A. By School Corporations

Purchases of tangible personal property are exempt from the sales tax if the property is acquired by a school corporation and is used to carry on and further the educational purposes of the school corporation. The purchase must be invoiced to and paid directly by the school corporation.

This exemption applies to purchases of tangible personal property that is acquired for incorporation into a school building that is being constructed by a school corporation.

B. By School Organizations

School organizations that are under the control of a school corporation and whose funds are accounted for through an extracurricular activities account may use the exemption number of the school corporation to make qualified purchases exempt from sales tax. Such purchases may be made only where payment is made by an extracurricular activities account and the property purchased is to be used by the organization for purposes other than in connection with social activities.

If the school organization is not under the control of a school corporation, the organization must register for an RRMC and provide the registration number assigned by the department on Form ST-105, General Sales Tax Exemption Certificate, when it's submitted to vendors to validate an exemption from sales tax on the purchase of otherwise taxable tangible personal property.

School organizations may not make purchases exempt from sales tax when such purchases are for the personal ownership or use of individual members of the organization or if such purchases will be used in connection with social activities of the organization such as parties, dances, and picnics conducted by such organizations.

C. By Teachers

Purchases of tangible personal property by teachers for use in their classrooms are subject to sales and use tax. This is true even though the teacher may use the funds allotted to teachers to purchase classroom supplies. To be exempt from sales tax, the purchase must be invoiced to and paid directly by the school corporation.

A. By School Corporations

Meals

Sales of school meals are exempt from sales tax if the seller is a school corporation containing students in any grade, 1 through 12; the purchaser is a student or school employee; and the school furnishes the food on the serving school's premises. This exemption also extends to the sale of school meals prepared by a private caterer provided the meals are served on the school's premises and the caterer is merely acting as an agent for the school.

Sales of food and drinks through a vending machine will be granted exemption only in the following instances:

Prior to July 1, 2019, all other sales of food and drinks through vending machines are subject to sales tax, including sales of food and drinks through vending machines accessible to the general public due to location (such as in the school's lobby or entryway) or during non-school hours. Beginning July 1, 2019, all other sales of food and drinks through vending machines will not automatically be subject to sales tax. Instead, whether the item is subject to sales tax will be dependent upon whether it falls under any of the other categories of taxable items (such as candy, soft drinks, etc.).

School Bookstores

The sales tax shall not apply to sales by bookstores of tangible personal property intended primarily for the educational purpose of the organization and not used in carrying on a private or proprietary function.

The sales of textbooks and supplies by parochial, public, or private nonprofit schools are exempt if made to students of the school in grades 1 through 12. Such sales are primarily intended to further the educational purposes of the school. However, sales to persons who are not students or school personnel are subject to sales tax.

Sales by a bookstore of non-education-related items such as T-shirts, sweatshirts, hats, memorabilia, class rings, license plates, etc. are subject to sales tax, regardless of whether the purchaser is a student or non-student. In addition, the bookstore must register as a retail merchant to purchase these items exempt for resale and to collect the tax from the ultimate purchaser.

B. By School Organizations

Individual school organizations or groups that conduct selling activities need not collect sales tax if the funds are to be used by the organization in furtherance of a nonprofit purpose and the organization makes such sales for a period of 30 or fewer days during a calendar year. This exemption typically removes the requirement to collect sales tax for most fundraising and student activities conducted during the school year, such as athletic event concession sales, as long as the concessions are sold directly by the school organization.

Effective July 1, 2022, the 30-day rule was repealed and replaced with a different threshold. Sales of tangible personal property by qualified nonprofit organizations of not more than $20,000 in a calendar year used to raise funds to further the qualified nonprofit purposes of the organization are exempt from sales tax. That means that individual school organizations or groups that conduct selling activities need not collect sales tax if the funds are to be used by the organization in furtherance of a nonprofit purpose and the organization makes $20,000 in sales during a calendar year. If more than $20,000 in sales are made, the organization or group is required to collect sales tax on sales on an ongoing basis for the remainder of the calendar year.

Sales of high school yearbooks and annuals are exempt from sales tax as long as the yearbooks are produced and sold as a student activity or class project and the commercial publisher's activities are limited to furnishing necessary artwork, printing, or binding.

However, sales of tangible personal property on an ongoing basis are subject to sales tax. An example would be continued sales by a band booster club of tangible personal property throughout the year to raise money to buy band uniforms. Any nonprofit school organization or group that makes sales for more than 30 days during a calendar year (or, after July 1, 2022, $20,000 in sales in a calendar year) must register with the Indiana Department of Revenue as a nonprofit organization. Application for nonprofit registration must be made by using the department's online e-services portal, called the Indiana Taxpayer Information Management Engine (INTIME), by visiting intime.dor.in.gov..

DIN: 20220608-IR-045220194NRA

Composed: Apr 26,2024 4:07:18AM EDT

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