1. What is a Certificate of Exempt Status (CES) number?
   
   
2. What types of nonprofit organizations and governmental units qualify for a CES number?
   
   
3. Is the department reviewing and re-issuing new CES numbers as a result of this law change (2021 Wis. Act 1)?
   
   
4. Do all nonprofit organizations qualify for a CES number?
   
   
5. Does a Wisconsin veterans organization need a CES number?
   
   
6. Does an out-of-state nonprofit organization need a CES number?
   
   
7. How do I apply for a CES number?
   
   
8. Should a nonprofit organization or governmental unit charge sales tax on its sales of taxable products and services?
   
   
9. If an organization's sales would qualify for the occasional sales exemption, except entertainment is involved, does the organization need a seller's permit for the entire year?
   

1. What is a Certificate of Exempt Status (CES) number?

   A Certificate of Exempt Status (CES) number helps retailers identify organizations that qualify to make purchases exempt from Wisconsin sales and use tax. The Department of Revenue issues CES numbers to qualifying organizations.

2. What types of nonprofit organizations and governmental units qualify for a CES number?

   The following types of nonprofit organizations and governmental units qualify for a CES number:

   • Any nonprofit organization that is exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code (IRC) and has received a determination letter from the Internal Revenue Service (IRS). Such organizations are organized and operated exclusively for the following exempt purposes: religious, charitable, scientific, educational purposes, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals.
   • Churches and religious organizations that meet the requirements of 501(c)(3) of the IRC but are not required to apply for and obtain tax-exempt status from the IRS.
   • Federal governmental units
   • Wisconsin governmental units, including counties, cities, villages, towns and school districts
   • Any federally recognized American Indian tribe or band in Wisconsin
     
     

   Federal and Wisconsin governmental units, federally recognized American Indian tribes or bands, and out-of-state organizations, as described above, do not need a CES in order to make purchases exempt from tax. However, they may apply for a CES.

   Important note: Effective February 20, 2021, the exemption for certain nonprofit organizations was amended (2021 Wis. Act 1) to provide:

   • Organizations with a 501(c)(3) determination letter from the IRS may make purchases exempt from sales and use tax.
   • Churches and religious organizations meeting the requirements of section 501(c)(3) of the IRC are allowed to make purchases exempt from sales and use tax, even if they do not have an IRS 501(c)(3) determination letter.
     
     

   Prior Wisconsin law was similar to the IRC Code but did not include all types of organizations described under 501(c)(3).

3. Is the department reviewing and re-issuing new CES numbers as a result of this law change (2021 Wis. Act 1)?

   Yes, as a result of this law change, the department is reviewing CES numbers issued in the past and issuing a new 15-digit CES number beginning with 008 to qualifying organizations.

   • Retailers: May accept a 6-digit or 15-digit CES numbers from organizations making purchases exempt from Wisconsin sales and use tax through June 30, 2022. Beginning July 1, 2022 only the 15-digit number is acceptable.
     
   • Organizations with a CES number: May use a 15-digit or 6-digit CES number until June 30, 2022. Beginning July 1, 2022 only the 15-digit CES number is valid.
     
     
4. Do all nonprofit organizations qualify for a CES number?

   No. Organizations that are not exempt under section 501(c)(3) of the IRC will not be issued a CES number to make purchases exempt from sales and use tax. Examples include:

   • Civic organizations
     
   • Chambers of commerce
     
   • Business or union organizations
   • Fraternal or recreational groups
     
   • Professional societies
   • Social clubs or veteran organizations and their auxiliaries (see #5 for information about an exemption for Wisconsin veterans organizations)
   • Governmental units of other countries and states
     
     

   Information on IRS requirements can be found at irs.gov/charities/charitable/index.html.

5. Does a Wisconsin veterans organization need a CES number?

   For more information, see the article Exemption for State Veterans Organizations on page 14 of Wisconsin Tax Bulletin 201.
   

