Indiana Updates Sales Tax Exemptions for Nonprofits
- Sales Tax News
- Apr 24, 2012 | Will Frei
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.