Nonprofit organizations and schools have to collect and remit sales tax on tickets to athletic events, plays and concerts, among other things, under changes to Louisiana’s sales tax code passed by the Legislature during a special session earlier this year.
Museums, zoos, aquariums, nature centers, little theaters and other cultural institutions also have to collect and remit sales taxes from their patrons, while nonprofit organizations that provide workout facilities or entertainment venues, like the YMCA, have to collect sales taxes on their membership dues.
Those are among the many new changes to the tax code that nonprofit organizations are sorting through, two months after lawmakers approved a one-cent increase to the state’s four-cent sales tax while simultaneously removing dozens of exemptions and exclusions.
Most nonprofit organizations were previously included in those exemptions. Now, mostly, they’re not. To help the organizations make sense of the changes, the Louisiana Department of Revenue held a webinar earlier today outlining some of the biggest changes under the new law.
The new code can be confusing. While YMCA dues are taxable, because the organization provides workout facilities to its members, Rotary Club and professional association dues are not, explained David Hansen, policy services director for the department.
Tickets to fundraisers and galas are subject to taxation, but sponsorships of such events are not—unless tickets come with a sponsorship and comprise more than 40% of the worth of the sponsorship, Hansen said.
Dues paid to the Tiger Athletic Foundation are not subject to taxation. Neither are dues to Mardi Gras krewes. But the purchase of Mardi Gras beads are, as are Girl Scout cookies, Cub Scout popcorn and Boy Scout jambalaya.
For nonprofits like the YMCA, the changes have been an administrative headache, though the Y was better prepared than many organizations because it could model what YMCAs in other states with such sales taxes have done.
“The software pretty much took care of it,” says YMCA of the Capital Area Baton Rouge CEO Bob Jacobs. “The biggest pain is that it changes again July 1.”
More troublesome is that the Y has had to pass on the sales tax to its members, nearly one-third of whom receive financial assistance with membership dues from the organization.
“That 3% tax could be the tipping point for many of them,” he says. “And our facilities are often the only places where they get exercise and nutritional counseling. For the state it could really end up being penny wise, pound foolish in the end.”
The new tax rate approved by lawmakers went into effect April 1. Collections from April are due May 20. A new rate goes into effect July 1 and is due to expire June 30, 2018, though as Hansen points out the governor is calling for a second special session later this summer or later this year. More changes to the tax code could come then.
Organizations with questions should call (225) 219-7462 or email sales.inquiries@la.gov.
—Stephanie Riegel
