How Dayton's tax plan hits nonprofits
- Blog Post by: Lori Sturdevant
- February 5, 2013 - 12:03 PM
Dave of Owatonna asked: Would service organizations be exempt from Gov. Mark Dayton's expansion of the state sales tax to services?
I expanded "service organizations" to ask Janelle Tummel of the Department of Revenue about the Dayton plan's impact on all nonprofit organizations.
Tummel said that nonprofits that are currently exempt from the sales tax would remain so when they make purchases Dayton proposes to tax. That exemption is available now to groups that are organized exclusively for charitable, religious or educational purposes. If they are excused now from paying taxes on, say, office supplies, they'll be excused from paying taxes on the accounting services that Dayton seeks to include in the sales tax base.
But it's a different story when those groups are providers of services. When they provide a taxable service for a fee, they would be obliged under Dayton's plan to collect a sales tax. For example, if the YMCA offers swimming lessons for a fee, Dayton's proposal would require the Y to the sales tax to that tab and remit it to the state.
That would appear mean that the sales tax would apply to membership dues as well. I'm checking with Tummel on that point, and report her answer in a subsequent post.
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