Why Can’t Our Team Purchase Clothing Through the Booster Club and Avoid Paying Sales Tax?
The Lincoln East Booster Club (LEBC) has received this question several times from Parent Reps and realized that there is a lot of confusion as why the Booster Board cannot purchase clothing for East teams to avoid paying sales tax.
The fact that the LEBC is a 501(c)(3) nonprofit does not, by itself, entitle LEBC to an exemption from payment of sales and use tax. Nebraska Tax Regulations, Title 316 Reg-1-090. There are a few organizations that qualify for a blanket sales tax exemption, but the LEBC is not one of them. Neither are the Boys Scouts of America or the United Way.
When the LEBC purchases clothing for resale, we do not pay sales tax at the time of the original purchase. Nebraska Tax Regulations, Title 316 Reg 1-012.02D(1) Property purchased to be resold prior to the use of such property, (Reg-1-013, Sale for Resale-Resale Certificate).
When an organization re-sells clothing that they did not originally pay sales tax on, they would have to collect the sales tax at the point of resale. However, LEBC does not have to collect sales tax at the point of sale because the Nebraska Tax Regulations provide an exemption for sales by parent-booster clubs if the proceeds are used to support school activities or the school itself. Nebraska Tax Regulations, Title 316 Reg 1-012.02A(4)
The LEBC would be violating Nebraska Tax Regulations, Title 316 Reg 1-012.02A(4) if we purchased clothing for a particular East team because there would be no proceeds from the sale.