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Indiana Updates Sales Tax Exemptions for Nonprofits

The Indiana Department of Revenue has updated their rules concerning sales tax exemptions for nonprofit purchases. 

Indiana Sales Tax Information Bulletin #10 describes the application of sales tax to nonprofit organizations. The recently updated version of the bulletin states that in order for a purchase made by a nonprofit to be sales tax exempt, ". . . the transaction must be directly invoiced to the organization and directly paid via the organization's funds."

Besides these updated rules, a nonprofit must meet the following criteria in order to consider a purchase exempt from Indiana sales tax:

  • The organization must be listed in Indiana Code 6-2.5-5-21, which names the various types of organizations that may be considered nonprofit.
  • The organization must "...not be operated predominantly for social purposes."
  • The purchase cannot be for "...the private benefit of any member of the organization...."

The bulletin cautions that just because an organization is incorporated as a nonprofit does not mean that all of its purchases are sales tax exempt. A purchase must meet the criteria described above to be exempt from sales tax.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Will Frei
Avalara Author Will Frei
Will Frei covers sales tax news including best practices, legislation and sales tax technology. He is the Social Media Manager at Avalara.