Sales and Use Tax
Nonprofit Organizations and Government Units - Certificate of Exempt Status

  1. What types of nonprofit organizations and governmental units qualify for a Certificate of Exempt Status?
  2. How do I apply for exemption from sales tax for my nonprofit organization or governmental unit?
  3. Should a nonprofit organization or governmental unit charge sales tax on admissions to its events?

  1. What types of nonprofit organizations and governmental units qualify for a Certificate of Exempt Status?

    Wisconsin provides a sales and use tax exemption for purchases made by the following nonprofit organizations: Organizations organized and operated exclusively for religious, charitable, scientific or educational purposes, and for the prevention of cruelty to children or animals. Generally, organizations that qualify for exemption from Federal income tax under Section 501(3) of the Internal Revenue Code will qualify for exemption from Wisconsin sales and use tax. These organizations are issued a Certificate of Exempt Status (CES).

    Federal governmental units and Wisconsin governmental units, including counties, cities, villages, towns and school districts, and any federally recognized American Indian tribe or band in Wisconsin, also qualify for a CES. Governmental units are not required to apply for a CES in order to receive exemption on their purchases; however, they may choose to do so.

    Examples of organizations that do not qualify for sales tax exemption for purchases by nonprofits and will not be issued a CES are as follows:

    • Civic organizations
    • Chambers of commerce
    • Business or union organizations
    • Fraternal or recreational groups
    • Professional societies
    • Social clubs or veteran organizations and their auxiliaries
    • Governmental units of other countries and states

    Purchases made by these organizations are subject to Wisconsin sales and use tax unless some other exemption applies. Information on Internal Revenue Service requirements can be found at irs.gov/charities/charitable/index.html.

  2. How do I apply for exemption from sales tax for my nonprofit organization or governmental unit?

    To assist retailers in identifying nonprofit organizations that qualify for exemption from Wisconsin sales and use tax, the Department of Revenue issues the qualifying nonprofit organization or governmental unit a Certificate of Exempt Status (CES) number. A CES number can be obtained by submitting a completed Application for Wisconsin Sales and Use Tax Certificate of Exempt Status Form S-103 and the following documentation:

    • Articles of incorporation or bylaws
    • Statement of receipts (income) and disbursements (expenses) for the organization's last accounting period
    • Federal Internal Revenue Service (IRS) determination letter

    Governmental units need only submit the application

  3. Should a nonprofit organization or governmental unit charge sales tax on admissions to its events?

    A nonprofit organization or governmental unit's receipts from sales of admissions to its events qualify for the sales and use tax occasional sales exemption if the nonprofit organization or governmental unit meets all of the following three conditions:

    1. The nonprofit organization or governmental unit does not hold and is not required to hold a seller's permit.

      Exception: If a nonprofit organization or governmental unit holds a seller's permit solely for the purpose of conducting bingo events, this condition is still met.

    2. The nonprofit organization or governmental unit does not have taxable receipts exceeding $25,000 during the calendar year, or, the nonprofit organization or governmental unit's sales of otherwise taxable tangible personal property or services or its admission to events occur on 20 days or less during the calendar year. (For any sales of admissions or tickets, only the actual days of the events are counted, not the days of ticket or admission sales).

      Note: Both the $25,000 and 20-day standards must be exceeded for "Condition B" to be exceeded.

    3. The nonprofit organization or governmental unit does not conduct an event involving entertainment for which the nonprofit organization or governmental unit or other persons pay in excess of $500 for the entertainment and admission that is charged.

    Note: If, for example, the nonprofit organization or governmental unit were to pay $1,000 in total to performers to appear at a concert for which it charges admission, the nonprofit organization or governmental unit would not meet Condition C for that event. However, if none of the performers are paid, or if the total paid to them is less than $500, Condition C would be met for that event.

    There is also an exception to Condition C. A nonprofit organization or governmental unit that would otherwise qualify for exempt occasional sales, except for the involvement of entertainment may do the following:

    • Obtain a seller's permit from the Department of Revenue for the day or days of the event involving entertainment,
    • Pay the sales tax on sales of tangible personal property and taxable services on these days, and
    • Request inactivation of the seller's permit after the event by contacting the Department of Revenue.

    If the above three steps are taken, the nonprofit organization or governmental unit may still make exempt occasional sales on days not covered by the permit. (Note: These days and receipts are included in determining if Condition B is met.)

    If the nonprofit organization or governmental unit does not meet Conditions A, B, and C above, its receipts from sales of admissions are subject to tax. If the nonprofit organization or governmental unit is required to hold a seller's permit, its sales do not qualify for the exemption.

FOR MORE INFORMATION PLEASE CONTACT:

WISCONSIN DEPARTMENT OF REVENUE
Tax Operations Bureau
PO Box 8902, MS 3-80
Madison, WI 53708-8902
Phone: (608) 266-2776
Fax: (608) 264-6884
Email additional questions to DORBusinessTax@revenue.wi.gov

December 18, 2013