New Guidance Released To Further Clarify Sales Tax Rules for Indiana Not-for-Profits

In 2022, Indiana significantly changed the way not-for-profit organizations were able to purchase and sell taxable items exempt from sales tax. The sales tax law passed by the then-Indiana General Assembly changed the selling-days concept to a sales-threshold concept for triggering the collection responsibility by not-for-profits. Then, in 2023, the Indiana General Assembly further refined these rules with the aim of increasing the sales threshold and exempting certain not-for-profits entirely.

Recently, the Indiana Department of Revenue (IDOR) updated Sales Tax Information Bulletin 10 and Sales Tax Information Bulletin 20 as a result of these legislative changes. The updates to the bulletins are designed to clarify guidance for not-for-profit organizations and those that do business with them. Notable updates include:

• A new chart outlining whether each type of organization listed in IRC 501(c) may be considered a “qualified nonprofit organization” in Indiana
• New examples that include scenarios related to silent auction items and sales of tickets to fundraisers that include food, drink or other taxable items in an attempt to clarify how the economic nexus threshold applies and the tax base is calculated
• Explicit guidance explaining that third-party providers that (1) facilitate silent or live auctions via a mobile app and (2) accepts payments from winners are considered marketplace facilitators and therefore are required to collect and remit Indiana sales tax on the sale of any taxable items (or bundled transactions) sold as part of the silent auction
• Clarification that all the sales tax changes also apply to the collection and remittance of county food and beverage taxes by not-for-profit organizations

To learn more about this clarifying guidance, sign up for KSM’s Dec. 4 webinar, “Understanding Indiana’s Updates Sales Tax Rules for Not-for-Profits.”

For more targeted assistance, contact your KSM advisor or complete this form.