Tax Information

Tax Exempt Status

Many student organizations believe that because they are essentially non-profit and are comprised primarily of students, they are automatically tax-exempt. Recognition as a VSO does not cover you under the University’s or MSA’s tax-exempt number.  Your organization is not “Tax-Exempt” unless you have applied and been granted that status from the Internal Revenue Service or have a Sponsorship Agreement on file at SAL.  SSOs should contact their sponsoring unit with questions about the use of the University’s tax status.

If you think your organization may qualify for exemption from income taxes, contact the IRS (1-800-829-3676) and ask for Publication 557, “Tax-Exempt Status For Your Organization”.  This manual will tell you how to qualify for an exempt status. If your organization is a chapter of a national organization, contact your national office; you may qualify under their tax identification number.

Sales Tax Exemption

Exemption from Sales Tax is a state tax exemption. SSOs are covered under the University’s sales tax exempt status through their sponsoring units and may attain a letter from their departmental sponsor, their faculty or staff advisor, or SAL. Voluntary and non-affiliated organizations are not covered under the University’s status but may apply to the state for their own sales tax exempt status.
To determine if your group qualifies for exemption from Michigan Sales Tax on purchases, contact the State of Michigan Department of Treasury in Lansing (1-517-373-3190).  You will receive a criteria sheet and a sales tax exemption application.

If your organization is not tax-exempt, the University will charge appropriate Sales and Use Tax on purchases and rentals made through the University, which will appear on your Statement of Activity.  If your group purchases an item from the University that will be resold, please inform SOAS so they can make the necessary arrangements to ensure that you are not taxed for that item.

Sales Tax

Organizations are liable for collection and remittance of taxes on SALES and RENTALS involving non-exempt transactions.  Organizations exempt from payment of taxes on purchases are not exempt from payment of taxes on revenue from sales and rentals.  Generally, the sales tax applies to sales of personal property to consumers in the State of Michigan (i.e. doughnuts, T-shirts, hats, etc.).

It is not your organization, but the consumer who pays the tax on sales, and your organization should only be collecting the 6% sales tax on each item sold.  At the time the sales tax is filed your group is merely passing on the tax collected from the consumer, to the State of Michigan.  If your group paid Michigan Sales Tax on the items you purchased for resale, then your tax liability is the difference between the purchase price and the sales price.  In other words, you are taxed on the profit of items purchased and/or sold in Michigan.  When depositing revenue, you must inform SOAS if sales tax was paid at the time of purchase, or you may be double taxed.

SOAS submits a monthly report for Sales, Use, and Withholding tax to the Michigan Department of Treasury for all organizations that are subject to such taxes.  When depositing revenue derived from the sale of tangible personal property, you must record this transaction under the revenue code 413900.  At the end of each month, all sales for this revenue code are totaled and the organizations are charged for the portion of this revenue that represents collected sales tax.

Tax Advice

Any comment on tax matters contained in the SOAS/SAL Guidebook are provided merely as a courtesy for the general information purposes of student organizations and are not to be considered tax advice given by the University or its employees, however, we do have helpful information to point you in the right direction and would be glad to share that with you.  All student organizations should rely upon tax advice provided by their own independent tax advisors.

Sponsored Student Organizations and Taxes

In general, SSOs are covered by the University’s exemptions and tax filings and do not need to file their taxes independently. SSOs should discuss this with their sponsoring unit if there are concerns regarding their tax filings. Voluntary student organizations are expected to operate on a non-profit basis and may qualify for federal tax exemption. Depending on a VSO’s annual income, the organization may need to request formal recognition of its tax-exempt status and may be required to file federal (or state) tax returns. For more information regarding the filing requirements for your organization, please visit http://studentorgs.umich.edu/guidebook/soas/taxes/reporting.