Kyle Ward                                                                                                      April 14, 2008
Executive Director
Texas PTA
408 W. 11th Street
Austin, Texas 78701-2113

Dear Kyle:

I want to thank you and other officers of the Texas PTA, Kathy Coffman, Suzy Swan, and Karen Slay, for visiting with the Comptroller and staff this morning.       

Your organization provided valuable insight to the problems facing Parent Teacher Associations (PTAs) throughout Texas.  We share a common goal in simplifying the collection of taxes and ensuring that the largely volunteer organizations can meet their tax responsibilities.  

This office has consistently held that school fundraising firms taking orders through brochures and sales forms were considered the actual sellers of the fundraising items and responsible for the sales taxes on the full sales price.  The PTAs or other nonprofit associations act as representatives for the fundraising firms in taking the orders and earning a commission and are not responsible for the sales taxes on these sales.  Some for-profit fundraising firms have accepted this responsibility.  Others have attempted to change their contracts placing sales tax responsibilities on the individual PTA groups or forcing the nonprofit to utilize one of their two limited tax free sale days.  Our office needs to maintain a level playing field for all taxpayers such that firms following our longstanding policy do not operate at a disadvantage to others.

To resolve these issues, for clarity, and the efficient administration of the tax, the Comptroller will regard the PTAs or other nonprofit entities as the sales agent for the fundraising firm and will apply §151.024 of the Texas Tax Code.

The fundraising firm may price their goods clearly stating that the price of a taxable item includes tax.  Tax does not have to be calculated on the sales form.  A PTA or other nonprofit organization will not need to obtain a permit at all if they do not exceed their allotment of two tax free sale days provided in §151.310 of the Texas Tax Code.  When acting as an agent of a fundraising firm, the nonprofit is not the seller and does not use a tax free sale day.

Thank you again with helping us understand this situation and for all you do for the schoolchildren of Texas.

 

Kevin Koller
Assistant Director of Tax Administration

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