Certain nonprofit organizations are exempt from Wisconsin sales or use tax on their purchases of taxable products and services. Organizations that qualify for this exemption include those organized and operated exclusively for religious, charitable, scientific or educational purposes. These organizations are typically provided tax exempt status under sec. 501(c)(3) of the Internal Revenue Code.
How to claim an exemption
In order to claim an exemption from tax on its purchases, a qualifying nonprofit organization located in Wisconsin must apply for a Certificate of Exempt Status (CES) number with the Wisconsin Department of Revenue using Form S‑103. The purchaser must provide its CES number to the seller in order to claim the exemption.
A qualifying nonprofit organization located out-of-state is also exempt from tax on its purchases. The qualifying out-of-state organization may use the Wisconsin sales and use tax exemption certificate, Form S‑211, to purchase without tax even though it has not been issued a Wisconsin CES number.
Exemption applies to the organization
This exemption only applies to sales made to the qualifying organization. A sale made to an individual is subject to sales tax, even if the products or services purchased are intended for the exempt organization and the individual is reimbursed by the organization for the purchase.
Exception: When an individual makes a purchase on behalf of an exempt organization and the invoice or billing document identifies the organization as the purchaser, the purchase is exempt from Wisconsin sales and use tax provided the individual gives the seller the organization's CES number, or a properly completed exemption certificate (e.g., Form S‑211).
If making payment using personal funds, the individual must also provide the seller a written statement from the organization indicating the individual is authorized to make the purchase on behalf of the organization and that the organization will reimburse the individual for the purchase.
The seller must keep the exemption certificate and/or record the CES number on the copy of the invoice the seller keeps.
Example 1: An organization holding a CES number orders office supplies. The organization provides the seller a properly completed exemption certificate identifying the organization as the purchaser. The seller issues an invoice identifying the organization as the purchaser. The organization pays using a check drawn on the organization's bank account. The sale of office supplies to the organization is exempt from Wisconsin sales tax.
Example 2: An individual purchases office supplies on behalf of a qualifying organization. The individual provides the seller the organization's CES number and a letter from the organization stating the individual is authorized to make the purchase for the organization. The sale is written up in the organization's name. The individual pays for the purchase using his personal credit card and is subsequently reimbursed by the organization for the purchase price. The sale of office supplies to the organization is exempt from Wisconsin sales tax.
Example 3: An individual purchases office supplies on behalf of a qualifying nonprofit organization. The invoice is written up in the individual's name. The individual pays for the purchase using his personal credit card and is subsequently reimbursed by the organization for the purchase price. The sale of office supplies is subject to Wisconsin sales tax, as the sale was made to an individual. Neither the organization nor the individual are allowed a refund of sales tax paid.
July 28, 2016