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Nonprofits and the Sales and Use Tax

195 Pages Posted: 10 May 2010 Last revised: 8 Mar 2012

Mark J. Cowan

Boise State University

Date Written: May 10, 2010


States vary in the application of their sales and use tax regimes to nonprofit organizations. Some states grant broad exemptions, others limit exemptions to an enumerated list of organizations, and others treat nonprofits much like they would any other taxpayer. The purpose of this Article is to analyze ways that states might review, rationalize, and reform the way they apply their sales and use taxes to nonprofit organizations. The Article addresses the key issues of whether sales/use tax exemptions should be used to subsidize nonprofits and whether such subsidies create unfair competition. The Article analyzes the issues from a sales/use tax point of view and a nonprofit point of view – drawing on the practical realties and the theories underlying both areas of the tax law. The analysis highlights longstanding, well-known problems in the broader state sales/use tax systems, but also reveals issues that are unique to nonprofits. For good measure, the political issue of the taxation of Girl Scout Cookies, which seems to arise at nearly every turn, is addressed.

Keywords: nonprofits, sales tax, use tax, tax exemptions

JEL Classification: H71, K34

Suggested Citation

Cowan, Mark J., Nonprofits and the Sales and Use Tax (May 10, 2010). Florida Tax Review, Vol. 9, No. 13, p. 1077, 2010. Available at SSRN:

Mark J. Cowan (Contact Author)

Boise State University ( email )

1910 University Drive
Boise, ID 83716
United States


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