Each state has rules as to what exemptions are available and what a non-profit must do to get those benefits. And there are 2 sides to the question: 1) What sales tax you must pay on purchases (like any other consumer) and what sales tax you should collect on things you sell and then remit to the state.
I found a nice explanation for you by the Michigan Non Profit Association about "
Staying Legal in Michigan
". Definitely worth checking out.
Here's an excerpt about Sales Tax
Sales Tax
Purchases
When a charity purchases items to help them carry out their charitable purpose, they are exempt from paying Michigan Sales Tax. To claim the exemption complete Form 3372 found on the Sales and Use Tax Information page on the Michigan Department of Treasury website. You may complete this form and take it to the retailer to claim an exemption, along with a copy of the IRS determination letter documenting your 501(c)(3) exemption. Additional information about sales tax exemptions can be found on the "Common Sales and Use Tax Exemptions and Requirements" page of the Michigan Department of Treasury's website. The Michigan Department of Treasury offers other resources to assist in understanding, paying, and claiming exemptions of sales tax, including a "New Businesses Webinar Presentation."
Selling Merchandise
Charities ARE NOT exempt from paying Sales Tax when they sell merchandise. Depending on the amount of sales during the year, the charity will need to remit sales tax to the State of Michigan periodically (annually, quarterly or monthly, depending on the amount of tax owed to the State). The charity will also need to obtain a license to collect sales tax from the purchasers. The Department of Treasury's Revenue Administrative Bulletin 1995-3 states exempts most nonprofit organizations from paying sales tax on retail sales if the "aggregate sales at retail for the calendar year are less than "5,000." If sales exceed that threshold, then tax is due on all sales for the year.
The Michigan Department of Treasury website has information on what you need to do to apply for a license and how and when you need to remit the tax to the State. The Instruction Book on the website answers many of the questions, but you will need to go to the Department of Treasury link above for all of the forms and information you need. The Michigan Department of Treasury also offers other resources to assist in understanding, paying, and claiming exemptions of sales tax, including a "New Businesses Webinar Presentation."
