in-20260819-IR-045260276NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE Information Bulletin #10 Sales Tax July 2026 Effective Date: July 1, 2026 (Replaces Bulletin #10, dated August 2024) SUBJECT: Application of Sales Tax to Nonprofit Organizations REFERENCES: IC 6-2.5-5-21; IC 6-2.5-5-25; IC 6-2.5-5-26; 45 IAC 2.2-5-55; 45 IAC 2.2-5-56; 45 IAC 2.2-5-57; 45 IAC 2.2-5-58; 45 IAC 2.2-5-59; 45 IAC 2.2-5-60 DISCLAIMER: Information bulletins are intended to provide nontechnical assistance to the general public. Every attempt is made to provide information that is consistent with the appropriate statutes, rules, and court decisions. Any information that is not consistent with the law, regulations, or court decisions is not binding on either the department or the taxpayer. Therefore, the information provided herein should serve only as a foundation for further investigation and study of the current law and procedures related to the subject matter covered herein. SUMMARY OF CHANGES Aside from nonsubstantive, technical changes, this bulletin has been updated to include changes made in House Enrolled Act 1406 (2026), which added two new types of nonprofit organizations that are not subject to the sales threshold requirements. The bulletin also incorporates examples from the department's regulations and removes guidance that applies to periods that are now out of statute. INTRODUCTION This bulletin concerns the application of Indiana sales and use tax to nonprofit organizations. This bulletin will discuss when sales tax must be collected by nonprofit organizations and when Indiana sales and use tax must be paid on purchases by nonprofit organizations. REGISTRATION When taxable retail sales are made by nonprofit organizations, the organization must register with the Nonprofit Section of the Indiana Department of Revenue (the department) and receive a taxpayer identification number. Indiana nonprofit organizations making tax-exempt qualified purchases, but not making retail sales, also must register with the Nonprofit Section of the department and receive a taxpayer identification number. A nonprofit organization must register for a sales tax exemption by submitting Form NP-20A, which can be filed using the department's online e-services portal INTIME (Indiana Taxpayer Information Management Engine), by visiting intime.dor.in.gov. Once a nonprofit has been registered with the department, they will be able to obtain a specially-issued exemption certificate through INTIME as of July 1, 2022. NOTE: An organization that has been classified as a “social” organization by the Internal Revenue Service (IRS), including homeowner's associations, are not allowed to make purchases exempt from Indiana sales and use tax. Nonprofits that are temporarily in Indiana, such as those who are here for short events or conventions, may request a temporary exemption certificate by filing for Form NP-20T, which is available as of July 1, 2022. This specially-issued exemption certificate will be in the form of a letter issued by the department. A nonprofit organization that does not sell taxable products and/or that does not have a need to purchase items exempt from sales tax still must still file Form NP-20A with the department as part of further filing requirement related to income tax. For income tax and other filing and reporting requirements for nonprofits, refer to Income Tax Information Bulletin #17, available online at in.gov/dor/resources/tax-library/information-bulletins/income-tax-information-bulletins/. QUALIFIED NONPROFIT ORGANIZATIONS For purposes of the nonprofit exemptions described throughout this bulletin, a “qualified nonprofit organization” means any of the following types of organizations: However, a social organization that is predominately organized and operated predominantly for social purposes would not be considered a qualified organization and would therefore not qualify for the exemptions discussed in this bulletin. Refer to the section on Social Organizations at the end of this bulletin for further information. When comparing the qualifications above with the categories of federally designated nonprofits in IRC § 501(c), many of these categories would be considered qualified nonprofit organizations. However, some of them would not. The table below explains whether a 501(c) organization would be considered qualified nonprofit organizations: Federal Code Section Charitable Organization Qualified Organization for Indiana Purposes 501(c)(1) Corporations organized under Act of Congress Depends - These types of nonprofits do not meet any of the four categories of qualified organizations, but they may be exempt under the federal entity exemption. Refer to Sales Tax Information Bulletin #4. 501(c)(2) Corporation owned by exempt organization; purpose to hold title to property Depends on whether the nonprofit is organized and operated exclusively for religious, charitable, scientific, literary, educational, or civic purposes, and further that no part of its income is used for the private benefit or gain of any member, trustee, shareholder, employee, or associate. Otherwise, these types of nonprofits do not meet any of the four categories of qualified organizations. 501(c)(3) Organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, educational, foster amateur sports competition, prevention of cruelty to children and animals; no part of net earning inures to the benefit of any private shareholder/individual Yes 501(c)(4) Social welfare organizations; local associations of employees; HOAs; Volunteer Fire Companies; net earnings exclusively devoted to charitable, educational or recreational purposes Depends on whether the nonprofit is organized and operated predominantly for social purposes. For instance, homeowners associations are designated as a social organization under federal law, and thus are not exempt. 