Changes to Tax Status of Non-Profits

A number of changes were made during the Special Session under Act 25 and 26 to the tax status of non-profit organizations in Louisiana. These changes to sales taxes are of particular concern because non-profits must now collect sales tax for items which were previously tax-exempt.

Effective April 1, 2016, various events sponsored by domestic nonprofit, charitable, religious and educational organizations will be subject to 5% state sales tax from April 1, 2016, through June 30, 2016. This includes, but is not limited to: sales of admissions to entertainment events; admissions, parking and sales at fundraising events; all outside gate admissions; and parking fees at fairs and festivals sponsored by nonprofit organizations. If your organization has received an approved Application for Exemption from Collection of Louisiana Sales Tax at Certain Fundraising Activities for a particular fundraising event or activity that is being held after April 1, 2016, it is no longer valid. Any event held after April 1, 2016, is subject to the new sales tax requirements.

Additionally any membership dues or fees paid for the privilege of access to clubs or the privilege of having access to or the use of amusement, entertainment, athletic, or recreational facilities will now be subjected to sales tax under Acts 25 and 26. However, membership fees or dues paid to a club such as the Rotary Club, which does not grant members access to a club or the privilege of accessing amusement, entertainment, athletic, or recreational facilities will not be subject to state sales tax.

The sales tax rates now in effect:

4/1/2016 – 6/30/2016: 5%
7/1/2016 – 6/30/2018: 3%
7/1/2018 – 3/31/2019: 0

The new sales tax rates are causing a lot of confusion. Whether you are a for-profit or a non-profit, the rules have changed and will continue to shift over the next few years. To make sure your organization is in compliance with the new sales tax laws, get in touch with us to set up a consultation to review how the new rules impact your organization.

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