If your PA/PTA has obtained federal tax exemption, it should also apply for exemption from New York State and City sales and franchise taxes. Once it receives these exemptions, it can purchase items sold within New York without paying sales tax, and can avoid the franchise tax that New York corporations usually must pay.
Sales Tax Exemption
To apply for exemption from New York State and City sales tax, your PA/PTA should file Form ST-119.2, the sales tax exemption application, along with any other required documentation. The form, as well as information about the sales tax exemption, is available on the sales tax exemption page of NYS Department of Taxation and Finance’s website. The link also contains information on how to make tax-exempt purchases once your PA/PTA’s application is approved. Instructions for filing for sales tax exemption, including a list of the required documentation, are available on Form ST-119.2-1.
Franchise Tax Exemption
Normally, New York corporations must pay a franchise tax in order to do business in New York State. However, your PA/PTA can apply for exemption from this tax if it is a not-for-profit organization that has obtained federal tax exemption. Your PA/PTA should apply to the New York State Department of Taxation and Finance for exemption by completing Form CT-247 and submitting it along with the other required paperwork (including documents from the IRS granting tax exemption, your PA/PTA’s articles of incorporation, and its bylaws). Instructions for completing and submitting the form are included on the second page of the form.
Collection of Sales Tax
PA/PTAs occasionally hold fundraising events at which they sell goods to raise money for school activities. Some PA/PTAs hold these types of events only a few times a year, whereas other PA/PTAs set up “school stores” at their schools where students can buy everyday school supplies (such as pencils and notebooks). The income from these sales is used by the PA/PTAs to fund school programs.
If your PA/PTA wishes to fundraise through sales, it may be required to collect New York State sales tax on the items it sells, depending on the frequency of the sales and other factors. It is advisable to contact an attorney to discuss whether your PA/PTA will have to collect sales tax, and the procedures required for doing so.