Holly Posted February 11, 2009 Share Posted February 11, 2009 I hope I can explain my question well enough. I usually work with organizations that are non-profit organizations and they send me their Tax ID #. This time the same girl called me back from last year's hockey team fundraiser and asked if I would do it again for them. She said though that the Spring team is different than the Fall team in that they are not a non-profit organization. She said that their spring team does not have a tax id number since it is not a non-profit org. How do I work this at the end of the year for tax purposes -- 1099, etc.? I assume since the commission money is for the whole team, one person would not be responsible for claiming it. So, I really can't ask for a social security number. I really do not know how teams are set up. Does anyone have any input on this? I need to get back with her on this today. She was wondering if I would still be able to do it. Thanks! Quote Link to comment Share on other sites More sharing options...
Misty Posted February 12, 2009 Share Posted February 12, 2009 I'm not sure how your state works, but in Maryland, I am just wholesaling the product to them, and they collect sales tax. It's counted as a sale on my part. There isn't a 1099, as they don't work for me. If they aren't non profit, then they should just get a temporary sales tax ID from the state for the purpose of doing the fundraiser, and collecting and turning in sales taxes to the state. Quote Link to comment Share on other sites More sharing options...
Holly Posted February 12, 2009 Author Share Posted February 12, 2009 I'm not sure how your state works, but in Maryland, I am just wholesaling the product to them, and they collect sales tax. It's counted as a sale on my part. There isn't a 1099, as they don't work for me. If they aren't non profit, then they should just get a temporary sales tax ID from the state for the purpose of doing the fundraiser, and collecting and turning in sales taxes to the state.Thanks Misty. That helps. I have been paying the sales tax on all other fundraisers I have done, but it is a pain in the butt. Last last year this same hockey team said that they usually like the price to be an even dollar amount to make it easy for the kids, which causes me to eat part of the sales tax. This was the only time though that I ran into trouble where they did not want to have to deal with change. I could not go up to the nearest dollar because then the product ended up even more and they are already priced pretty high for fundraisers because of my cost that goes into my signature line. I guess if I worked it to where they are not wholesaling so they do not need a Tax ID number, then I would have to send out a 1099 for commission paid and that is where the question is. I am going to email the head guy and see what he has done in the past when they have done fundraisers. I would think this particular team has done fundraisers before. We'll see. Quote Link to comment Share on other sites More sharing options...
islandgirl Posted February 12, 2009 Share Posted February 12, 2009 If you do decide to sell it to the organization wholesale, you still need a sales tax ID # or tax exempt form filled out.... If you ever get audited, they will want it....Holly, I pulled the below post from an old thread that VE wrote.. It is a great explanation.That is how I do mine. I collect the sales tax on the point of sale per my states sales tax laws....http://www.fundraisetaxlaw.org/ Every state is different, so this link may help...Nope...even if an organization IS EXEMPT, they are exempt from PAYING tax on items used to further the purpose of their organization. That is a slippery slope! If a director of an organization is buying candles from you to give as gifts to employees or burn in the office, I don't consider that "used in the course of their exempt organization's purpose." Exempt orgs are NOT exempt from collecting sales tax on taxable sales of tangible personal property (i.e. fundraiser). It is two totally different things. I know that all states have different rules, but this is one that is pretty much across the board. At my kid's school, they sell tshirts, book bags, koozies with our school logo. We have to collect sales tax on those transactions.Example that might come into play with a fundraiser:A school has received 501© exempt status. They want to sell your candles as a fundraiser. The amount of the total sale of the candle is $10. They keep $5. The total tax due is based on the SALE of the candle which is $10. The school is acting as your sales agent which makes YOU responsible for collecting and remitting the tax. If your tax rate is 9% and the total sales of the fundraiser amounted to $2000, then YOU have to report and remit $180 as part of your total sales for whichever time period the sale took place. Tax is not based on the 50% profit you make, but on the TOTAL sale of the item. You will have to figure this into your cost some how...either by building it into the price and doing a "tax included" sale (make sure you state on the order form that State sales tax is included in the price of the candle), or you will have to have a column on the fundraising form to compute the tax and add it up on the form.I guarantee you that if you do it the right way, you will have organizations saying "No...we are exempt so it does not apply to us." Again, exempt orgs are exempt from PAYING tax on items they CONSUMED or USED in the course of providing their service (trash bags at a school, trays used in the cafeteria, light bulbs, paper, etc.) Arm yourself with information. Get copies of the rules/laws from your state to back yourself up. Bottom line, I am not willing to sacrifice my business by being audited and penalized for something someone is not willing to do that is legally dictated. I have flat out refused some fundraisers because of this. Did I lose business? Yup. But, I can sleep at night. Another way to handle it is to treat it as a resale. Sell the candles to them through a wholesale transaction and THEY are responsible for the taxes. In order to do this, the have to be permitted for sales tax. You will have to have them fill out the paperwork (usually called a resale/tax exempt certificate) and include their taxpayer number. If you accept it in "good faith" (meaning you have a properly completed form with all info and you, in good faith, believe that they will follow through on their end), then you are covered. Keep it on file for at least 4 years.Again, each state has different laws/rules, but in those that have a sales tax, this one is pretty much across the board. If you have any questions, call your regulating office.If an organization argues that they are tax exempt, but you know they are really not, just pay the sales tax on the point of sale to cover your butt.(Make sure you factor the sales tax into your total sale price so you don't loose profits)That way you keep the fundraiser, and they are happy thinking they are tax exempt...They don't even have to know you paid the tax on the point of sale.. Just do it. Quote Link to comment Share on other sites More sharing options...
