Wis. Admin. Code Tax § 11.35

Current through May 28, 2024

Section Tax 11.35 - Occasional sales by nonprofit organizations

(1) SCOPE. This section describes the occasional sales exemption for nonprofit organizations as provided in s. 77.54(7m), Stats.

(2) DEFINITIONS. In this section:

(a) "Admission event" means that access to the event involving entertainment is generally restricted to only those who pay a required fee, who make a required donation or who are required to make a purchase of some kind such as a meal or raffle ticket.

(b) "Entertainment" means entertainment provided at an admission event by all persons or groups who are paid in the aggregate more than $10,000 per event by all persons for performing, for reimbursement of expenses or for prize money.

(c) "Nonprofit organization" includes a neighborhood association, church, civic group, garden club, social club or similar organization not operated or organized for profit where no part of the net income inures to the benefit of any private shareholder or individual. A governmental unit described in s. 77.54(9a), Stats., is considered a "similar organization" for purposes of this paragraph.

(d) "Sales price" means sales price as defined in s. 77.51(15b), Stats., from all sales in Wisconsin of otherwise taxable tangible personal property, items, property, or goods under s. 77.52(1) (b), (c), or (d), Stats., and services after subtracting allowable exemptions.

(3) GENERAL. A nonprofit organization shall charge Wisconsin sales tax on sales of tangible personal property or items, property, or goods under s. 77.52(1) (b), (c), or (d), Stats., and taxable services, unless the sales qualify as exempt occasional sales or are otherwise exempt. The occasional sales exemption does not apply to the sales price from the sale of bingo supplies to players or to the sale, rental or use of regular bingo cards, extra regular cards and special bingo cards.

(4) STANDARDS. Under s. 77.54(7m), Stats., a nonprofit organization shall meet all of the following standards for its sales to qualify as exempt occasional sales:

(a) The organization is not engaged in a trade or business.

(b) Entertainment is not involved at an event for which charges by the organization constitute admissions.

(c) The organization does not have and is not required to have a Wisconsin seller's permit, except for conducting bingo.

(5) NOT ENGAGED IN A TRADE OR BUSINESS. A nonprofit organization is not engaged in a trade or business for purposes of sub. (4) (a) if it meets at least one of the following:

(a) Its sales of otherwise taxable tangible personal property, items, property, or goods under s. 77.52(1) (b), (c), or (d), Stats., or services or its events occur on 75 days or less during the calendar year, regardless of the dollar amount of sales. For events involving the sales of tickets, only the actual days of the events are counted, not the days of ticket sales.

Example: A boy scout troop takes orders for Christmas wreaths from August 1 through November 1. The wreaths are delivered by the troop on December 15 and 16. For purposes of determining whether its events meet the 75-day test, the troop should use the days of delivery rather than days orders are taken.

(b) Its taxable sales price for tangible personal property, items, property, and goods under s. 77.52(1) (b), (c), or (d), Stats., and taxable services for the calendar year are $50,000 or less, regardless of the number of days on which its sales or events occur. Sales that are nontaxable are not included for purposes of the $50,000 sales price test.

Examples:

1) A church sells frozen pizzas. Since sales of frozen pizzas are exempt from sales tax, the sales of the frozen pizzas are not counted as part of the sales price for purposes of the $50,000 receipts test.

2) A nonprofit organization, which sells hundreds of Christmas trees, sells 5 Christmas trees for $100 to a public school. Although Christmas trees are taxable tangible personal property, a public school can purchase tangible personal property and items, property, and goods under s. 77.52(1) (b), (c), and (d), Stats., exempt from sales tax. As a result, this $100 exempt sale to the school is not counted as part of the sales price for purposes of the $50,000 receipts test.

(6) ENTERTAINMENT.

(a) For a nonprofit organization's sales to qualify as exempt occasional sales, entertainment may not be involved at an event for which charges by that nonprofit organization constitute admissions.

Examples:

1) Four different bands are paid $3,000 each to perform at various times during a 3-day event. There is an admission charge for access to the event. Since the total payment for entertainment ($12,000) exceeds the $10,000 limit in sub. (2) (b), entertainment is deemed to be involved. As a result, receipts from the event are taxable.

