School Fundraisers

A one-day, tax-free sale day (24 consecutive hours) is either:

• The day the vendor delivers the items to the exempt organization; or
• The day the exempt organization delivers the items to its customers.

For example, a school group selling yearbooks can accept pre-orders without collecting tax if the day the group delivers the yearbooks to its customers is on one of the group’s designated tax-free sales days.

Customers buying from surplus inventory on the designated day do not owe tax. For example, a school can sell old yearbooks on the same designated day they are distributing the new yearbooks and not collect sales tax. Extra yearbooks sold outside of those days are taxable.

If two or more organizations hold a tax-free sale together, the event counts as one tax-free sale for each participating group. Each organization that participates in the joint tax-free sale can hold one additional tax-free sale during that calendar year.

An organization can hold its two tax-free sales back-to-back for a maximum of 48 consecutive hours. For example, a sale could last from noon Friday until noon Sunday.

This exemption does not apply to any items sold for more than $5,000, unless the exempt organization made the item or it was donated to the organization and not sold back to the donor.

If an exempt organization sells only nontaxable items or sells only during its tax-free fundraisers, it does not need a sales tax permit. To buy taxable items tax free for resale, the organization can either give the seller a resale certificate (PDF), if it has a sales tax permit, or an exemption certificate (PDF). See the "Food and Beverage Sales" and "Other Nontaxable Sales" sections.

To qualify as a bona fide chapter of a school, a group of students must be organized for an activity other than instruction or to have tax-free sales.

"Bona fide chapters" include school-recognized student groups organized by electing officers, holding meetings and conducting business. Bona fide chapters can include whole grade levels, such as the senior, junior, sophomore or freshman class, but cannot be limited to a specific class, such as English Composition or Freshman Biology. Other school groups composed of students and staff can qualify, such as student councils, science clubs or drama clubs. There is no limit on the number of bona fide chapters.

School departments such as purchasing, accounting or maintenance departments, and specific classes like biology or math classes, are not bona fide chapters, even though they are part of the school or school district.

Unless otherwise qualified to hold tax-free sales, groups that are not bona fide chapters must get a sales tax permit and collect and remit sales tax on taxable items unless another exemption applies.

Nonstudent organizations do not qualify as bona fide chapters of a school, but may qualify for the tax-free sale days under other provisions. Examples are booster clubs, parent-teacher associations (PTAs), parent-teacher organizations (PTOs), parent-teacher-student associations (PTSAs) and parent-teacher-student organizations (PTSOs). Nonstudent nonprofit organizations that are not bona fide chapters of schools, however, may still qualify for two one-day, tax-free sales or auctions on their own.

For example, a booster club for a band, athletic team or similar group can hold two one-day, tax-free sales or auctions once it has received a sales tax exemption from the Comptroller’s office.

A nonprofit organization that has received an Internal Revenue Service (IRS) exemption under Section 501(c)(3), (4), (8), (10) or (19) can qualify for Texas sales and franchise taxes exemptions. A booster club that has one of these 501(c) federal exemptions must apply to receive these tax exemptions by completing and submitting Form AP-204 (PDF) along with a copy of its IRS exemption letter to the Comptroller’s office. After our office notifies the club of its exempt status, the club can hold two one-day, tax-free sales or auctions each calendar year.

PTAs, PTOs, PTSAs and PTSOs and similar parent-teacher organizations can qualify for a sales tax exemption as educational organizations and can hold two one-day, tax-free sales or auctions each calendar year. All parent-teacher organizations must complete and submit Form AP-207, Application for Exemption - Educational Organizations (PDF) to the Comptroller’s office. Once the exemption is granted, these organizations can hold the two one-day, tax-free sales or auctions each calendar year.

Sales of taxable items made at other times of the year are taxable, unless another exemption applies.

The following entities do not have to collect tax on sales of food products, candy, snack items and soft drinks sold during the regular school day and by agreement with the school or school district:

• School districts.
• Public or private elementary or secondary schools.
• Bona fide student organizations.
• Parent-teacher associations and organizations.
• Booster clubs.
• Other school support organizations.

This exemption also includes these items sold through vending machines.

Sales outside of the school day of food products, candy, snack items and soft drinks by a PTA/PTO, booster club or other school support organization are tax free if:

• The organization is associated with a specific public or private elementary or secondary school;
• The sales are part of the organization’s fundraising drive; and
• All net proceeds go to the organization for its exclusive use.

