98-064
Response
August 26, 1998
REQUEST
LETTER
It
is our understanding that some of the high schools in Utah are using the sale
of the schools’ year book as one of their designated fund raisers. Printed information from the Tax Commission
notes that schools are not required to pay sales tax on fund raiser, if they
meet the fund raising criteria in local board policy.
We
would like to use the sale of the school yearbook as one of the qualified fund
raisers for our district. We are aware
that this would need to be school board approved per policy and that a
designated account would need to be established at each school which will be
controlled by the school or the district.
Also, we are aware that funds may not be used to directly or indirectly
compensate an individual teacher or other personnel by direct payment,
commission, or payment in kind.
We
would appreciate your responding to us in writing regarding this issue.
Sincerely,
NAME
COMPANY
October
13, 1998
NAME
COMPANY
RE: Sale Tax on Yearbook Sales
Dear
NAME,
We have received your request for an
advisory opinion concerning the sales of yearbooks and whether these sales may
qualify for the school fundraising sales tax exemption found in Utah Code Ann.
§59-12-104(38). Utah Code Ann.
§59-12-102(8) sets forth three requirements before a sale is deemed a tax
exempt fundraising sale. First, the
sale must be made by the school or one of its students. If the publisher of the
yearbook is considered the seller, the sale would not qualify. Second, the sale must be one for the purpose
of raising funds for the school to purchase equipment or materials or to
provide transportation. Third, the sale
must be part of a officially sanctioned school activity.
To meet the third of these
requirements, the “officially sanctioned school activity” must be: (1)
conducted in accordance with a formal policy adopted by the school or district
governing the authorization and supervision of fundraising activities; (2) the
funds may not be used to directly or indirectly compensate an individual
teacher or other personnel by direct payment, commission, or payment in kind;
and (3) the net or gross revenues from the fundraiser must be deposited in a
dedicated account which is controlled by the school or district.
From the facts you supplied, it
appears that your school’s actions will satisfy the third of the three
requirements. However, you have not
indicated if the second requirement will be met, specifically whether the
yearbook sales are for the purpose of raising funds for the purchase of
equipment or materials or to provide transportation. If the sales are for one of these purposes, then the sales would
satisfy both statutory requirements and be exempt. If the sales are for another purpose, then the sales are not
exempt. Also, as mentioned above, the
first requirement is met only if the school or a student is the seller.
Also, please be aware that if the
sale does qualify for the fundraising sale tax exemption and the school
collects sales tax anyway, then the school must remit those taxes to the
Commission.
Please contact us if you have any
other questions.
For
the Commission,
Joe
B. Pacheco, CPA
Commissioner
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