Social ads and sales tax
October 17, 2020 1:03 PM Subscribe
I work for a university in the U.S. that's tax exempt. I'd like to run some social media ads (probably FB/Instagram, possibly Twitter) about a free virtual conference we're holding. Will we get charged sales tax? If so, do you have any idea how to submit a tax exempt form to the relevant parties?
I've run a bunch of social ad campaigns before, but never for a place that's tax exempt, so I never really paid attention to the tax issue. Getting a response from Facebook is hopeless.
I've run a bunch of social ad campaigns before, but never for a place that's tax exempt, so I never really paid attention to the tax issue. Getting a response from Facebook is hopeless.
As I recall from when I worked at a 501c(3) you still get charged the sales tax and then you submit all your claims and are reimbursed. Details are fuzzy because I didn’t deal with accounting other than submitting expense reports.
So basically, as accounting at your office
posted by raccoon409 at 1:15 PM on October 17, 2020
So basically, as accounting at your office
posted by raccoon409 at 1:15 PM on October 17, 2020
Response by poster: I'm in Illinois, in case anyone has specific experience there.
posted by chimpsonfilm at 1:23 PM on October 17, 2020
posted by chimpsonfilm at 1:23 PM on October 17, 2020
Best answer: IAAL, IANYL.
There is a distinction between being exempt from federal taxation and exemption from state-imposed sales tax. In my jurisdiction, you can be exempt from federal taxation without being exempt from sales tax. Further, even an entity that is exempt from federal taxation can create federal tax liability for itself by engaging in activity that is sufficiently businesslike and insufficiently related to its charitable mission. In fact, advertising is one of the big areas of activity that the IRS has consistently found to trigger the obligation to pay taxes on net income.
Bottom line, unrelated business income can be very complicated, and you should check in with your GC’s office if there isn’t a university policy already in place on how this is done and reported.
posted by joyceanmachine at 1:45 PM on October 17, 2020
There is a distinction between being exempt from federal taxation and exemption from state-imposed sales tax. In my jurisdiction, you can be exempt from federal taxation without being exempt from sales tax. Further, even an entity that is exempt from federal taxation can create federal tax liability for itself by engaging in activity that is sufficiently businesslike and insufficiently related to its charitable mission. In fact, advertising is one of the big areas of activity that the IRS has consistently found to trigger the obligation to pay taxes on net income.
Bottom line, unrelated business income can be very complicated, and you should check in with your GC’s office if there isn’t a university policy already in place on how this is done and reported.
posted by joyceanmachine at 1:45 PM on October 17, 2020
Response by poster: YMMV, but we ran the ads and were not charged sales tax. As it turns out, others from our university have had the same experience.
posted by chimpsonfilm at 5:56 PM on October 28, 2020
posted by chimpsonfilm at 5:56 PM on October 28, 2020
This thread is closed to new comments.
The best information will probably be on your state tax board website.
posted by calgirl at 1:13 PM on October 17, 2020