501(c)(5) Labor, Agricultural, or Horticultural organizations Depends on whether the nonprofit is organized and operated predominantly for social purposes 501(c)(6) Business Leagues, Chambers of Commerce, Real-Estate Boards, Board of Trades, or Professional football leagues Depends on whether the nonprofit is organized and operated predominantly for social purposes 501(c)(7) Clubs organized for pleasure, recreation or nonprofit purposes Depends on whether the nonprofit is organized and operated predominantly for social purposes 501(c)(8) Fraternal beneficiary societies, orders or associations--providing payment of life, sick, accident or other benefits to members of the order Depends on whether the nonprofit is organized and operated predominantly for social purposes 501(c)(9) Voluntary Employee beneficiary associations--providing for payment of life, sick, accident or other benefits to the members Depends on whether the nonprofit is organized and operated predominantly for social purposes 501(c)(10) Domestic fraternal societies, orders, or associations under the lodge system exclusively for religious, charitable, scientific, literary, educational and fraternal purposes that do not provide payments of life, sick, accident or other benefits to members Depends on whether the nonprofit is organized and operated predominantly for social purposes 501(c)(11) Teacher's retirement fund No 501(c)(12) Benevolent Life Insurance Associations No 501(c)(13) Cemetery Companies not operated for profit Depends on whether the nonprofit is organized and operated exclusively for religious, charitable, scientific, literary, educational, or civic purposes, and further that no part of its income is used for the private benefit or gain of any member, trustee, shareholder, employee, or associate. Otherwise, these types of nonprofits do not meet any of the four categories of qualified organizations. 501(c)(14) Credit Unions; Domestic building and loan associations; cooperative banks; Mutual savings banks No, if it is a state nonprofit. If it is a federal nonprofit, they may be exempt under the federal entity exemption. Refer to Sales Tax Information Bulletin #4. 501(c)(15) Insurance companies other than life No 501(c)(16) Crop Operations Depends on whether the nonprofit meets one of the categories of Qualified Nonprofit Organizations discussed in the section above. 501(c)(17) Trusts for Supplemental Unemployment compensation Benefits No 501(c)(18) Trusts created prior to 6/25/1959 for the payment of benefits under a pension plan Yes 501(c)(19) A post or organization of past and present members of the Armed Forces of the US. Depends on whether the nonprofit meets one of the categories of Qualified Nonprofit Organizations discussed in the section above. 501(c)(21) Trust organized to administer expenses related to disability or death due to pneumoconiosis under Black Lung Act No 501(c)(22) Trust associated to Employee Retirement Income Security Act No 501(c)(23) Organization formed before 1880 and more than 75% of members of which are present or past members of the Armed Force to provide insurance and other benefits to veterans or dependents Depends on whether the nonprofit is organized and operated predominantly for social purposes. 501(c)(24) Single-Employer Pension Plan trust Yes 501(c)(25) Trust with less than 35 shareholders organized for acquiring real property and holding title to property No 501(c)(26) State established organization to provide medical care Depends on whether the nonprofit is a shared hospital services organization exempt from federal income taxation by Section 501(c)(3) or 501(e) of the Internal Revenue Code. 501(c)(27) State established organization prior to 6/1/1996 to reimburse members for losses under worker's comp acts No 501(c)(28) National Railroad Retirement Investment Trust No 501(c)(29) Co-op Health insurance issuers No SALES BY QUALIFIED NONPROFIT ORGANIZATIONS Sales of tangible personal property by qualified nonprofit organizations of not more than $100,000 in the current or previous calendar year used to raise funds to further the qualified nonprofit purposes of the organization are exempt from sales tax.1 The $100,000 current or previous calendar year threshold applies to all qualified nonprofits except for the following: These six types of nonprofits are exempt from the requirement to collect and remit sales tax regardless of the dollar amount of sales in a year. A nonprofit that is not one of these six types of organizations is required to collect sales tax if they reached the $100,000 threshold in the previous calendar year or after they reach the $100,000 threshold in the current calendar year on an ongoing basis for the remainder of the calendar year and each calendar year thereafter until the organization makes less than $100,000 in sales for two consecutive years. Neither the nonprofit nor their customers owe sales tax on sales made prior to meeting the threshold. Furthermore, the sales of an organization include sales made by all units operating under the organization's registration with the department. These provisions also apply to social organizations as well as other qualified organizations; however, the exemption does not apply to social organizations that are predominantly organized and operated for social purposes (refer to the section on Social Organizations at the end of this bulletin for further information). Regardless of whether the nonprofit is one of the six excepted nonprofits or is another type of nonprofit that is under the $100,000 threshold, any sales made through a marketplace facilitator will not be exempt, because the facilitator is treated as the retail merchant by law and the exemption does not flow through to the facilitator. The sales tax exemption for nonprofit sales also applies to the collection of food and beverage taxes. Any transaction that is exempt from Indiana sales tax imposed by IC 6-2.5 is also exempt from any Indiana county or municipality imposed food and beverage tax. Further, if a nonprofit is eligible for any of the exemptions discussed above, they may also sell alcohol exempt from sales tax and any food and beverage