Student Organization's Taxes
Student organizations must be aware that they may be liable to pay sales tax on some fundraising efforts. Even if the has a tax-exempt number, sales tax is to be collected on items and services such as amusement services (live or recorded performances, movies or plays, exhibits or displays and spectator sports), ready-to-eat food items, items for resale (t-shirts, posters, decals, etc.), and rental of tangible personal property. University and college student organizations will be exempt from taxes if the student organization sale of taxable items lasts only one day and does not hold more than one of these sales per month. All funds collected from these special sales must go to the organization and must not be used to pay officers or individual members. The organization must file a certificate with the state comptroller's office and provide proof they are affiliated with an institution of higher learning. Student organizations selling items more than once a month or for longer than one day must obtain a tax certificate number and pay the appropriate sales tax on the item sold.
Student organization registration does not imply tax exemption. Only university departments and offices may use Texas Tech's tax ID number. Student organizations do not fit neatly into I.R.S. categories for non-profit and tax exempt status.
- National social fraternity and sororities are tax exempt under their parent organization as defined in I.R.S. code 501(c) and should contact their national office for information on how to use their tax-exempt number.
- Some other organizations who are nationally affiliated may be tax-exempt. Contact the national office to determine your group’s status.
- Groups not affiliated with a national organization are probably not tax-exempt unless they have applied directly to the I.R.S. for this status.
Applying for Tax-Exempt Status
An organization wishing to apply for tax-exempt status must realize it is a complex and cumbersome process. An attorney specializing in this area is probably necessary because the laws and procedures written for qualifying as a tax-exempt organization are very confusing and constantly changing. If a student organization is qualified for tax-exempt status, it would most likely be covered under 501(c)(3) or 501(c)(7) sections in the IRS tax code and would file a form 1023. There is also a possibility that an organization with a primary purpose to support the university or a department could qualify under 501(a). These groups would file a form 1024 with the IRS. The application process will take a minimum of six months, but may last more than year before a tax-exempt certificate is issued.
Opening A Bank Account/Employer Identification Number (EIN)
If your organization is trying to open an off-campus bank account, the bank will request your organization’s tax ID number (a.k.a. Employer Identification Number). If the organization is tax-exempt, then give the bank your tax-exemption number. If your organization needs to apply for a tax ID number, fax a request for catalog #16055 to the IRS in Austin, TX at 703/368-9694. The IRS will fax back to you the SS-4 form which you will need to complete and fax the completed form to 512/460-8000.