Are nonprofits that sell goods liable for state sales tax, like for-profit businesses? And does the answer change if sales are made via the Internet? Nonprofits may indeed owe state sales tax for their sales, depending on their specific activities and extent of available state nonprofit exemptions. In the wake of the U.S. Supreme Court’s June 2018 South Dakota v. Wayfair, Inc. decision, such liability may include online sales – for both businesses and nonprofits. This is huge news for giant retailers like Wayfair and Amazon, but what does it mean for nonprofit sellers?
Amid revelations of Russian-backed Facebook ad campaigns and troublesome data leaks, Facebook has recently implemented new mandatory disclaimer labels and related requirements for advertisements deemed to be “political.” Given applicable political restrictions for Section 501(c)(3) organizations, does Facebook’s new political ad policy mean that public charities may no longer advertise on Facebook? Or could Facebook’s new ad policy lead to legal trouble for Section 501(c)(3) organizations, if the IRS should question their self-declared “political” involvement? The answer to both questions should be “No,” but the taint of identifying activities as “political” may well create some legitimate consternation among nonprofits.
It’s no surprise to pay sales tax when buying goods at stores. But what happens when a nonprofit organization sells goods, through a website, at periodic conferences, or as part of its program activities? Must the nonprofit collect sales tax too on its sales of T-shirts, books, or other items made available to others, just like a store? Aren’t nonprofits exempt from taxes? If a nonprofit’s sales are not exempt, under which state sales tax law will it owe sales tax?