taxes. However, for nonprofits that do not qualify for the exemptions listed above for whatever reason, including because they are social organizations that are predominantly organized and operated for social purposes, sales of alcohol will be subject to sales tax and food and beverage tax, if applicable. All organizations required to collect sales tax must register with the Department of Revenue and get a Retail Merchant Certificate. They also must register as nonprofit organizations. An organization can register with the department for sales tax, county innkeepers' tax, and food and beverage tax by visiting the State of Indiana's INBiz website, which allows businesses to register with multiple state agencies, at inbiz.in.gov. A separate application is required for each business location. The nonrefundable application fee for a Retail Merchant's Certificate is $25. Upon registration and for the first full year, the nonprofit will be required to file sales tax returns (Form ST-103) based on their taxable sales volume for the preceding calendar year, as determined by the department. Sales tax returns must be filed using INTIME. Even if no tax is due for a particular period, a return must still be filed (called a “zero return”). However, when the nonprofit organization sells items, such as periodicals, books, or other property, that are intended primarily to further the educational, cultural, or religious purposes of the organization or for the improvement of the work skills or professional qualifications of the organization's members, and the sales are not used in carrying out a private or proprietary business, the $100,000 threshold does not apply and the items may be sold exempt throughout the year. SALES BY A NONPROFIT FORMED TO SUPPORT A PUBLIC LIBRARY Sales of tangible personal property by a nonprofit formed to support a public library (e.g., a “Friends of the Library” group), are exempt from the state gross retail tax if the property sold consists of: In other words, nonprofits formed to support a public library do not have to collect and remit sales tax on their normal sales of used books, videos, and other items from a library's collection. However, this exemption does not apply to any other sales of tangible personal property by a nonprofit formed to support a public library (e.g., food and beverages, furniture, and artwork). The sale by nonprofits formed to support a public library of these other types of tangible personal property would be subject to the rules outlined in the Sales by Qualified Nonprofit Organizations section above. PURCHASES BY QUALIFIED NONPROFIT ORGANIZATIONS Purchases for Own Use To qualify for a sales tax exemption on purchases as a nonprofit organization, the following conditions must be met: NOTE: The fact that an organization is incorporated as a nonprofit corporation or is being exempted from income tax by the IRS does not necessarily mean that purchases made by the nonprofit organization are exempt from sales/use tax. Organizations, as previously described, that are registered with the Indiana Department of Revenue as nonprofit organizations may purchase exempt from Indiana sales and use tax tangible personal property used in carrying out the nonprofit purpose of the qualified organization. To purchase tax exempt, the organization must register with the department no later than 120 days after the taxpayer's formation, after which the organization can obtain a Form NP-1 (Indiana Nonprofit Sales Tax Exemption Certificate) from INTIME. However, schools that are a part of the Indiana public school system should not register as nonprofits with the department and should continue to use Form ST-105, as they are primarily treated as governmental entities even though the exemptions pertaining to nonprofit organizations apply to them. NOTE: Form ST-105s issued prior to Jan. 1, 2023, by a qualified nonprofit registered in Indiana will expire Jan. 1, 2024. The issuing nonprofit must provide Form NP-1 to their vendors from that point forward. A separate Form NP-1 needs to be generated for each vendor, and a vendor must be inputted by the nonprofit in INTIME in order to generate Form NP-1. Purchases by Fraternities, Sororities, or Student Cooperative Housing Organizations Fraternities, sororities, or student cooperative housing organizations may purchase tangible personal property exempt from Indiana sales tax if they use the property or service to carry on their ordinary and usual activities and operations as a fraternity, sorority, or student cooperative housing organization. Purchases by Non-Indiana Nonprofit Organizations Nonprofit organizations not registered with the Indiana Department of Revenue and located in another state may use a Streamlined Sales Tax Governing Board Form F0003 to make purchases exempt from the sales tax. Purchases for Resale Tangible personal property purchased for resale by a nonprofit organization is eligible for the sales tax exemption. Purchases and Sales Made by Social Organizations Purchases of tangible personal property to be used by organizations organized and operated predominantly for social purposes are not exempt. If more than 50% of an organization's expenditures is related to social activities, the organization is considered to be predominantly organized and operated for social purposes. Examples of expenditures related to social activities include: Similarly, sales of tangible personal property to be used by organizations organized and operated predominantly for social purposes are likewise not exempt. This bulletin applies only to the status of nonprofit organizations under the sales tax statute. Nonprofit organizations are subject to the Adjusted Gross Income Tax Act on unrelated business income as defined in Internal Revenue Code Section 513. Homeowners' associations do not qualify for sales tax exempt status under Indiana law. If you have any questions concerning this bulletin, please contact the Tax Policy Division at taxpolicy@dor.in.gov. _________________________