Revenue Administrative Bulletin 2020-25

SALES AND USE TAX TREATMENT OF NONPROFIT ENTITIES

Approved:  December 22, 2020

(Replaces Revenue Administrative Bulletins 1988-42, 1991-19, and 1995-3)

 

Pursuant to MCL 205.6a, a taxpayer may rely on a Revenue Administrative Bulletin issued by the Department of Treasury after September 30, 2006 and shall not be penalized for that reliance until the bulletin is revoked in writing. However, reliance by the taxpayer is limited to issues addressed in the bulletin for tax periods up to the effective date of an amendment to the law upon which the bulletin is based or for tax periods up to the date of a final order of a court of competent jurisdiction for which all rights of appeal have been exhausted or have expired that overrules or modifies the law upon which the bulletin is based.

 

RAB 2020-25.  This Revenue Administrative Bulletin (RAB) describes the sales and use tax treatment of tangible personal property and taxable services sold to and sold by certain exempt nonprofit entities. This RAB replaces RABs 1988-42, 1991-19, and 1995-3.

INTRODUCTION   

The General Sales Tax Act (GSTA) imposes tax on retail sales of tangible personal property at a rate of 6% of the seller’s gross proceeds.[1]  The Use Tax Act (UTA) imposes tax at a rate of 6% of the purchase price of tangible personal property for the use, storage, or consumption of that property in this state.[2] 

Retail sales to qualified nonprofit entities for their own use, storage, or consumption are generally exempt from sales and use tax as discussed in greater detail below.[3]  Conversely, retail sales made by qualified nonprofit entities are generally subject to sales tax.[4]  However, exceptions apply for sales made by certain nonprofit entities for fundraising purposes so long as those sales do not exceed statutory thresholds.   

Generally, a person or entity making sales at retail must obtain a sales tax license; however, a person, business or other entity, or qualified nonprofit entity making retail sales at two or fewer events in a calendar year is not required to obtain a license or register for use tax and may instead report and remit tax on a Sales Tax Return for Special Events (Form 3421) or a Concessionaire’s Sales Tax Return (Form 5089); either form is acceptable. These forms can be found on the Department’s website at https://www.michigan.gov/treasury.

 

ISSUES

I. Sales TO Qualified Nonprofit Entities

A. What entities qualify to claim an exemption when purchasing tangible personal property or taxable services for their own use?  What property is excluded from those exemptions?

B. What is the sales and use tax treatment of room and accommodation rentals, property affixed to real estate, and leases when the purchase or lease is made by a qualified nonprofit entity?

C. How does a qualified nonprofit entity claim an exemption?

II. Sales BY Qualified Nonprofit Entities

A. What entities may claim an exemption when making retail sales of tangible personal property at fundraising events? 

B. What is the tax base for retail sales made by qualified nonprofit entities?

C. Is a nonprofit entity making retail sales of property at fundraising events required to have a sales tax license and file sales tax returns?

D. What sales of food by nonprofit schools or other educational institutions are exempt?

CONCLUSIONS

I. Sales TO Qualifying Nonprofit Entities

A. Qualified Nonprofit Entities

1. Entities with exemption ruling letters and nonprofits exempt under IRC 501(c)(3) or (4):  Sales of tangible personal property and taxable services to the following are generally exempt from sales and use tax:

  • For purposes of sales tax, a health, welfare, educational, cultural arts, charitable, or benevolent organization not operated for profit that has been issued an exemption ruling letter from the Department before July 17, 1998, to purchase items exempt from sales tax;[5]
  • For purposes of use tax, a health, welfare, educational, cultural arts, charitable, or benevolent organization not operated for profit that has been issued an exemption ruling letter from the Department before June 13, 1994, to purchase items exempt from use tax;[6]; or  
  • An organization not operated for profit and exempt from federal income tax under IRC 501(c)(3) or 501(c)(4).[7]

If property purchased exempt is used for any reason other than carrying out the purposes of the organization as stated in the organization’s bylaws or articles of incorporation (i.e., a taxable use), the exemption is limited to the percentage of exempt use to total use determined by a reasonable formula or method approved by the Department.[8] Fundraising is not a purpose of an organization;[9] however, tangible personal property or vehicles used for purposes of raising funds are exempt if the sales price of any single item does not exceed $5,000.[10] This limit also applies to property or vehicles used for the purpose of obtaining resources.[11] If the item exceeds $5,000 the entire sales price, including the first $5,000, is taxable.  A single item is an item that is sold by itself or is separately itemized on an invoice. 