2) Two nonprofit organizations co-sponsor an admission event at which a band is hired to perform. Each organization pays the band $5,500. Since the total payment for entertainment ($11,000) exceeds the $10,000 limit in sub. (2) (b), entertainment is deemed to be involved. As a result, receipts from the event are taxable.

3) A nonprofit organization sponsors a dinner and dance in the high school gymnasium. The dance band is paid in excess of the $10,000 limit in sub. (2) (b). There is no separate admission charge. However, access to the dance is restricted to those who have purchased the meal. The "meal" charge constitutes an admission charge to an event involving entertainment. Therefore, sales by the nonprofit organization at this event are taxable.

4) A nonprofit organization holds a pig roast at the city park and hires a band to play at the park gazebo so that patrons, if they so wish, can be entertained while they eat. There is no admission charge and access to the band is open to anyone, whether they purchase the meal or not. Entertainment is deemed not to be involved. Therefore, the sales by the nonprofit organization may still qualify as exempt occasional sales.

5) Nonprofit Organization A sponsors an admission event at which a band is hired to perform. The band is paid more than $10,000. Nonprofit Organization A allows Nonprofit Organization B, a separate entity, to sell soft drinks and food at the event for consumption on the premises of the event. Although Nonprofit Organization A's sales at the event do not qualify for the occasional sales exemption, Nonprofit Organization B's sales at the event may qualify as exempt occasional sales. The admission charge to the event involving entertainment is made by Nonprofit Organization A, not Nonprofit Organization B.

(b) A nonprofit organization that would otherwise qualify for exempt occasional sales, except for the involvement of entertainment, may obtain a seller's permit from the department for the day or days involving entertainment, pay the sales tax on that event and request inactivation of its seller's permit after the event, and still have exempt occasional sales on days not covered by the seller's permit. Days and receipts from events involving admissions to entertainment for which a seller's permit was obtained are included with all other sales in determining the 75-day test and the $50,000 taxable receipts test described in sub. (5). A nonprofit organization that obtains a seller's permit for an event and does not request inactivation of its seller's permit after the event does not qualify for the occasional sale exemption while the seller's permit is active, regardless of the number of days and dollar amount of its sales.

Examples:

1) A nonprofit organization plans 5 events covering 3 days each for the year for a total of 15 days. Entertainment will be involved at one event only. The sales by the nonprofit organization would qualify as exempt occasional sales, except for the involvement of entertainment at the one event. The nonprofit organization may obtain a seller's permit for the one event involving entertainment and request inactivation of its seller's permit after the event; thus allowing the other 4 events to qualify as exempt occasional sales.

2) A nonprofit organization holds several events during the year. For one of the events, the nonprofit organization obtains a seller's permit because entertainment is involved, collects sales tax on its receipts of $5,000 from that event and requests inactivation of its seller's permit after the event. Taxable receipts from its other events must be combined with the $5,000 of receipts from the event for which it held a seller's permit for purposes of determining whether the $50,000 taxable receipts test is met.

(7) HOLDING A SELLER'S PERMIT.

(a) A nonprofit organization is not required to hold a seller's permit if its sales are exempt from sales and use taxation by meeting the provisions of sub. (4) (a) and (b). However, an organization required to hold a seller's permit solely for the purpose of conducting bingo games may still qualify for the occasional sales exemption on nonbingo sales if it otherwise qualifies under the provisions of sub. (4) (a) and (b).

(b) If a nonprofit organization holds a seller's permit in the current year, but intends or believes in good faith that its activities in the following year would qualify as exempt occasional sales except for its holding of a seller's permit, it may request inactivation of its seller's permit and its sales in the following year will qualify as exempt occasional sales provided it meets the standards in sub. (4) (a) and (b) in that following year.

Example: A nonprofit organization has held nineteen 4-day events for a total of 76 days each year for the past 5 years. Receipts were always over $50,000, and there were no admissions to entertainment events. One event has lost money for the past 2 years. The organization intends to discontinue that event for the following year; thus, it may anticipate coming under the 75-day standard and request inactivation of its seller's permit in good faith.

(c) If a nonprofit organization did not hold or was not required to hold a seller's permit or requested inactivation of its seller's permit in good faith but later, due to unforeseen circumstances, exceeds the standards, only the sales occurring after the standards are exceeded do not qualify as exempt occasional sales and are subject to tax.

