I am going to build something for a non-profit. (in NYS)
Ordinarily I can buy supplies tax free, but then I have to charge the buyer
sales tax. In this case I will be donating it rather than selling it, so I
can't charge them tax. So, can I still buy it tax free?
Alternately I could use their tax exempt certificate, but then I suppose
they would have to reimburse me for the purchase, and I would have to make a
cash donation. Or not?
This isn't just for income tax is it?
Depends on which state you're in. In some states nonprofits may be
exempt from sales and use taxes, and in some states they are not.
If your nonprofit is exempt from sales tax, I'd donate the cash to buy
the supplies and have them buy them.
But be careful. Just because an organization is a nonprofit for income
tax purposes does not automatically give them an exemption from sales
and use tax. In California, for example, nonprofits have to pay sales
tax - at least they did the last time the issue came up.
It isn't about income tax at all; it's sales and use tax.
In New York, the sale of tangible personal property to a contractor
for use in constructing or repairing real property owned by a tax
exempt organization is exempt from sales and use tax. The property
must become an integral part of the real property owned by the exempt
organization, so this would not apply to supplies that are consumed by
the contractor in the course of construction, only to materials that
become part of the property. N.Y. Tax Law §1115(a)(15) ; N.Y. Tax
Law §1115(a)(16) ; N.Y. Tax Law §1116(a) ; NYCRR 20 §541.1(e) ;
NYCRR 20 §541.3(b) ; NYCRR 20 §541.3(d).
The contractor must obtain a properly completed exemption certificate
from the exempt organization to support the exemption. NYCRR 20
If you are going to purchase supplies that you will consume in the
construction process, i.e., that will not become part of the completed
structure, you should contribute the cash to the exempt organization
and let it purchase the supplies. Then the purchase will be exempt.
Katie in San Diego
In article ,
501(C)(3) organizations are exempt from paying NYS sales tax on
purchases for their own use. (I don't know about other categories of
non-profits.) There are some filing requirements to get the
exemption, I think (but it's automatic).