Although school districts are exempt from federal and state income taxes, they must pay
California sales tax on items they sell. The only exemption from sales tax for ASB organizations
is when sales are irregular or intermittent, such as sales at football games or annual rummage
(please call me if you have a question on whether its an irregular sale or not 787-2024)
If tax is paid when the goods to be sold at the fund-raiser are purchased, the only remaining tax
liability is the difference between the purchase price and the selling price. That is the amount that
will need to be included on the sales tax return. Those involved with ASB should check with their
district’s business office to see if this sales tax information can be combined on the sales return
that is completed. Many business offices want to include all sites tax information on one return.
(please submit Sales Tax information to Pollyanna or if you have questions, you can reach
her at 787-2030)
Sales and Use Tax
State Revenue and Taxation Code (RTC) section 6006 identifies what constitutes a sale and what
is subjected to state sales tax. Section 6006 (f) of the RTC states, “A transfer for a consideration
of the title or possession of tangible personal property which has been produced, fabricated, or
printed to the special order of the customer, or of any publication” is a sale.
Many out-of-state vendor assumes that educational agencies do not have to pay sales tax and so
do not charge it. If this is the case and it is not changed, the state sales tax is not paid to the
vendor. Instead, the school agency must include the purchase of the item in the sales tax report to
the State Board of Equalization (SBE) and pay the obligation directly. Note that not all districts
are on the same reporting schedule; it is based on the total sales in dollars (e.g., monthly,
quarterly, or annually), so those involved should work with their district’s business office to learn
the requirements for their district.
The SBE does not have a mechanism in place to track sales between California and other states
for reporting purposes. Therefore, school agencies should not submit the sales tax to an out-of-
state vendor when it is not charged, but should instead report those purchases on the periodic
report filed with SBE.
This ensures that the appropriate sales tax is submitted to the California SBE with no fear of
penalties for underpayment of sales tax.
The additional information about sales tax contained on the State Board of Equalization Web site
at www.boe.ca.gov may also be helpful.