Brenda (OH) Posted February 12, 2009 Share Posted February 12, 2009 I have done fundraisers with groups that are not exempt and I add a column on my forms that they collect the tax at the time of the sale. I treat it as any normal sales and claim the state taxes appropriately. Quote Link to comment Share on other sites More sharing options...
Holly Posted February 12, 2009 Author Share Posted February 12, 2009 Thanks Karen. Fortunately, I have been doing it the way VE had posted. This particular time messes me up because the teams are running independently from the sponsor. I am still a little confused on what part the sponsor plays in this particular situation. I did talk with the guy and he said that the teams work independently and the team itself does not have a Tax ID number. I could have the coach and the main girl I am working with issue me their S.S. numbers (not sure if they would feel comfortable though - although I am a company) and treat each one as independent sellers. If either one of them hit $600 plus in commission, I would have to issue them a 1099. I will have to research this out. Not sure if that will work. Thanks again for the info. If you do decide to sell it to the organization wholesale, you still need a sales tax ID # or tax exempt form filled out.... If you ever get audited, they will want it....Holly, I pulled the below post from an old thread that VE wrote.. It is a great explanation.That is how I do mine. I collect the sales tax on the point of sale per my states sales tax laws....http://www.fundraisetaxlaw.org/ Every state is different, so this link may help...If an organization argues that they are tax exempt, but you know they are really not, just pay the sales tax on the point of sale to cover your butt.(Make sure you factor the sales tax into your total sale price so you don't loose profits)That way you keep the fundraiser, and they are happy thinking they are tax exempt...They don't even have to know you paid the tax on the point of sale.. Just do it. Quote Link to comment Share on other sites More sharing options...
Holly Posted February 12, 2009 Author Share Posted February 12, 2009 I have done fundraisers with groups that are not exempt and I add a column on my forms that they collect the tax at the time of the sale. I treat it as any normal sales and claim the state taxes appropriately.Thanks Brenda. This is the way I have been doing it with the non-profit orgs. as well. My question is with the ones that are not exempt how do you deal with their commission for tax purposes on their end and you as one who has paid commissions to them. If they are not treated as wholesale and don't have a Tax ID number anyway to be treated as wholesale then they would I assume have to be treated like consultants/reps....when they hit the $600 + they have to be issued a 1099. Am I wrong? I am still learning all the ends and outs on this. Thanks! Quote Link to comment Share on other sites More sharing options...
Brenda (OH) Posted February 12, 2009 Share Posted February 12, 2009 I keep it simple - when we close out with the fundraiser I automatically calculate their % and provide them with their earnings and enter my % as taxable sales. I don't issue any 1099's. ETA - I only worry about keeping track of my reportable sales Quote Link to comment Share on other sites More sharing options...
Holly Posted February 12, 2009 Author Share Posted February 12, 2009 I keep it simple - when we close out with the fundraiser I automatically calculate their % and provide them with their earnings and enter my % as taxable sales. I don't issue any 1099's.Thanks Brenda. Not sure if you meant "sales tax". I have and will still pay the sales tax on total sales like I do with consutant sales. I am worried that I could get in trouble for not sending a 1099, if I have no way of sending a 1099 if needed for those that are not wholesale and do not issue a Tax ID number, or S.S. number. All this can drive one nuts! Quote Link to comment Share on other sites More sharing options...
Brenda (OH) Posted February 12, 2009 Share Posted February 12, 2009 I figure as long as I report all my taxable sales (sales taxes, and income on state and federal returns) I am in compliance. I am a sole proprietor (sp) not a LLC or corporation, so I don't mess with 1099's. I let the organization deal with keeping track of their profits / earnings even if it is over $600.00. Quote Link to comment Share on other sites More sharing options...
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