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Q&A with the KY Dept. of Revenue: Part One

House Bill 487 significantly expands sales tax collection in KY and contains provisions in the law worrisome to nonprofits — potentially requiring sales tax to be assessed on:

  • admission
  • memberships
  • attendance at events and even things like auction items.

We can all see how problematic this is for the nonprofit sector. To help alleviate some ambiguity around this legislation, we’ve been in contact with the KY Dept. of Revenue, submitting your questions directly.

Here are their answers, so far:

  • Will a trade association have to pay sales tax on registrations for annual conferences, workshops, webinars, etc.?
    • The trade associations will not owe sales tax on membership dues or for registrations to workshops, seminars, etc. Taxable memberships are those of like kind and character to gym or health spa memberships. Booth space will also not be taxable.
  • How often do we need to remit sales tax to the state – monthly, quarterly, annually?
    • The sales tax frequency will be set at time of registration, usually monthly or quarterly. See TaxAnswers.ky.gov for more detail.
  • Does the sales tax requirement apply to program fees for youth development programs run by nonprofits?
    • No, development programs w/ educational component are not taxable.
  • We are a 501c3 collaborative that focuses on improving health and the health care delivery system. We collect membership dues from the organizations that belong to the collaborative to carryout initiatives to improve health in our region. Are these membership dues taxable?
    • Health and healthcare collaborative dues for funding initiatives not taxable unless some admission component to gym, etc.
  • We are a museum, are our memberships taxed?
    • What does museum membership include? If admission to museum then taxable. May need more detail.
  • How will the the basis for the tax calculation be determined on things like auction items?
    • Auction items are taxable based on the final bid price.
  • Will raffle tickets be taxable?
    • Raffle tickets are not taxable if paying for chance to win.
  • We hold a fundraiser every year, are the tickets for the fundraiser taxed?
    • Yes, on fundraisers. See website for more detail.
  • Does the sales tax apply to registration fees for charity runs/walks?
    • Yes, on registrations for charitable run/walks.

Stay tuned as we continue to gather more information on this expansion of sales tax in KY. To submit further questions, click here.