a tax-free sale during that calendar year.

Sale

17

Tax-Free Sale Date • Either the date on which the items are delivered by the vendor to

the school organization or the day on which the school organization delivers the items to its customers may be designated as the one-day tax-free sale day.

• Persons buying from surplus inventory on the designated date do

not owe tax. • Persons buying on subsequent dates owe tax.

Sale

18

Calculate Sales Tax Due to MISD

Due

to M

ISD

19

Due

to M

ISD

20

High School Sales Tax Report

Due

to M

ISD

21

Resources • Sales and Use Tax Bulletin, Texas Comptroller of Public Accounts

http://window.state.tx.us/taxinfo/taxpubs/tx94_183.pdf

• TEA - Financial Accountability System Resource Guide Module 5 - Site based Decision Making 5.5.5 Taxable Status of Purchases http://tea.texas.gov/Finance_and_Grants/Financial_Accountability/Financial__Accountability_System_Resource_Guide/

• Texas Comptroller of Public Accounts – Tax Publications http://window.state.tx.us/taxinfo/taxpubs/index.html

• Student Awards, Trophies and Letter Jackets http://aixtcp.cpa.state.tx.us/opendocs/open04/0750b12l.html UIL Constitution http://www.uiltexas.org/files/constitution/uil-ccr-2014-2015-full.pdf

• The state comptroller’s office maintains a toll-free information number for quick

response to any state tax question. 1-800-252-5555

Reso

urce

s

22