How Do You Claim a Sales Tax Exemption?


Quick Answer

Fill out a request with your state tax department or comptroller's office to gain exemption from sales taxes, as the Texas Comptroller of Public Accounts explains. However, the process varies among states. As of 2015, applicants in New York use bulletin TB-ST-350, while five different forms apply in Texas.

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Full Answer

Organizations qualify for an exemption for sales taxes when they make purchases that benefit the tax-exempt purpose of that organization. For example, a volunteer fire department exists to answer fire calls and in some areas, to provide emergency medical services. These volunteers either receive no compensation or extremely low compensation for that work, and as a result, they qualify for a sales tax exemption, which allows them to purchase supplies, equipment and other items related to that purpose without paying sales tax, according to the Texas Comptroller of Public Accounts.

Other organizations that qualify include religious, educational and charitable organizations. Youth athletic organizations that do not operate at a profit, chambers of commerce, tourist promotional agencies, political entities and any other organizations qualifying under Internal Revenue Code section 501(c)(3), (c)(4), (c)(8), (c)(10) or (c)(19) also qualify, according to the Texas Comptroller of Public Accounts.

When representatives of exempt organizations make purchases, they must use the applicable exemption certificate within a certain time period of the purchase. In New York, for example, the deadline is 90 days after the purchase. Sellers have the right to deny the certificate, but in that instance, organizations may apply for a refund of their sales tax, as explained by the New York State Department of Taxation and Finance.

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