Example 1: ABC is a nonprofit entity that is exempt from federal income tax under IRC 501(c)(3).  ABC purchases a vehicle for $10,000 that it intends to use for the purpose of delivering meals to the elderly.  One of the purposes of ABC as stated in its bylaws is assisting the elderly in obtaining nutritious meals.  The sale of the vehicle is exempt because it is used for carrying out the purposes of the organization as stated in its bylaws. 

Example 2: Assume the same facts as Example 1, however, the intended use of the vehicle is strictly for raising funds for the organization.  This sale is not exempt because its price exceeds $5,000, and the tax is calculated on the entire $10,000 sales price.

Example 3:  ABC is a nonprofit entity that is exempt from federal income tax under IRC 501(c)(3).  ABC leases a vehicle with a value of $20,000 that it intends to use for fundraising purposes.  The monthly lease payments are $300 and the dealer has elected to collect and remit use tax on the lease payments absent a claim of exemption.  ABC is not eligible for the exemption because the sales price of the vehicle exceeds $5,000. 

Example 4:  Assume the same facts as Example 1; however, ABC also leases the vehicle to third parties when it’s not in use delivering meals.  Because the vehicle is used for both a taxable and exempt purpose the vehicle is taxable based on the percentage of time it is used for purposes that are not exempt. ABC must report and remit use tax based on the percentage of taxable use.  For instance, if 10% of the use does not qualify for the exemption, ABC must report and remit 6% use tax based on 10% of the vehicle’s purchase price.

2. Nonprofit schools, nonprofit hospitals, and homes for children and aged persons:  The sale of tangible personal property to a nonprofit school, nonprofit hospital, or nonprofit home for the care and maintenance of children or aged persons is exempt only if the facility is operated by any of the following:

  • A federal, state, or local governmental entity;
  • A regularly organized church, or a religious or fraternal organization;
  • A veterans’ organization; or,
  • A nonprofit corporation incorporated under the laws of Michigan.[12]

To qualify for this exemption, the facility must benefit the public at large, and not be limited to the advantage, interests, and benefits of the operator’s members or any restricted group.  Additionally, the income from the facility may not, in whole or in part, inure to an individual or private shareholder.

The facility must  operated by one of the entities listed above.  If the entity contracts with a different person to operate the facility it does not qualify for the exemption.

Example 5:  ABC is a nonprofit school owned by a regularly organized church.  The church enters into a contract with XYZ management company (a for profit company) to run the day-to-day operations of the school.  The school does not qualify for this exemption because it is not operated by the church.

Example 6:  Assume the same facts as Example 5, however, XYZ is a nonprofit company.  The school is eligible for the exemption because the school is operated by a nonprofit.[13] 

Sales of tangible personal property or taxable services to a parent cooperative preschool are exempt.[14]

If property purchased exempt is used for a nonexempt purpose, such as for the benefit of an individual and not the nonprofit entity, the exemption is limited to the extent that the property is used for exempt purposes.  If such a dual use occurs, the exemption must be apportioned by the percentage of exempt use to total use determined by a reasonable formula or method approved by the Department.[15]   

3. Regularly organized churches and houses of religious worship: The sale of tangible personal property to a regularly organized church or house of religious worship is exempt.

Specifically Excluded Property: The following property is not exempt for an entity claiming an exemption based on its status as a regularly organized church or house of religious worship:

  • Property mainly used in a commercial enterprise;
  • Vehicles licensed for use on public highways other than a passenger van or bus with a manufacturer’s rated seating capacity of 10 or more that is used primarily for the transportation of persons for religious purposes;[16]
  • Property used by religious organizations and societies composed of church members;
  • Merchandise to be given as prizes in games of skill or chance  or sales of tangible personal property, including sales of meals in a commercial activity, when conducted as a retail business for gain, benefit, or advantage, direct or indirect (except as provided in Conclusions Section II, below); and,
  • Property sold to church employees for their own personal use.[17]

If a regularly organized church or house of religious worship is also exempt on another basis, such as if it is exempt from federal income tax under IRC 501(c)(3),[18] it may benefit from whichever exemption is more advantageous. 

