How to Handle Sales Tax

Some states require the payment of sales tax on school fundraisers. In order to make money collection easier on school fundraising groups in states where sales tax must be paid, we offer the option of using a slightly higher-priced tax-included product brochure in place of a regular brochure. The tax-included brochure offers the same items as the regular brochure but at a higher list price. So for instance, an item that may list for $10.00 in the tax-included brochure might only list for $9.25 in the regular brochure. The increased price difference in the tax-included brochure will help pay the tax so that the group can keep more of their profit. Keep in mind that sales tax rates may vary by state and even by city or county. The pricing difference is only meant to help off-set the tax burden and is not an exact calculated tax.

The group is still responsible for paying the tax which will automatically appear itemized on their fundraising invoice and is based on the group’s local tax rate. We will then pay it, on their behalf, to the State Tax Board.

What follows is an example of how the sales tax would be calculated using 40% profit on a $10.00 item, with an 8% sales tax rate:

Using a Tax-Included Brochure:

• $10.00 list price shown in brochure (retail + tax), paid to person making sale and deposited by group
• $ 0.80 sales tax due (8% of $10.00)
• $ 9.20 is actual retail amount for profit and invoicing purposes ($10.00 - $0.80)
• $ 3.68 profit to group (40% of $9.20)
• $ 5.52 amount due on invoice ($9.20 - $3.68)
• $ 0.80 tax due on $10.00

Total amount due is therefore $6.32 ($5.52 + $0.80 tax)

Another option is to have the buyer pay the list price in the brochure and then add in the sales tax to the list price. In this case one would use a non tax-included brochure which has slightly lower item pricing because an amount has not been added to help offset the tax. However, the person making the sale would then need to calculate the tax on the item and then add it to the price that is listed in the brochure. So if a retail amount was $9.00, they would collect a total of $9.72 from the purchaser of the item. Profit would then be calculated based on $9.00.

Using a Non Tax-Included Brochure:

• $ 9.00 list price shown in brochure (retail only)
• $ 3.60 profit to group (40% of $9.00)
• $ 5.40 amount due on invoice ($9.00 - $3.60)
• $ 0.72 tax due on $9.00 (8% of $9.00)
• $ 9.72 (retail + tax) paid to person making sale and deposited by group

Total amount due is therefore $6.12 ($5.40 + $0.72)

We only offer a tax-included option for one of our fall brochures. All other brochures will require the collection of sales tax as an additional step.

Finally, keep in mind that not all items are taxable. Items such as cookie dough or frozen food are not usually taxed; however other items such as chocolate may not always be tax-free. Every state is unique and we will know which items to tax according to each state’s tax laws. We recommend that you check with your state so that you will understand your state's tax laws as they apply to fundraising. In some cases, depending on your state, you may be allowed to submit a 'tax exempt certificate' or provide a tax exempt number to the school fundraising company in lieu of having to pay the tax.