Monday, July 23, 2012

Popcorn Machines and Sales Tax

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?  

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.