Accounting & Bookkeeping & Small Business Forum

[PCharlton]

We are a small non-profit organization. Our business is to promote the demand for milk, dairy products and educate the public on the nutritional value on behalf of the Mid-Atlantic Dairy Farmers.

We are trying to decipher what invoices we receive is taxable and what is not.

After going onto the IRS website, we still have questions.

We were hoping someone out there can help us.

We understand that food is not taxable which would cover the milk we buy but our questions are more geared toward service.

When we read the brochure on sales and use tax, we gathered that all purchases or leases of tangible personal property and services of items are taxable unless the item qualifies for exemption from tax.

So here is the big question: What is considered a service?

We received an invoice for "Flavor Reformulation/Sensory Testing", would you consider this a service or a study?

Also, would this be taxable? Since the milk is not taxable, the service or study of the milk shouldn't be as well.

Do I have any takers out there to give me their experienced opinion.

Patch

[Richard Noot]

PCharlton wrote: We are a small non-profit organization. Our business is to promote the demand for milk, dairy products and educate the public on the nutritional value on behalf of the Mid-Atlantic Dairy Farmers.

We are trying to decipher what invoices we receive is taxable and what is not.

After going onto the IRS website, we still have questions.

We were hoping someone out there can help us.

We understand that food is not taxable which would cover the milk we buy but our questions are more geared toward service.

When we read the brochure on sales and use tax, we gathered that all purchases or leases of tangible personal property and services of items are taxable unless the item qualifies for exemption from tax.

So here is the big question: What is considered a service?

We received an invoice for "Flavor Reformulation/Sensory Testing", would you consider this a service or a study?

Also, would this be taxable? Since the milk is not taxable, the service or study of the milk shouldn't be as well.

Do I have any takers out there to give me their experienced opinion.

Patch State sales tax law is more complicated for NON profits as compared to for profit organizations. Example : In some states a purchase can become taxable by the mere fact that is was paid with the nonprofits employees credit card or personal check rather than by a credit card or check for use by the business only. Another example is that items normally used by a church are tax exempt but if purchased for say the Pastors parsonage is taxable. Most states have flea market laws which cover the selling of products at a short term event or an auction. These laws will vary for profit vs non profit sellers also. The point I am trying to make is that there is no single answer and the answer can vary depending on what is purchased or sold who purchases or sells it and who and how it its paid. My sugge4stion is to call your states revenue dept and discuss the transaction with them