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S.F. No. 943 - Exemption for purchases by nonprofit entities (as proposed to be amended by A-3)
Author: Senator Ann H. Rest
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
Date: February 19, 2019


Under current law, purchases by qualifying nonprofit organizations are exempt upfront from sales tax if the item or service is used in the performance of the organization’s charitable, religious, or educational purposes. The exemption also extends to sales to qualifying senior citizen groups. The exemption, however, does not apply to all sales to and purchases by nonprofit organizations.

This bill expands the exemption to sales to and purchases by all 501(c)(3) organizations that have obtained a tax identification number from the Department of Revenue and do not currently qualify for the exemption. The bill retains the current law exemptions and exclusions for purchases by veterans groups, hospitals, outpatient surgical centers, and critical access dental providers, and nursing home and boarding care homes.

Under the bill, the following materials would continue to be excluded from the exemption: construction materials purchased by a contractor as part of a lump-sum contract; construction materials that will not be used principally by the nonprofit entity; lodging and prepared food, candy, soft drinks, and alcoholic beverages; and the leasing of motor vehicles.

Effective for sales and purchases made after June 30, 2019.

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