Example 7:  ABC is a regularly organized church that also has status as a 501(c)(3).  ABC purchases a vehicle that has a capacity of less than 10 persons and uses it for carrying out the purposes of the church as stated in its bylaws. The vehicle is exempt because ABC is a 501(c)(3).

Example 8: Assume the same facts as Example 7; however, ABC is not a 501(c)(3) and its only basis for claiming a sales tax exemption is the fact that it is a regularly organized church.  The vehicle is taxable.

4. Veterans’ Organizations:  Sales of tangible personal property and taxable services to veterans’ organizations exempt from federal income tax under IRC 501(c)(19) are generally exempt from sales tax.[19]

If property purchased exempt is used for any reason other than carrying out the purposes of the organization as stated in the organization’s bylaws or articles of incorporation (i.e., a taxable use), the exemption is limited to the percentage of exempt use to total use determined by a reasonable formula or method approved by the Department.[20]   Fundraising is not a purpose of an organization;[21] however, tangible personal property or vehicles used for purposes of raising funds for a veterans’ organization are exempt if the sales price of any single item does not exceed $25,000.[22] This limit also applies to property or vehicles used for the purpose of obtaining resources.[23] If the item exceeds $25,000, the entire sales price, including the first $25,000, is taxable.[24]

B. Purchases of Rooms and Accommodations, Property Affixed to Real Estate, and Leases

1. Rooms and Accommodations: When a qualified nonprofit entity claims an exemption for rented rooms or accommodations, the accommodations must be furnished directly to the qualified nonprofit for official (rather than personal) use and paid for with its funds.[25]  If an employee or agent of the qualified nonprofit entity pays for the accommodations with his or her personal funds, the transaction is not exempt, even if the qualified nonprofit entity reimburses its employee or agent for the cost of the accommodations.

2. Property Affixed to Real Estate: Generally, when a qualified nonprofit entity purchases tangible personal property for affixation to realty and hires a contractor to perform the affixation, the qualified nonprofit entity is exempt from sales tax on such a purchase, but the contractor will be subject to use tax if the property is affixed to and made a structural part of real estate.  However, if the property is affixed to, and in some instances also made a structural part of real estate, the contractor is also exempt from use tax for certain property as discussed in RAB 2019-15 Sales and Use Taxation in the Construction Industry (e.g., nonprofit hospitals, qualified nonprofit housing,[26] and church sanctuaries[27]).When such an exemption applies, the qualifying nonprofit should provide the contractor a completed Michigan Sales and Use Tax Contractor Eligibility Statement (Form 3520). 

3. Leases:  If a lessor elects to remit use tax on rental receipts in lieu of paying sales tax on the purchase of the property, leases of the property to qualified nonprofit entities are exempt from use tax to the same extent the sale of the property would be exempt from sales tax.

C. Claiming the Exemption 

When a qualified nonprofit entity makes an exempt purchase,[28] it may claim an exemption in two ways.  First, it may provide the seller with a completed Michigan Sales and Use Tax Certificate of Exemption (Form 3372). Alternatively, in lieu of a certificate of exemption, the qualified nonprofit entity may provide information to the seller, in paper or electronic format, identifying both the reason for claiming the exemption (including its sales tax license number if the exemption claim is for resale and the purchaser has a sales tax license) and the purchaser.[29] Form 3372 can be found on the Department’s website at http://www.michigan.gov/taxes.  See RAB 2016-14 for more detailed information on claiming an exemption.    

II. Sales BY Qualified Nonprofit Entities

Except as outlined below, retail sales by qualified nonprofit entities are subject to tax and the entity must file all required returns and remit all tax that is due. 

