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Pay Pal and State Taxes

Forums: General Discussion
Created on: 02/22/10 02:41 PM Views: 1156 Replies: 3
Monday, February 22, 2010 at 2:41 PM

I'm ready to jump into the Pay Pal arena and have a question about state taxes.

We are a federal 501c(7)alumni association, located in Kansas.

Does pay pal automatically collect state sales tax on website donations, items for sale and reunion tickets? And this would force the association to fill out those dreaded state sales tax forms every quarter. It doesn't seem right that taxes should be collected on donations. How are other schools, especially those that sell items, handling this?

I'm assuming I'll be setting up a business pay pal account, unless advised otherwise.

Thanks for all your help.


Monday, February 22, 2010 at 3:54 PM - Response #1

Hi Larry,

I'm not positive how Paypal will handle State Taxes for a non-profit for your state. I went to look the information up on their site and its not outlined in their non-profit section. They do list a phone number for additional questions (866) 837-1863. I would run your scenario past them to be sure.

Edited 02/22/10 3:55 PM
Monday, February 22, 2010 at 4:05 PM - Response #2

Thanks. I'll give them a call and report my findings in this thread. Larry

Monday, February 22, 2010 at 4:29 PM - Response #3

I called Pay Pal and they said I should use a Business Account... Website Standard option. When you fill out your profile you can specify your state sales tax rate (probably in some drop down menu) for your local area, or not (which I presume means a "zero" tax).

They do not automatically collect sales tax on any items sold. Wether I choose to collect sales tax or not on items sold, and report those taxes, is up to me. So how much risk am I willing to take with the tax police!!! That is the question now.

Thanks for everyones help.

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