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How to Handle Sales Tax for Brochure Fundraisers

By Clay Boggess on Oct 3, 2014
How to Handle Sales Tax for Brochure Fundraisers

What you should know about sales tax before you start your sale

Some states require the payment of sales tax with brochure sales. To make money collection easier, some school fundraising companies offer the option of using a higher-priced brochure to help cover the tax. The tax-included brochure offers the same items as a regular brochure.

For instance, an item that would normally sell for $9.50 may be increased to $10.00 in the tax-included brochure. The price difference helps pay the tax so the group can keep more of their profit.

Although sales tax rates vary by state and even by city or county, this method has been proven to help. The price difference is only meant to help off-set the tax burden and is not an exact calculated tax.

The group is still responsible for paying the tax which usually appears itemized on their invoice and is based on the group’s local tax rate. The company then pays it, on the group's behalf, to their state tax office.

What follows is an example of how the sales tax would be calculated using 40% profit on a $10.00 item, with an 8% sales tax rate:

Using a Tax-Included Fundraising Brochure

  • $10.00 is the list price shown in the brochure based on retail plus tax. This amount is collected by the seller.
  • $ 9.20 is the actual retail amount used as a baseline to calculate the group's profit and invoice ($10.00 - $0.80).
  • $ 3.68 is the profit to group (40% of $9.20).

The total amount due is therefore $6.32 ($9.20 + $0.80 to cover the tax - $3.68).

Selling with a Brochure without Tax Included

Another option is to have the buyer pay the regular price in the brochure and then add in the sales tax. In this case one would use a regular brochure that contained slightly lower pricing. However, the person making the sale would then need to collect additional tax on the item. So if the retail amount was $9.50, sellers would collect an additional $0.76 for a total of $10.26. Profit would be calculated based on the $9.50 retail price.

  • $ 9.50 is the list price shown in the brochure based on retail only.
  • $ 3.80 profit to group (40% of $9.50).
  • $ 5.70 would be the amount due on the invoice ($9.50 - $3.80).
  • $ 0.76 tax due on $9.50 (8% of $9.50).
  • $ 10.26 would need to be collected by the seller which would be the retail amount plus the tax.

The total amount due is therefore $6.46 ($5.70 + $0.76).

This assumes that the state collects tax on the retail price. Some states collect based on the wholesale amount.

For more information, see our brochure fundraising tax guide.

Some Brochure Items are Not Taxed

Every state varies when it comes to sales tax with fundraisers. Items such as cookie dough or frozen food are not usually taxed; however other items such as chocolate may not always be tax-free.

We recommend checking with your state to confirm your state's tax laws. In some cases, depending on the state, you may be allowed to submit a tax exempt certificate or provide a tax exempt number to the company in lieu of having to pay the tax.

See our brochure fundraisers

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