A. Fundraising Sales

1. Fundraising Sales by Nonprofits Other Than Veterans’ Organizations: Generally, retail sales by any person, including nonprofit entities, are subject to sales tax.[30]  However, the first $10,000 in sales of tangible personal property made by a nonprofit school,[31] nonprofit church, nonprofit hospital, nonprofit parent cooperative preschool,[32] or an entity holding exempt status under MCL 205.54q(1)(a) or (b)[33] is exempt from sales tax if the entity’s aggregate sales at retail in the calendar year are less than $25,000.[34]

If the qualified nonprofit entity’s aggregate sales at retail in a calendar year equal or exceed $25,000,  of its sales in that calendar year are taxable, including the first $10,000 in sales that were treated as exempt prior to exceeding the $25,000 threshold. The qualified nonprofit entity must remit the sales tax even if it did not collect sales tax from its customers.[35]

If a qualified nonprofit entity does not exceed the $25,000 threshold in retail sales, but collects sales tax from its customers on its first $10,000, it must remit the tax to the Department and may request a refund from the Department only after it refunded the tax to its customer(s).[36]  An entity that qualifies for this exemption is not required to claim it; however, if it chooses not to claim it then it must report and remit the tax.

Schools and other nonprofit organizations often engage in fundraisers where students or members solicit sales to be fulfilled by third-party for profit sellers.   In these instances, eligibility for the fundraising exemption depends on which party is making the retail sale of the property.  If the qualified nonprofit is making the sale it is eligible for exemption; however, if the third-party is making the retail sale it is not.

Example 9: ABC is a 501(c)(3).  During the calendar year it makes retail sales at fundraising events totaling $24,000.  ABC is not required to pay sales tax on its first $10,000 of sales that calendar year.  However, if ABC erroneously collected sales tax from its customers, it may either refund the taxes to its customers or remit the tax to the Department.  If it has already remitted the tax to the Department, it may seek a refund by first refunding the tax to its customers, and then requesting a refund of the tax from the Department.

Example 10: ABC is a 501(c)(3). During the calendar year it makes retail sales at fundraising events totaling $25,010.  ABC is required to remit sales tax for all $25,010 of its sales for that calendar year, including the first $10,000 in sales, regardless whether it collected sales tax from its customers.

Example 11:  XYZ Inc. sells candy, mugs, and other items.  XYZ enters an agreement with School, a 501(c)(3), to sell these items for fundraising purposes. Pursuant to the agreement, School solicits sales of the items and turns the orders in to XYZ to be filled. XYZ then fulfills the orders and collects money from School. The sale at retail is made by XYZ, not School; therefore, the sales are subject to sales tax regardless of the volume of sales.

Example 12:  Assume the same facts as Example 11, but instead of soliciting orders and then turning them in to XYZ, School purchases $5,000 worth of candy for resale and School fulfills orders as students turn them in.  School is making the retail sale; therefore, they are eligible for the fundraising exemption. 

2. Fundraising Sales by 501(c)(19) Veterans’ Organizations:  Sales of tangible personal property by veterans’ organizations that are exempt from federal income tax under IRC 501(c)(19) for the purpose of raising funds for the benefit of an active duty service member[37] or a veteran[38] are exempt up to $25,000 in aggregate sales of tangible personal property per fundraising event.[39]

3. Non-fundraising Retail Sales:  Retail sales of tangible personal property made by qualified nonprofit entities that are not for exempt fundraising purposes as discussed above are subject to sales tax. Qualified nonprofit entities making such sales must comply with all requirements of a retail seller under the GSTA.  

Example 13: ABC is a nonprofit hospital that is exempt from federal income tax under IRC 501(c)(3).  ABC operates a gift shop out of its hospital for the convenience of its patients and to raise revenue.  All sales made by the gift shop are subject to sales tax.

B. Tax Base for Retail Sales

1.  In General: When the exemption for fundraising activities does not apply, retail sales by qualified nonprofit entities are subject to sales tax.  The GSTA imposes tax on the “gross proceeds” of taxable sales.[40]  Gross proceeds are equal to the “sales price”[41] of the property, which consists of the total amount of consideration for which the property is sold, leased, or rented, and may include (among other things) delivery and/or installation charges.[42]  Tax is still due even if the qualified nonprofit entity paid sales tax on the property when it was purchased. In such instances the qualified nonprofit entity may request a refund of the sales tax paid from the vendor by presenting the vendor with an exemption claim for purposes of resale or by completing and filing a refund request on Form 5633, Purchaser Refund Request for a Sales or Use Tax Exemption.  It is in the sole discretion of the vendor whether it issues the refund or signs a Form 5633 presented to the vender by the nonprofit entity.  

