Q: Can a 501c3 sell item like Tshirts without paying sales tax by claiming the money is a donation?
Our nonprofit rents space to 12 step groups. One board member wants to raise funds by selling key chains, shirts, etc at AA and NA meetings. He is claiming the exchange of merchandise for cash would be a donation. I disagree. I think he is selling and we have to pay sales tax.
A: You are correct. If it were really a donation, the buyers would also be able to get the items "sold" for nothing (i.e.: free).
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