Taxes
Sales Tax
Student organizations must be aware that they may be liable to pay
sales tax on some fundraising efforts. Even if the organization 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.
Tax-Exempt Status
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.
Organizations may also set up accounts with the university, called agency
accounts, instead of using a bank.