Example 14:  ABC is exempt from federal income tax under IRC 501(c)(3).  ABC purchases t-shirts to resell and pays sales tax on the t-shirts when it purchases them.  ABC is still liable for sales tax when it resells the t-shirts; however, it may request a refund of sales tax from its vendor by making a proper exemption claim indicating the sale should have been exempt for purposes of resale.

2. Prepared Food Sales: When a qualified nonprofit entity charges admission or requests a donation to attend a fundraising event and provides or makes available prepared food to the attendees, the tax base is the fair market value of the prepared food that is provided or made available at the event.[43]  Fair market value is the price of admission or donation paid to attend, or, if that amount exceeds the fair market value of the prepared food, the fair market value is the price paid to purchase and prepare the food.[44] If the qualified nonprofit pays sales tax to its food vendor then it is not liable for use tax on the prepared food that it uses in hosting the event.

Example 15: A qualified nonprofit entity sells tickets to its fundraising event for $25.00 per person.  Meals are provided at the fundraiser by the nonprofit entity. The entity is liable for sales tax based on each $25.00 ticket it sold unless it can demonstrate that the fair market value of the meals provided was less than $25.00 per person, in which case the tax base would be the fair market value of the meals provided.

Example 16: A qualified nonprofit entity purchased beer and wine for a fundraising event and paid sales tax on that purchase.  If the beer and wine are served at no additional charge to the attendees, no additional tax is due.  However, if there is a “cash bar,” sales tax is due on the total gross proceeds of the beverage sales and the entity may claim a resale exemption when purchasing the beverages or seek a refund of tax paid to the vendor.

Example 17:  A nonprofit entity holds an “all-you-can-eat” pancake supper.  Tickets are sold for $5.00 per person for adults and $2.75 per person for children.  Tax is due on the sales price of each ticket ($5.00 and $2.75, respectively); however, refer to II.A. to determine if these sales are exempt under the fundraising provisions. 

3. Auction Sales and Raffles:  Sales at auctions by nonprofit entities are subject to sales and use tax based on the sales price of the property.  However, nonprofit organizations exempt from federal income tax under IRC 501(c)(3) or (4) that paid sales tax on an item auctioned at a price in excess of its fair market value may seek a refund or claim a credit equal to 6% of that portion of the sales price that exceeded the item’s fair market value.[45]  But, if sales tax is collected from the purchaser, the nonprofit entity must demonstrate to the Department that it refunded the sales tax to the purchaser prior to claiming a refund or credit for the tax.[46]  The 501(c)(3) or (4) entity or organization must also obtain and retain in its records a certification of the fair market value of the auctioned item supplied by the donor of the item.[47]  This does not apply to anyone other than a 501(c)(3) or (4) entity or organization, such as veterans’ organizations exempt under IRC 501(c)(19). Sales at auctions by any entity other than a 501(c)(3) or (4) entity or organization must remit tax on the full auction price of the property regardless of fair market value.  

Example 18:  ABC, a 501(c)(19) veterans’ organization, holds a silent auction for the benefit of active service members and sells a framed picture for $1,000.  The fair market value of the picture is $500.  The aggregate sales at the event total $30,000.  The framed picture is taxable based on the $1,000 sales price.

Sales of raffle tickets are not subject to sales tax. However, the qualified nonprofit entity is subject to use tax based on the purchase price of the property being raffled.  If the raffled property was donated free of charge, the nonprofit entity is not liable for use tax on the raffled item.  If a qualified nonprofit entity gives consideration to a person for property for raffle, the raffled item is subject to use tax based on the purchase price of the property unless the qualified nonprofit entity paid sales tax to the seller.[48]

C. Sales Tax License and Return Filing Requirements

A qualified nonprofit entity is required to have a sales tax license and file sales tax returns even if its fundraising sales are all exempt as discussed in Conclusion IV.[49]  However, if a qualified nonprofit entity holds two or fewer events per calendar year during which it makes sales at tax return; instead it may file a Sales Tax Return for Special Events (Form 3421) or a Concessionaire’s Sales Tax Return (Form 5089) to report tax and remit payment to the Department; either form is acceptable.  A qualified nonprofit entity continuously operating a gift shop or other retail establishment must file sales tax returns at the frequency assigned by the Department (i.e., monthly, quarterly, or annually).