Examples:

1) A church held 73 days of events or sales in the current year. Receipts for the events equaled $70,000 and no entertainment was involved. The church expects to hold the same 73 days of events in the following year. It requests inactivation of its seller's permit. However, in the middle of the following year, the church garage is destroyed by fire. An additional 4-day event is held to raise funds to help replace the garage. Only the receipts from days 76 and 77, the days exceeding the standard, are subject to sales tax.

2) A garden club is organized in the current year. The garden club is not required to hold a seller's permit and does not apply for one. In the following year, the garden club holds 77 days of events with taxable receipts from the events of $70,000. Only receipts from days 76 and 77, the days exceeding the standard, are subject to sales tax.

(d) If a nonprofit organization has sales in the current year and then requests inactivation of its seller's permit, sales made in the current year before requesting inactivation of the seller's permit do not qualify as exempt occasional sales, even if the standards for exempt occasional sales in sub. (4) (a) and (b) are met.

Example: A nonprofit organization holds 70 days of sales in the current year. The organization holds a seller's permit, files sales and use tax returns and pays sales tax on all its receipts in the current year. At the end of the current year, the organization realizes that its sales would have qualified as exempt occasional sales except for its holding of a seller's permit. The organization may not claim a refund of taxes paid while it held a seller's permit.

(8) WHEN SALES DO NOT QUALIFY FOR OCCASIONAL SALES EXEMPTION. If a nonprofit organization has sales of tangible personal property, items, property, or goods under s. 77.52(1) (b), (c), or (d), Stats., or taxable services, and the sales do not qualify as exempt occasional sales, it is required to obtain a seller's permit and collect and remit sales tax on its taxable sales.

Wis. Admin. Code Department of Revenue § Tax 11.35

Cr. Register, June, 1991, No. 426, eff. 7-1-91; renum. (1) and (2) to be (2) and (1) and am. (2) (b), am. (3), (5) (b) and (6) (a), Register, October, 1997, No. 502, eff. 11-1-97; EmR0924: emerg. am. (2) (b), (3), (4) (c), (5) (a), (b), (6) (b), (7) (d) and (8), r. (2) (c), renum. (2) (d) to be (2) (c) and am., cr. (2) (d), eff. 10-1-09; CR 09-090: am. (2) (b), (3), (4) (c), (5) (a), (b), (6) (b), (7) (d) and (8), r. (2) (c), renum. (2) (d) to be (2) (c) and am., cr. (2) (d), Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (4) (b), (6) (b), (7) Register November 2010 No. 659, eff. 12-1-10; CR 12-014: am. (1) Register August 2012 No. 680, eff. 9-1-12.

Amended by, CR 19-20112: am. (2) (b), (5) (a), (Example), (b), (Example 1), (Example 2), (6) (a), (Example 1), (Example 2), (Example 3), (Example 5), (b), (Example 2), (7) (b) (Example), (c) (Example 1), (Example 2), (d) (Example) Register June 2020 No. 774, eff. 7/1/2020

To obtain a seller's permit, a nonprofit organization shall file Wisconsin form BTR-101, Application for Business Tax Registration, with the department. Form BTR-101 may be obtained from any department of revenue office, or by writing or calling Wisconsin Department of Revenue, P.O. Box 8902, Madison, WI 53708-8902, telephone (608) 266-2776.

The interpretations contained in s. Tax 11.35 became effective January 1, 1989, pursuant to 1987 Wis. Act 399, except: (a) the $25,000 receipts standard and the $500 entertainment standard became effective January 1, 2006, pursuant to 2005 Wis. Act 25; (b) The change of the term "gross receipts" to "sales price" and the separate impositions of tax on coins and stamps sold above face value under s. 77.52(1) (b), Stats., certain leased property affixed to real property under s. 77.52(1) (c), Stats., and digital goods under s. 77.52(1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; and (c) the 75 day standard, the $50,000 receipts standard, and the $10,000 entertainment standard became effective January 1, 2017, pursuant to 2015 Wis. Act 364.

Section Tax 11.35 interprets ss. 77.51(9) and 77.54(7m), Stats.