Business, Chamber of Commerce, Events, KPB

Sales tax changes for nonprofit organizations in Kenai Peninsula Borough

Nonprofit friends and Seward information sharers,

Please help spread the word about a training session TOMORROW night at 6pm at City Council Chambers.  The Kenai Peninsula Borough Assembly has passed changes to sales tax regulations in KPB that means nonprofits will need to collect sales tax as of January 1 unless activities fit under certain exemptions.

Some exemptions that I have been able to confirm include:  admission fees, educational programs, dues/membership fees paid to nonprofit organizations, human health care, and childcare.  However, some of these exemptions aren’t official until the assembly votes on January 3 (but would be retroactive to January 1), so fingers crossed.

Things that don’t appear to be exempted based on my conversation this morning with Craig Chapman, the Borough finance director, include vending machine sales, Rotary lunches, and any merchandise sales (rowing club hats and PFDs, for example) unless they are below a specific cap or happen on less than 15 days a year.

It is unclear to me whether things like sports participation fees (e.g., Tsunami swim club, rowing club) are exempt.  I think with some effort they could be classified exempt under the educational category.  It is clear that the intention of the borough is to tax sales that are competing with for-profit activities, and these activities appear not to do so.

I think many of Seward’s nonprofit organizations will be able to avoid collecting sales tax on most of their activities with careful attention to the rules.  For instance, for the rowing club, I may limit the ability of club members to purchase PFDs and hats to a very specific window of time so that we stay under 15 days year for merchandise sales.

The meeting tomorrow will be with two staff of KPB sales tax division who most understand the rules and can advise on what is and is not taxable.  I encourage all nonprofits to send at least one representative.

Here is the announcement of tomorrow’s training from the borough website:

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See attached for the educational exemption policy and the ordinance adding some exemptions that has not yet been passed but hopefully will be on January 3rd.

Other existing exemptions are at this link (do a search for 5.18.200)

http://www.kpb.us/images/KPB/FIN/Sales_Tax/Sales_Tax_Code_Of_Ordinances_Revised_as_of_7-1-13.pdf

If you are unable to have anyone attend but have specific questions you would like asked, please feel free to send those my way and I will do my best.

Thanks,

Tara Riemer

Sending this as a citizen of KPB and not in any official role

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