Tax-Exempt Sales by Nonprofit Organizations

The following sales made by nonprofit organizations are exempt from the Maryland sales and use tax:

• Sales by churches or religious organizations for their general purposes.
• Sales of food by schools other than post-secondary institutions.
• Sales of food by a nonprofit organization if there are no facilities for food consumption on the premises and the food is not sold within an enclosure for which a charge is made for admission.
• Sales of food served by a volunteer fire, ambulance or rescue company or an auxiliary if the proceeds are used to support the organization.
• Sales of magazine subscriptions in a fundraising activity by an elementary or secondary school in the state if the net proceeds are used solely for the educational benefit of the school or its students.
• Sales made in hospital thrift shops operated entirely by volunteers selling only donated articles for the benefit of the hospital.
• Sales made by an auctioneer for a bonafide church or religious organization if the proceeds are used for exempt purposes. The tax should not be collected on the portion of the price that qualifies for a deduction as a charitable organization under IRS guidelines.

Only churches, religious organizations and government agencies may use an exemption certificate to purchase items for resale without paying sales and use tax. All other organizations must issue a resale certificate, with their Maryland sales and use tax license number, to purchase items tax-free for resale.

Any organization making ordinarily taxable sales of tangible personal property, including meals, must obtain a sales and use tax license and collect and remit the tax, even though the organization has an exemption for items it purchases. The organization must collect tax on sales to anyone, including members, students and beneficiaries, even if the item has been donated or sold at or below cost.