6. Does an out-of-state nonprofit organization need a CES number?

   A qualifying out-of-state organization does not need a CES number to make purchases exempt from sales and use tax.
   

   A nonprofit organization qualifies for exemption on its purchases if it holds a 501(c)(3) determination letter from the IRS. Churches and religious organizations meeting the requirements of section 501(c)(3) of the IRC are allowed to make purchases exempt from sales and use tax, even if they do not have an IRS 501(c)(3) determination letter.

   Note: This exemption does not apply to purchases made by state or local governmental units from other states, including non-Wisconsin public schools and school districts. It also does not apply to fraternal, professional, labor, or civic organizations, or social or recreational clubs.

   A qualifying out-of-state nonprofit organization may purchase items exempt from tax by providing the seller either of the following:

   • A fully completed Wisconsin Sales and Use Tax Certificate (Form S-211 or S-211E) indicating the organization meets the requirements of section 501(c)(3) of the IRC.
   • The organization's CES number. The seller records the CES number on the billing notice or invoice and must retain a copy of the billing notice or invoice.
     
     

   Caution: Penalties may apply if you use an exemption certificate in a manner that is prohibited by or inconsistent with the law or provides incorrect information to a seller. The penalty is $250 for each invoice or bill of sale related to the use of the incorrect exemption certificate.

7. How do I apply for a CES number?

   Apply for a CES number by completing Form S-103, Application for Wisconsin Sales and Use Tax Certificate of Exempt Status. Include a copy of your organization's 501(c)(3) determination letter from the IRS.

   Exceptions:

   • Churches and religious organizations that meet the requirements of 501(c)(3) are not required to provide a determination letter.
   • Federal and Wisconsin governmental units, or a federally recognized American Indian tribe or band in Wisconsin, only need to submit the application.
     
     
8. Should a nonprofit organization or governmental unit charge sales tax on its sales of taxable products and services?

   A nonprofit organization or governmental unit's sales are not taxable if the nonprofit organization or governmental unit qualifies for the occasional sale exemption.

   The occasional sale exemption applies if all of the following three conditions are met:

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

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

   • The nonprofit organization or governmental unit is not engaged in a trade or business. A nonprofit organization or governmental unit is not engaged in a trade or business if either of the following is met:
     
     
     • Its taxable sales are $50,000 or less during the calendar year, or
     • Its sales of otherwise taxable sales occur on 75 days or less during the calendar year.(For sales of admissions or tickets, only the actual days of the events are counted, not the days of ticket or admission sales).
       
       
   • The nonprofit organization or governmental unit does not conduct an admission event involving entertainment.
     
     
     • Entertainment is involved if the total amount paid to all entertainers is more than $50,000, including amounts paid as prize money or reimbursement of expenses. For example, the organization pays performers $55,000 to appear at a concert for which it charges admission.
       
       
9. If an organization's sales would qualify for the occasional sales exemption, except entertainment is involved, does the organization need a seller's permit for the entire year?

   A nonprofit organization or governmental unit that would 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: Days and receipts are included in determining if Condition B is met.
   

   If the nonprofit organization or governmental unit is required to hold a seller's permit, its sales do not qualify for the exemption.

Applicable Laws and Rules

This document provides statements or interpretations of the following laws and regulations enacted as of January 31, 2024: secs. 73.03, 73.035, 77.51, 77.52, 77.53, 77.54 and 77.60, Wis. Stats., and sec. 77.54, Wis. Stats. (2013), secs. Tax 11.002, 11.05, 11.14 and 11.35, Wis. Adm. Code, and 26 U.S. Code § 501.

Laws enacted and in effect after this date, new administrative rules, and court decisions may change the interpretations in this document. Guidance issued prior to this date, that is contrary to the information in this document is superseded by this document, according to sec. 73.16(2)(a), Wis. Stats.

The department welcomes your input on our guidance. Submit comments on this guidance document.

Guidance Document Number: 100089

January 31, 2024