Not for profits and Sales Taxes in NYC...?

Question

I'm working loosely with a not for profit called SIFE. Our mutual project is to help a student at a NYC college get her product to market. Under what circumstances could we sell the product and not charge sales taxes, if any?

If the venue were at the college, which is itself a not-for-profit, would we be tax-exempt?

I appreciate any and all guidance.

Answer 1

First of all, being a not-for-profit does not imply tax-exempt. But even if you were a tax-exempt organization, that might mean that your organization didn't have to pay taxes on items it bought for its own use, but it would still have to collect and remit tax on sales taxable items that it SOLD. If the item is taxable under your state law, then you'd have to collect sales tax on it and remit it to the state no matter what the status of YOUR organization is.

An example: I work a lot with a small public library, a 501(c)3 tax exempt organization. We don't pay income taxes, and don't pay sales tax on items we purchase like books, copier paper, shelves, etc etc etc. But when we SELL items to the public, we collect sales tax and remit it to the state just like any other organization would, except that for example sales at our annual book sale aren't subject to sales tax. That's in PA, and I don't know if other states are different.

Answer 2

The venue has nothing to do with the taxability of an item. As an exempt organization, the college would not have to pay taxes on items it buys; likewise neither would your organization. If your selling items though, you would be required to collect and remit the sales tax, because that charge is passed on to the customer, and they are ultimately liable to pay it, even if it's done as use tax.