What kind of cookie person are you? Specifically, what type of Girl Scout cookie person—thin mints, caramel delights, peanut butter patties, or, like Leonardo DiCaprio, are you a trefoil fan? Whichever cookie you prefer, Idaho legislators are considering making Girl Scout cookie purchases a little more fun. A bill that would exempt Girl Scout cookies from the Idaho sales and use tax recently squeaked through the Idaho House of representatives and is now headed to the Idaho Senate. According to local Spokane newspaper the Spokesman-Review, Idaho and Hawaii are currently the only two states to tax Girl Scout cookies.
This recent move in Idaho to exempt Girl Scout cookies from sales tax reflects a nationwide trend of generally taxing sales to and by charitable organizations while exempting only specific charities or specific types of charitable sales from sales and use taxes. In fact, while a majority of states, including Florida, New York, Texas, and Virginia, provide a general sales tax exemption for purchases by all nonprofits or charitable organizations, a large minority of states exempt only specific charities from the sales and use taxes.
For example, while Alabama has no general exemption for sales or purchases by charitable or nonprofit organizations, the state exempts several specific charities from paying sales and use taxes. Exempt charities include the Diabetes Trust Fund, the headquarters of the American Legion, the Grand Chapter of all Orders of the Eastern Star, the Alabama Goodwill Industries, and several others. Oh, and the Girl Scouts are also exempt.
Additionally, in Oklahoma, while sales to charitable organizations are generally taxable, sales to 4-H clubs, Boys and Girls Clubs, and YMCA’s are exempt from sales and use taxes. In Washington, instead of exempting sales to specific charities, the state provides exemptions for sales of certain types of property or services to certain types of charities and nonprofits. For example, in Washington, sales of trail grooming services to nonprofit corporations and sales of clay targets used during clay target shooting to a nonprofit gun club are exempt from tax. Also, neither state imposes sales tax on Girl Scout cookies.
According to the Spokesman-Review, some Idaho lawmakers have questioned the fairness and the wisdom of passing exemptions for specific charitable organizations instead of a general, more broad-based exemption for all charitable or nonprofit organizations. One lawmaker stated that the singling out of organizations is “a horrible precedent to be setting in our tax policy.” However, concerns over preferential treatment for some charities apparently haven’t hindered Idaho from passing specific sales and use tax exemptions for the Idaho Ronald McDonald House, the Blind Services Foundation, and the Idaho Foodbank Warehouse. Indeed, imagine what the Girl Scouts’ reactions would be if popcorn sales by Boy Scouts were exempt while their cookie sales weren’t!
However you feel about narrow sales tax exemptions for specific charities, hopefully all this talk of taxes will help promote Girl Scouts financial literacy and entrepreneurial skills.
Continue the discussion on LinkedIn: Should states provide sales tax exemptions for specific charities in lieu of a broader exemption for all charitable or nonprofit organizations?
For more information about state tax issues, sign up for a free trial on Bloomberg BNA’s Premier State Tax Library.
By Emilie Burnette
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