The exempt school organizations can issue an exemption certificate (PDF) instead of paying tax on taxable food and beverage items they buy to sell at an exempt food sale. The exemption certificate should state that the group will sell the items as part of its fundraiser. The food and beverage sales tax exemption does not include sales of alcoholic beverages and other non-food items such as spirit wear, accessories or school supplies.

Fundraising sales of food, prepared food, soft drinks, snack items, or candy by booster clubs or other school support organizations, which will benefit the school or school district, are exempt from sales tax if the fundraiser takes place at a concession stand during a school’s or school district's sponsored or sanctioned event.

For example, a middle school sports booster club sells food items from a concession stand at a school-sanctioned track meet to raise funds for new uniforms for the school. These sales are exempt from tax.

Baked goods are nontaxable, unless heated or sold with eating utensils. Exempt school organizations selling baked goods at a bake sale do not have to collect sales tax. Examples of baked goods include pies, cakes, cookies, doughnuts, kolaches, biscuits and bagels. Eating utensils include plates, spoons, knives and forks. Napkins or wax tissues are not eating utensils. A piece of pie served on a plate is taxable, but a doughnut handed to the customer with a wax tissue is not taxable.

All volunteer nonprofit organizations, such as a booster club or a parent-teacher group, can hold a tax-free annual banquet or other food sale; however, a school district or school cannot. The exemption applies if:

• The event is not professionally catered;
• It is not held in a restaurant, hotel or similar place of business;
• It does not compete with a seller required to collect tax; and
• Only the organization’s members prepare, serve and sell the food.

If the organization sells nonfood items, such as spirit items, t-shirts or alcoholic beverages, it must collect tax unless another exemption applies.

Alcoholic beverages are not food products and are taxable. The type of tax due depends upon the type of permit issued to the selling organization by the Texas Alcoholic Beverage Commission.

If you sell only beer and wine using a beer and wine permit (no mixed beverages), then your sales are subject to sales tax.

If you sell mixed beverages, and hold a mixed beverage permit, your sales of the mixed beverages, beer, wine and mixers are subject to two taxes:

• 6.7 percent mixed beverage gross receipts tax assessed on the seller; and
• 8.25 percent mixed beverage sales tax assessed on the purchaser.

Magazines subscriptions for at least six months and entered as periodicals class (formerly called second class) mail are exempt from sales tax. Single issues and subscriptions for fewer than six months are taxable.

The sale of gift certificates, discount cards and coupon books is not taxable. Any tax due is collected by the retailer when the purchaser redeems the gift certificate, promotional discount or coupon.

An amusement service exclusively provided and sold by a nonprofit organization, not including a 501(c)(7), is exempt from sales tax if the proceeds do not benefit an individual. For example, the sale of an admission ticket to a school carnival, dance, athletic event or musical concert is exempt.

All tickets and advertising must show the organization as the sole event provider and that the event is exempt from tax.

A nonprofit organization can hire a for-profit entity to provide expertise to produce an event if the for-profit entity is not providing the amusement service.

Membership dues and fees charged by a nonprofit organization, other than a 501(c)(7), are tax exempt.

Periodicals and reading materials published and distributed by religious, philanthropic, charitable, historical, scientific or other similar nonprofit organizations are exempt from tax. Similar organizations include PTAs, PTOs, PTSAs and PTSOs, but not schools. These similar organizations can publish and sell printed reading materials, such as yearbooks, directories, newsletters and calendars, without collecting sales tax. The qualifying organization can give a completed resale certificate (PDF) or exemption certificate (PDF) to the printer instead of paying tax on charges for printing, binding and item placement.

School districts, schools and school groups must collect tax on the printed reading materials sold unless the sale is during one of the organization’s tax-free fundraisers.

Printed items that are not reading materials are taxable, unless sold during a qualifying and designated tax-free sale. Examples include school logo t-shirts, bookmarks, photographs and novelties.

A person using their personal funds to buy a taxable item to donate to a qualifying organization can give an exemption certificate (PDF) to sellers instead of paying tax on the item. The person cannot use the item before donating it. The exemption does not apply if the item is donated to an individual, such as a teacher or a student.

The purchaser must show on the exemption certificate that the taxable item will be donated to a qualifying organization and clearly identify the organization accepting the donation. The purchaser owes tax on the item’s purchase price if it is used before donating the item.