These forms can be found on the Department’s retail, it is not required to have a sales tax license or to file a monthly, quarterly, or annual sales website at https://www.michigan.gov/taxes.

D. Food Sales by Nonprofit Schools or other Educational Institutions

The sale of otherwise taxable food[50] to enrolled students by a school or other educational institution not operated for profit is exempt from sales tax.  Sales of taxable food to nonstudents, such as teachers, are taxable. [51]

Example 19:   ABC School is a nonprofit school.  ABC operates a cafeteria that provides meals to its enrolled students for lunch and breakfast.  ABC’s sales are not taxable.

Example 20:  ABC School is a nonprofit school.  ABC contracts with XYZ Catering to provide meals to its students for lunch and breakfast.  XYZ makes the sales to the students. XYZ’s sales are taxable because it is not a nonprofit school.


[1] MCL 205.52(1).

[2] MCL 205.93(1).  If Michigan sales tax was paid on the property it is exempt from use tax.  MCL 205.94(1)(a); Andrie v Dep’t of Treasury, 496 Mich 161 (2014).

[3] See MCL 205.54a(1)(a)-(b); MCL 205.94(1)(h)-(i); MCL 205.54q(1)(a); and, MCL 205.94(1)(w).  For purposes of this RAB, “qualified nonprofit entity” and “qualified nonprofit” means an entity that is eligible to claim an exemption discussed in Part 1 of this RAB.

[4] Standard exemptions, such as the resale exemption, may still apply.  MCL 205.51(1)(b).

[5] MCL 205.54q(1)(a).

[6] MCL 205.94(1)(w).

[7] MCL 205.54q(1)(b) and MCL 205.94(1)(w). The Department defers to the IRS’s classification as either a 501(c)(3) or 501(c)(4).  Generally, however, a 501(c)(3) is a charitable organization and a 501(c)(4) is a social welfare organization.

[8] MCL 205.54q(5) and MCL 205.94(2).  The method or formula for apportioning between exempt and taxable uses is a factual determination made on a case by case basis.  The method or formula does not need to be preapproved by the Department.

[9] Many nonprofits bylaws or articles of incorporation allow the entity to perform fundraising activities such as bingo, Las Vegas nights, and raffles. However, fundraising is not a stated purpose of the organization. Fundraising is merely a means to an end. The stated purposes of nonprofit organizations are the end goals, which are generally of a health, welfare, educational, cultural arts, charitable, or benevolent nature. 

[10] MCL 205.54q(2)(b)(i).

[11] Id.

[12] MCL 205.54a(1)(a), MCL 205.94(1)(h), and Mich Admin Code, R 205.140.

[13] This example assumes that the nonprofit school benefits the public at large, and is not limited to the advantage, interests, and benefits of the operator’s members or any restricted group.  Additionally, the income from the facility does not, in whole or in part, inure to an individual or private shareholder.

[14] “Parent cooperative preschool" means a nonprofit, nondiscriminatory educational institution, maintained as a community service and administered by parents of children currently enrolled in the preschool, that provides an educational and developmental program for children younger than compulsory school age, that provides an educational program for parents, including active participation with children in preschool activities, that is directed by qualified preschool personnel, and that is licensed pursuant to 1973 PA 116, MCL 722.111 to 722.128. MCL 205.54a(1)(a) and MCL 205.94(1)(h).

[15] MCL 205.54a(2) and MCL 205.94(2).  The method or formula for apportioning between exempt and taxable uses is a factual determination made on a case-by-case basis.

[16] MCL 205.54a(1)(b) and MCL 205.94(1)(i).

[17] Mich Admin Code R 205.65.

[18] Churches that meet the requirements of IRC 501(c)(3) are automatically granted tax exempt status and do not need apply for and obtain recognition of tax-exempt status form the IRS.   Internal Revenue Service, Tax Guide for Churches and Religious Organizations, <https://www.irs.gov/pub/irs-pdf/p1828.pdf> (accessed December 9, 2020).  This exemption also applies to those churches and houses of religious worship that do not have automatic 501(c)(3) status; determining what is a church or a house of worship that does not have 501(c)(3) status is a fact dependent and will be determined on a case by case basis.

