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S.F. No. 426 - Modification of threshold of duration of premises leases for certain non-profit fundraising events; annual city celebration sales tax exemption (as proposed to be amended by A-1)
 
Author: Senator Scott M. Jensen
 
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
 
Date: January 31, 2017



 

 

Section

Provision

1

Under current law, sales of tangible personal property and services at, and admissions to fundraising events sponsored by a nonprofit organization are exempt from sales tax, provided the organization and event meets certain criteria. This section modifies one of those criteria, increasing the threshold for the maximum amount of days the premises may be leased for purposes of conducting the fundraising event from five days to 25 days. 
 

2

Paragraph (a) creates a new exemption for sales of tangible personal property or services at and admissions to an annual city celebration designated by the city. As proposed to be amended, the exemption applies to cities with a population less than 25,000 and meets the following requirements:

  • Held on consecutive days, but not more than ten total;
  • Run by the city or nonprofit organization designated by the city;
  • Recording of all gross receipts in accordance with generally accepted principles of the city or nonprofit organization; and
  • Distribution of the entire proceeds, minus expenses, to one or more of: the city’s general fund or a nonprofit 501(c)(3) or 501(c)(4) organization to promote its primary mission, excluding political activities.

Paragraph (b) provides that the exemption does not apply:

  • To admission charges for or use of amusement devices involving bingo or other gambling activities;
  • If profits are not used solely and exclusively for charitable, educational, civic, or governmental purposes; or
  • Unless the city or designated nonprofit keeps a separate accounting of all events included in the celebration.

Paragraph (c) defines “nonprofit organization” and “city celebration.” 

 
 
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