Do I need to collect sales tax as a 4-H group?
4-H groups are responsible for collecting and remitting sales tax in a variety of settings. Learning how and when to collect sales tax provides a valuable life skill for youth.
Michigan 4-H groups have a responsibility to be good stewards of money and, as part of that, the collecting and remitting of Michigan sales tax applies. Sometimes sales tax can seem confusing or overwhelming. To help, Michigan State University Extension 4-H Youth Development provides tools in the “Financial Manual for 4-H Volunteers: Leading the Way to Financial Accountability” and the “Financial Manual for 4-H Treasurer: A Guide to Managing Money Wisely” to support 4-H groups as they work through collecting and paying sales tax. An overview of sales tax for Michigan 4-H groups:
- All tangible items are taxable regardless of where they are sold. For example, candles and greeting cards, even if they are sold at a bake sale, are taxable.
- Food is taxed depending on where it is sold. Food sold at a concession stand, like at a restaurant where the food is prepared and immediately consumed, is taxable. Food sold at a bake sale, like in a grocery store where food is meant to be consumed later, is not taxable. Vegetables, eggs, milk, meat and poultry that is only cut, repackaged or pasteurized by the seller is not considered prepared food and therefore is not taxable.
- If taking orders for items, such as candles or wrapping paper, that are sold through a company, generally that company is responsible for collecting and remitting the sales tax. Therefore, it is not the responsibility of the group selling those items. It is always wise to check with the company first to be sure the sales tax is included in the selling price and will be remitted by the company.
- When reselling or auctioning items, for simplicity sake, regardless of how they were purchased or received, collect sales tax on the final price/payment. Items made by members of the group and sold must also include sales tax.
- When a 4-H group holds a livestock auction or animal sale, sales tax does not need to be collected and remitted if the purpose of the sale is for agricultural purposes, e.g., breeding, meat or milk production, etc. This would include any commission the 4-H group receives as a portion of the sale. Any re-sale of the animal would be non-taxable as well, as long as the agricultural purpose was established.
All sales tax must be reported and submitted annually in the club’s Annual Financial Summary Report. 4-H youth treasurers should be involved in helping the group leader complete this important year-end report due in the fall. As questions arise, clarification on state sales tax can occur through conversations with your county 4-H program coordinator. By following all sales tax laws, Michigan 4-H groups are responsible stewards of funds raised throughout the year.
Michigan State University Extension and Michigan 4-H Youth Development help to prepare youth for successful futures. As a result of career exploration and workforce preparation activities, including serving in the role of 4-H treasurer, thousands of Michigan youth are better equipped to make important decisions about their professional future, ready to contribute to the workforce and able to take fiscal responsibility in their personal lives. To learn about the positive impact of Michigan 4-H youth career preparation, money management and entrepreneurship programs, read the 2015 Impact Report: “Preparing Michigan Youth for Future Careers and Employment.”