[19] MCL 205.54q(1)(c).

[20] MCL 205.54q(5) and MCL 205.94(2).  The method or formula for apportioning between exempt and taxable uses is a factual determination made on a case by case basis. The method or formula does not need to be preapproved by the Department.

[21] See, infra footnote 9.

[22] MCL 205.54q(2)(b)(ii).

[23] Id.

[24] See, infra Examples 1-5.  These examples apply in the same manner to 501(c)(19) entities.  The only distinction is the limit for the 501(c)(19) entity is $25,000 per individual item rather than $5,000.

[25] Mich Admin Code R 205.88(2)(f). 

[26] MCL 205.54w(1); MCL 205.94s(1).

[27] MCL 205.54p(1); MCL 205.94m(1).

[28] This RAB does not discuss a seller’s obligations when making an exempt sale. The GSTA addresses a seller’s responsibilities when making an exempt sale at MCL 205.62.

[29] This includes any of the exemption certificates provided for in the Michigan Administrative Code’s Sales and Use Tax Rules, Mich Admin Code, R 205.1 et seq.

[30] MCL 205.52(1).

[31] “School,” for purposes of this exemption, is defined as “each elementary, middle, junior, or high school site within a local school district that represents a district attendance area as established by the board of the local school district.”  MCL 205.54o(2).

[32] A club, association, auxiliary, or other organization affiliated with a school, church, hospital, parent cooperative preschool, or nonprofit organization with a tax exempt status under MCL 205.54q(1)(a) or (b) is not considered a separate person for purposes of this exemption.  MCL 205.54o(2).

[33] These entities are discussed infra Conclusion I. A. 

[34] MCL 205.54o(1).

[35] Sales tax is imposed on the seller.  MCL 205.52(1).

[36] MCL 205.73(4).

[37] For purposes of this exemption, “service member” means “a member of the Armed Forces of the United States, a reserve branch of the Armed Forces of the United States, or the National Guard.”  MCL 205.54o(3)(c).

[38] For purposes of this exemption, “veteran” means any of the following: “(i) A person who served on active duty in the Armed Forces of the United States for a period of more than 180 days and separated from the Armed Forces of the United States in a manner other than a dishonorable discharge; (ii) A person discharged or released from active duty because of a service-related disability; or, (iii) A member of a reserve branch of the Armed Forces of the United States at the time he or she was ordered to active duty pursuant to subtitle E of title 10 of the United States Code, 10 USC 10001 to 18506, who served on active duty during a period of war, or in a campaign or expedition for which a campaign badge is authorized, and was released from active duty in a manner other than a dishonorable discharge.”  MCL 205.54o(3)(d).

[39] MCL 205.54o(3).  A club, association, auxiliary, or other organization affiliated with a 501(c)(19) veterans’ organization is not considered a separate person for purposes of this exemption.

[40] MCL 205.52(1).

[41] MCL 205.51(1)(c).

[42] MCL 205.51(1)(d).  See RAB 2015-17 (Sales Tax Treatment of Delivery and Installation Services Provided by Retailers) for a detailed discussion of the taxability of delivery and installation charges.

[43] Sales of prepared food and sales of alcoholic beverages are taxable (referred to in this RAB as “prepared food” unless otherwise indicated).  MCL 205.54g and MCL 205.94d.  This RAB does not discuss what constitutes taxable prepared food.  For information regarding the sales tax treatment of prepared food, see Mich Admin Code, R 205.136 and RAB 2009-8 (Sales Tax – Food for Human Consumption).

[44] The Department may use any other reasonable method to determine the appropriate fair market value of the prepared food.

[45] MCL 205.184(1).  “Auctions” includes silent auctions.

[46] MCL 205.184(2).

[47] MCL 205.184(3).

[48] MCL 205.94(1)(a).

[49] Mich Admin Code, R 205.1(1); R 205.140(5).

[50] See RAB 2009-8 (Sales Tax-Food for Human Consumption) for a more detailed discussion of taxable and exempt food items.

[51] MCL 205.54a(1)(c); Mich Admin Code R 205.74(3).