School fundraising sales and the sales tax

The Senate Tax Committee considered a bill this week to ensure certain school fundraising sales are not subject to the state sales tax. Last year, the Legislature approved an education funding bill that contained one technical change meant to align schools’ accounting methods with the Governmental Accounting Standards Board. Lawmakers believed they were making a necessary compliance update, but the change prompted certain school fundraising activities to suddenly become taxable sales.

The change required all funds to be deposited with the school district, meaning funds raised from sales of books, flowers, wreaths, greeting cards, water bottles, garage sales, or coffee mugs have been subject to the state sales tax since July 1, 2019. Other popular fundraising sales that already had specific exemptions written into law, such as candy, were not affected.

The bill considered this week would essentially reset the law to pre-2019 treatment so that these common methods of fundraising would not be subject to the sales tax as long as they are for elementary or secondary school student activities and as long as the school district reserves and spends the revenues raised for only that activity. The bill was laid over for possible inclusion in the final tax bill.

(SF 3052)