DRS: Tax Exemption Programs for Nonprofit Organizations

Nonprofit Organizations


Connecticut law provides for an exemption from Connecticut sales and use taxes for qualifying nonprofit organizations.  An organization that was issued a federal Determination Letter of exemption under Section 50l(c)(3) or (13) of the Internal Revenue Code is a ”qualifying organization” for the purposes of the exemption from sales and use taxes. Connecticut no longer issues exemption permits but accepts for proof of exemption a copy of the Federal Determination Letter or a Connecticut Exemption Permit (E-Number Permit) issued prior to 1995.

For information on how to obtain a federal determination letter of exemption for the organization, you may contact the Internal Revenue Service at 1-877-829-5500.  SN 95(10), Exempt Purchases by Exempt Organizations, provides additional information about the Connecticut exemption process.

An organization with an E-number by the Department of Revenue Service issued prior to July 1, 1995 is also considered a ”qualifying organization” for the purposes of the exemption from sales and use taxes.  As of July 1, 1995, the Department no longer issues exemption permits but it will honor permits issued prior to July 1, 1995 as long as the organization remains exempt from federal income tax.  Therefore, if your organization was issued a Connecticut E-number prior to July 1, 1995, it will be exempt from tax by completing CERT-119 and attaching to it a copy of your E-Number Permit.


 Purchases of Goods or Taxable Services

 

A “qualifying organization” may purchase supplies, services and equipment without paying Connecticut sales and use taxes if the purchases are made by the organization, are exclusively for the purposes for which the organization was established, and are paid for with organization funds. To claim exemption for the purchase of goods or taxable services, the organization must complete CERT-119, Certificate for Purchases of Tangible Personal Property and Services by Qualifying Exempt Organizations and give it to the retailer.  The organization must attach to the CERT-119 a copy its federal Determination Letter or group Determination Letter issued by the Internal Revenue Service.   (Do not send CERT-119 to this Department, it must be given directly to the retailer.)


 Purchases of Meals or Lodging

  • If the organization will be purchasing the meals or lodging with its own funds and will not charge or be reimbursed by those attending the event, prior approval from the Department of Revenue Services is required.  To request exemption from the tax on meals or lodging the organization must submit a completed CERT-112, Certificate for Exempt Qualifying Purchases of Meals or Lodging by an Exempt Organization or Qualifying Governmental Agency, to this Department at least three weeks prior to the event.  The organization must attach to the CERT-112, a copy of its federal Determination Letter or group Determination Letter issued by the Internal Revenue Service.  Please also refer to  PS 2006(3), Purchases of Meals or Lodging by Exempt Entities.
  • If the organization is purchasing meals but will charge those who are attending the event (either by selling tickets or collecting reimbursement from those attending the event), do not complete CERT-112.  Instead, follow the directions in SN 98(11), Exemption from Sales and Use Taxes of Sales by Nonprofit Organizations at Fundraising or Social Events, about purchasing meals and lodging using the exemption for five one-day events.
  • The charge for lodging (hotel or motel) is not exempt from tax if the organization is being reimbursed in whole or in part by the person(s) staying in the hotel or motel rooms.

 Sales Made by Nonprofit Organizations

 

Nonprofit organizations that make sales of goods or services are generally required to obtain a Connecticut Sales and Use Tax Permit and to collect sales tax on those sales.  There are exceptions to the general rule. A nonprofit organization may make sales at up to 5 fundraising events per year without collecting sales tax.  For information on this exception to the general requirement to collect the sales tax, please read our publication, SN 98(11), Exemption from Sales and Use Taxes of Sales by Nonprofit Organizations at Fundraising or Social Events.