Understanding the Changes in Wisconsin's Nonprofit Organization Tax Exemption

As of February 20, 2021, Wisconsin has amended its exemption for certain nonprofit organizations, affecting the way they purchase goods and services exempt from sales and use tax. In this article, we will explore the changes and provide a comprehensive overview of what it means for churches, religious organizations, federally recognized American Indian tribes or bands, and other qualifying entities.

Prior to the law change, Wisconsin's exemption was similar to the Internal Revenue Code (IRC) but did not cover all types of organizations. However, with the amendment, more nonprofits are now eligible to make purchases exempt from sales and use tax.

Eligibility Criteria

To qualify for a Certificate of Exempt Status (CES) number, an organization must meet specific requirements. These include:

* Being a federally recognized American Indian tribe or band in Wisconsin

* Being a governmental unit, such as counties, cities, villages, towns, and school districts

* Meeting the requirements of section 501(c)(3) of the IRC but not being required to apply for and obtain tax-exempt status from the IRS

* Being organized and operated exclusively for religious, charitable, scientific, educational purposes, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals

Additionally, nonprofits that are exempt from federal income tax under section 501(c)(3) of the IRC and have received a determination letter from the Internal Revenue Service (IRS) also qualify.

How to Obtain a CES Number

The Wisconsin Department of Revenue issues CES numbers to qualifying organizations. This number helps retailers identify organizations that qualify to make purchases exempt from Wisconsin sales and use tax.

In conclusion, the recent law change in Wisconsin has expanded the exemption for certain nonprofit organizations, allowing them to make purchases exempt from sales and use tax. By understanding the eligibility criteria and how to obtain a CES number, these organizations can ensure compliance with state regulations and take advantage of this valuable benefit.

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