Our local PTA depends on members doing a lot of purchasing to support events. They provide the proper tax exempt documentation to members, and state in bold that sales tax is not a reimbursable expense.
However, some retailers, Costco in particular, though there are others, are difficult to manage WRT tax exempt documentation. Members who try to save the PTA money by buying through these retailers get stuck with a big sales tax bill.
Here’s the question, is there any reason to believe that there is a tax law prohibiting a non-profit tax-exempt PTA from reimbursing sales tax, or is it simply the local rule to encourage members to use the tax exempt forms?
The PTA here has no idea, they’re just using the same forms they’ve used the last decade.
I’d be surprised if it were a law - but I don’t know why a non-profit would want to reimburse for taxes it shouldn’t have to pay.
I’m a bit surprised that Costco is difficult- it’s usually not the larger stores that have difficulty. Perhaps the form ( I assume it’s a state sales tax exemption form or certificate, not one created by the PTA itself) is out of date and the PTA should be using a more recent one?
I run into this same issue frequently when making purchases on behalf of my son’s Boy Scout troop (using the tax-exempt documentation provided to our charter organization, which is a local church).
Anyway, it is my understanding that in most states, to use tax-exempt documentation, the purchase must be made using a check or credit card in that organization’s name.
While not all retailers enforce this (especially smaller mom & pop retailers), most of the larger retailer chains do.
In one example that I recently encountered, I was trying to buy some troop campout supplies at Cabela’s. Even though I had all of the tax-exempt documentation for our charter organization, they would not negate the sales tax unless I had a check or credit card in our charter organization’s name. They wouldn’t even take cash. They said that a check or credit card in the organization’s name was required to prove the purchase was actually being made for the tax-exempt organization in question in case they were ever audited by the state.
So unless your PTA is willing to pass out signed blank checks or credit cards to members making purchases on its behalf, it don’t think it is reasonable to disallow reimbursing members for sales tax. Alternatively, whoever has signing authority for the PTA checking account needs to make all of the purchases themselves.
If I were in that situation, I would either refuse to make any more purchases on the organization’s behalf, or chalk it up to as a donation to the organization.
Costco in particular is a problem because they require the PTA to have its own membership.
I think most folks take the sales tax as a mini donation, it’s not worth the headache over a $2-5 hit for general purchases. It’s when it’s $20-$50 for a purchase supporting a big event that is driving the questions.
At a guess, from my working with exempt town and school groups, the issue is this: They are exempt from sales tax, so setting aside funds to reimburse sales tax for third-party purchases and donations is wasted money. By making the firm rule that they do not reimburse sales tax, they put the burden on the volunteer/donater to get the merchandise under an exemption or just eat the small difference as part of their contribution.
One thing to consider is that nobody is forced to participate in the PTA. If your PTA becomes too much of a PITA, people will start leaving and either form their own PTA or decide that they don’t really need a PTA anyway. So there’s an advantage to being willing to accommodate your volunteers to some extent.
As (US) sales tax is regulated at the state (& local) level, there are at least 50 different answers. Without knowing where the OP is, all we’re able to do is report anecdote on how it works where each of us is located.