Fundraising Nonprofits In Minnesota: Events, Taxes And Exemptions

by | Oct 12, 2016 | Consulting

Nonprofit organizations have played a significant part in the state of Minnesota. From providing assistance to the vulnerable sectors of society to promoting the Arts and culture of the region to employing local citizens, these groups help to contribute to the overall wellbeing of the state. In performing such tasks, fundraising nonprofits are bound by the state’s rules and regulations. This is particularly pertinent when it comes to fundraising events and taxes.

Fundraising Sales and Exemptions

The Minnesota Charitable Solicitation Act, Chapter 309 of MN Statutes, is responsible for providing governance to the diverse activities of charitable organizations. The Attorney General holds responsibility for supervision of such actions. When it comes to fundraisers, the state has in place two exemptions – of one applies to all nonprofit organizations. It stipulates that all such groups, as defined under state law, are exempt for all the sales in a year providing the days of the events do not total more than 24.

In other words, fundraising nonprofits are exempt from sales tax for all fundraisers held that year as long as the total number of days they last does not extend beyond 24. However, other requirements and stipulations do apply.

Fundraising Nonprofits and the 24-Day Exemption Rule

The 24-day exemption rule is not a Carte Blanche. It defines specifics to which legally defined nonprofits must adhere if they hope to escape charging sales tax. The following must apply before an organization can be a recipient of this exemption.

  • The events must be limited in duration, of a set purpose, is not a business operations, and is not a regular daily or monthly occurrence
  • 24-days is the total days of all events for a year
  • All the fund raisers, whether an auction, raffle sale or gala event count towards the 24-day total
  • The days prior to an event such as ticket sales, do not count as part of the 24-day total. Nor does the taking of orders (only the delivery days)
  • Records for each event within the period must be separate and carefully documented with records readily available for various financial purposes including auditing
  • Events are not to be held on sites the nonprofit leases or occupies for a period of more than 5 days but less than 30

These are only a few of the stipulations allowing charitable organizations to avoid paying sales taxes on special events. Minnesota has several more provisos surrounding this issue. If fundraising nonprofits want to fully understand the regulations and their implications for their organization, the best route to take is a simple one. Consult an attorney who specializes in the laws governing charitable organization.

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