November 7, 2008
Pennsylvania Sales and Use Tax
No. SUT-08-019
Isolated Sales
Fundraising Activities

ISSUE:

Whether Pennsylvania’s isolated-sales exemption applies to Taxpayer’s scheduled
fundraisers for 2008-2009, thereby relieving Taxpayer from collecting sales tax.

CONCLUSION:

No. Taxpayer must collect sales tax on its 2008-2009 fundraisers because these sales
activities are frequent and recurring, and therefore not “isolated sales” as defined in 61 Pa.
Code § 32.1.

FACTS:

Taxpayer is a parent-teacher organization holding a valid “75” exemption number.
Taxpayer holds a number of fundraisers each school year and was told that its exempt
status would allow it to conduct three fundraisers annually without having to collect sales
tax. Taxpayer was also advised that if more than three fundraisers were conducted, it is
required to collect sales tax only on fundraisers additional to the three exempt events. In
its request for the issuance of a letter ruling, the Taxpayer provided a listing of scheduled
fundraisers for 2008-2009 showing a total of five multiple-day fundraising events in 2008
and a total of four multiple-day sale events in 2009. These events feature merchandise
including books, cakes, chocolate, and plants, etc. Additionally, Taxpayer holds a monthly
sale of frozen foods.

DISCUSSION:

Pennsylvania imposes a sales tax of six-percent (6%) on each separate sale at retail of
tangible personal property within the Commonwealth. 72 P.S. § 7202(a). While the law
provides a limited sales-tax exemption to qualified organizations holding a valid “75”
exemption number, this exemption does not extend to sales conducted by these
organizations. Specifically, an exempt organization that sells taxable tangible personal
property and services must collect and remit sales tax, unless such sales fall within the
definition of an isolated sale. 61 Pa. Code § 32.21(c).

Department regulation defines “isolated sales” as the “infrequent sales of a nonrecurring
nature made by a person not engaged in the business of selling tangible personal
property.” 61 Pa. Code § 32.4(a)(1). Moreover, such sales must occur “no more frequently
than three times nor for more than a total of 7 days in any 1-calendar year.” 61 Pa. Code §
32.1(1). The Department considers a calendar year the period from January 1st to the
subsequent December 31st. When an exempt organization’s taxable sales fall outside the
definition of “isolated sales,” the organization must collect sales tax on all of its taxable
sales without exception. It is the Department’s opinion that when an organization is aware
in advance that its taxable sales will exceed the three-times/seven-days threshold, it must
collect and remit sales tax on all scheduled taxable sales.

 When the taxable sales conducted by an exempt organization are not “isolated sales,” the
exempt organization must register for a Pennsylvania sales tax license to collect tax. 61 Pa.
Code § 32.21(c)(4). Although the organization may purchase tangible personal property for
resale tax-free, it must collect and remit sales tax on the subsequent sales. 61 Pa. Code §
31.21(c)(4)(i).

On the other hand, if an exempt organization’s sales are isolated sales, the exempt
organization is not required to obtain a sales tax license number. Rather, it must provide a
validly executed exemption certificate to the vendor indicating the dates of the fundraising
event(s). 61 Pa. Code § 32.21(c)(4)(ii). Then, the organization may purchase tangible
personal property for resale tax-free and is not required to collect sales tax on the
subsequent sales.

Given that Taxpayer knew in advance that it would conduct more than three taxable sales
events annually and the aggregate of each year’s taxable sales events exceeded seven
days, these sale activities are frequent and recurring and therefore taxable. The only
exceptions are the chocolate sale, the cake sale and the monthly sales of frozen foods since
these are nontaxable food items. As such, Taxpayer must collect sales tax on all of its
scheduled fundraisers except the chocolate sale, cake sale and the frozen food sales.

Office of Chief Counsel | POB 281061 | Harrisburg, PA 17128 | 717.787.1382 | www.revenue.state.pa.us