Popcorn Machines and Sales Tax

QUESTION:   

Our PTA is buying a new popcorn machine to enable us to sell popcorn to students and staff as a fundraiser.  Because we will use the machine to make a product we will be selling, can we avoid paying sales tax when we buy the machine using our resale permit?  

ANSWER:  

The PTA must pay sales tax on the popcorn machine because it is for the PTA’s use. The PTA will be selling a product created by the machine, but will not be reselling the machine itself.  Only the items sold--the popcorn and the bags--are being resold, and therefore eligible for a tax free purchase through use of the reseller's permit. 

Also, be aware that if your PTA is selling popcorn on a regular schedule (e.g. every Friday afternoon, the 3rd Thursday of every month), it is required to collect sales tax on the sales.  See the Question of the Week regarding this.

Endorsing/Contributing to District Levy Campaigns

QUESTION:   

Our school district is planning on holding a levy election next spring, and a committee has been organized to campaign in favor of the levy.  Our PTA has historically contributed to such campaigns, and the budget for 2012-13 includes a line item for a contribution.  The committee would like us to make a contribution now that the new fiscal year has begun.  Is this appropriate, or should we wait until the entire membership votes to endorse the levy? 

ANSWER:  

Including a line item in the budget is a necessary step but it is not in and of itself sufficient to justify making the contribution.  A budget creates the authority for the board of directors to expend funds, but the board must actually approve the expenditure before it is made. 

Therefore, because there is a line item for the campaign contribution in the budget approved by the membership, IF the board votes to authorize the contribution, an endorsement vote by the membership is not required to make the contribution.  Of course, an endorsement vote by the membership is the best practice and should be conducted when the timeline permits.