Form Pub. Ks-1560 - Kansas Business Taxes For Schools & Educational Institutions Page 12
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37IMPORTANT: To accurately report the sales tax
directly to the winner of a drawing or raffle, the winner
is liable for the sales tax on its fair market value directly
on sales made in this manner, follow the
to the vehicle dealer. Whenever the sales tax has not
procedure in the vending machine example on page 19.
been paid by either the vehicle donor or vehicle winner
to this state or another state, the winner will pay sales
AUCTIONS
or use tax to the country treasurer when registering it.
[K.A.R. 92-19-30]
Many schools, alumni groups and endowment
associations raise funds by holding a charity auction.
BOOSTER CLUBS
All parts of this event are subject to sales tax.
Booster clubs are organized and operated to benefit
Your alumni association is holding its
a specific school program such as sports, music or
annual auction party to benefit the
drama. Booster clubs must register and collect sales
university. Tickets cost $50; $25 of which
tax on all retail sales of property, taxable services or
is a tax-deductible donation. A meal and
admissions, even though all proceeds from their
beverages are served; alcoholic drinks are sold
activities are used to support a school program. Booster
separately. During the evening guests bid on silent
clubs must also pay sales tax on all of their purchases
auction items, followed by a live auction. Auction items
of goods (except resale inventory) and taxable services.
are donated, purchased by the association at cost, or
sold on consignment. The sales tax treatment of each
Booster clubs and similar organizations that operate
component of this event is outlined below.
in support of a particular program or activity usually do
not qualify for exemption as a PTA or PTO. They do not
Tickets - Included or factored into the $50 ticket price
encompass the broad objectives of a PTA/PTO, and do
is the state and local sales tax. The ticket is an
not qualify as a PTA or PTO, even though they may be
admission and is taxable, whether the buyer attends
composed of parents, teachers, students, businesses
the function or not. See Admissions and Ticket Sales.
and others interested in the school or in a particular
Meals and Beverages - The association should buy
facet of the educational process.
these items without tax from its vendors, using a Resale
Exemption Certificate. Since the food and beverages
are being resold as part of the $50 ticket price, sales
CAFETERIAS, LUNCH ROOMS AND FOOD SERVICE
tax is being collected on the cost to the consumer.
Alcoholic Drinks - Included in the retail sale of
G
R
: I
’
ENERAL
ULE
F A SCHOOL
S EATING FACILITY IS OPEN
alcoholic drinks is the 10% retail liquor drink tax. A
,
TO THE PUBLIC
THE FOOD AND DRINKS SOLD ARE SUBJECT
special license is required.
. I
TO SALES TAX
F THE EATING FACILITY IS NOT OPEN TO THE
Door prizes - A door prize is either purchased or
,
.
[K.A.R. 92-19-21]
PUBLIC
ITS SALES ARE NOT TAXABLE
donated and given to the winner of a drawing. The alumni
association must pay sales tax on items purchased. The
This rule is again a reflection of the general goal of
sales tax due on new items donated by a local business
Kansas sales tax - not to create an unfair tax advantage.
will be paid by that business as Merchandise consumed
If the lunch room, cafeteria, or dining room is operated
and purchased without tax on its sales tax return. The
by the school solely for the purpose of providing meals
winner receives the prize for free, so does not pay any
for its students, teachers and staff, the school is not
sales tax on it. See also Raffles.
considered to be engaged in the business of regularly
Auction items - Sales tax is due on the total price
selling meals or drinks to the public, and therefore is
paid by the guests on the silent and live auction of items
not required to collect or remit tax on these sales.
of tangible personal property, whether bought, donated
or sold on consignment by the association. The auction
A middle school operates a cafeteria that
is taxable because the items being sold were acquired
is open only to students, teachers, staff
with the intent of reselling them (see Isolated or
of the middle school and an adjacent high
Occasional Sales). The association should not pay sales
school, and other school administrators
tax on any auction item purchased, but would factor out
and staff visiting the premises. The cafeteria would not
the sales tax that was included in the amount paid by
collect sales tax on the meals sold.
the guest for the item. If using labor auctions as a fund-
raising tool, where volunteers offer to do work for
However, when an educational institution’s cafeteria,
whoever is the high bidder for that respective service,
lunch room, or dining room is open to the general public,
these sales are not taxable.
the school is considered to be in the restaurant business
Vehicles - If the alumni association purchases a
and just like any other restaurant, must collect and remit
sales tax on all of its sales. Therefore, cafeteria and
vehicle as a prize to the winner of a drawing or raffle,
the direct purchase is taxable. The subsequent transfer
other food sales are considered taxable unless the
cafeteria is closed to the public. Signs as to admission
of the vehicle to the winner of the drawing or raffle is
to the room will not be accepted unless the school can
considered to be a gift and not subject to sales tax.
However, if the alumni association does not purchase
show that they visibly and actively police exclusion of
non-school personnel. Snack bar sales are taxable.
the vehicle, but rather title is transferred from a dealer
12
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