I. COLLECTING SALES TAX ON ITEMS SOLD
All student organizations are required by law to collect sales tax when selling goods and/or services (this may included tickets to an event). If a group has a state sales tax exemption, this means that the group is exempt from PAYING sales tax. The group is still responsible for COLLECTING sales tax when selling goods or services.
REMEMBER: STUDENT ORGANIZATIONS CAN BE AUDITED BY THE STATE, so it is very important that sales tax is properly collected and remitted to the State Comptroller's Office.
In order to properly remit sales tax:
- Pick up a Sales Tax permit form in Campus & Community Involvement.
-
Fill out the form and send it in to:
John Sharp
Texas Comptroller of Public Accounts
Austin, TX 78774-0100 - It will take 4-6 weeks for your form to be processed. When you receive your permit number, make a copy
and keep it in your bank folder at the Student Organization Bank so that it will be readily available for you.
THIS PERMIT NUMBER IS FOR YOU TO USE WHEN YOU REMIT PAYMENTS TO THE STATE. IT ALLOWS THE COMPTROLLER'S OFFICE TO READILY IDENTIFY WHAT ORGANIZATION IS REMITTING PAYMENT. - Obtain a "Texas Sales and Use" tax return from the Comptroller's Office. You can do this by calling (512) 463-4600.
- Fill out the tax return and send it to the same address as above by the 20th day of the next calendar month after the month of your sale.
NOTE: If your organization owes less than $500 in sales tax for a calendar month or $1,500 for a calendar quarter, taxes may be paid on a quarterly basis. This means payment is due by the 20th day of the month following each calendar quarter.
Exceptions to sales tax law:
- If a group is planning a one-day sale within a calendar month, it does not have to collect sales tax on any goods sold during that one-day period. A group may only hold two such one-day sales in a calendar year.
- If a group is holding an event that is exclusively for members of the UT community and they have not hired any off-campus business to provide services (such as a caterer or DJ), the group does not have to collect sales tax for tickets to the event. WE HIGHLY RECOMMEND THAT ORGANIZATIONS WHO ARE PLANNING EVENTS ON CAMPUS TALK TO CAMPUS & COMMUNITY INVOLVEMENT ABOUT SALES TAX.
II. PAYING SALES TAX ON ITEMS PURCHASED
Student organizations are NOT automatically exempt from paying state sales tax. To find out if your organization may file to become sales tax exempt, refer to Comptroller of Public Accounts, State Sales and Use Tax, Rule 3.322 (Texas Tax Code 151.309, 151.310: Texas Civil Statutes, Article 342-908). If your organization is eligible, you must first obtain 501c status from the federal government. It may take over 8 weeks for the forms to be processed by the federal government. If 501c status is granted, the organization may apply to the state by submitting a letter, a copy of your charter/by-laws, and a copy of your 501c letter of determination from the federal government (if applicable) to the following address:
State Comptroller ATTN: Exempt Organization Section Capitol Station Austin, TX 78774
Upon a ruling by the State Comptroller's office you will receive a letter allowing or denying exempt status. IF EXEMPT STATUS IS GRANTED, PLEASE INFORM CAMPUS & COMMUNITY INVOLVEMENT AND PROVIDE A COPY OF DOCUMENTATION FOR YOUR ORGANIZATION'S PERMANENT FILE.
If an organization is purchasing merchandise for resale, it has two options regarding sales tax.
- It can obtain a resale certificate from the state comptroller's office which will allow the organization to defer payment of sales tax until time of sale. This does not mean that the organization does not pay sales tax. It means that it will collect sales tax for the item when it is resold and that sales tax will then be remitted to the state.
- It can pay the vendor sales tax on the items purchased. Please note, however, that if the organization is selling the merchandise at a mark-up, sales tax must be collected and paid on the mark-up.