Kentucky nonprofits confused about tax expansion
LOUISVILLE, KY (WAVE) - Get ready to pay more. Kentucky's new expansion of the 6 percent sales tax is about to hit everyone in the pocketbook.
Pet care, landscaping services, and gym or club memberships will now get taxed. And in a bit of a surprise to many people, local charities will also be paying.
It comes as confusing news to many nonprofits. Even some lawmakers told WAVE 3 News they are unsure about how the tax will affect charities.
The Kentucky Department of Revenue spent the past month getting all the details so they could try and answer questions on their website.
Center for Nonprofit Excellence Director of Communications, Hannah Nitzken, has talked to many Louisville nonprofit leaders.
"They are really confused and worried about what this bill could mean for their donations," she said.
From the Jewish Community Center to the Kentucky Science Center, Nitzken said nonprofits and their CPAs have plenty of questions. That's because up until now, the Kentucky groups have always been tax exempt.
"We want to know exactly what the details are," Annette Ball, the Programs Director for Dare to Care, said.
The Kentucky Department of Revenue said organizations like Dare to Care -- that puts food into the community every day and has big events each year to help support that effort, like their Taste of Derby Festival and the upcoming Hunger Walk in September -- will face the 6 percent tax for all tickets to big events.
House Bill 487 also impacts auction items for charity events. For example, someone who wants to give to a nonprofit by buying a donated item valued at $50 that went up to $150 in a silent auction, will pay the tax on the higher sales price of $150, not on its actual value of $50.
Ball is worried donors might write down smaller bids after calculating that 6 percent tax on the end.
"We hope that it doesn't suppress donations that people want to make to the community," she said. "We want people to give freely and not have that worry."
Some nonprofits are so small they're concerned about not having enough staff to deal with the new issue.
"They've never collected sales tax before and so we're getting questions from our nonprofits like, 'How do we pay, once we've got the 6 percent, how do we even pay it back to the Kentucky Department of Revenue,'" Nitzken explained.
Children's summer camps are excluded from the tax.
The President and CEO of the YMCA of Greater Louisville, Steve Tarver, said he also doesn't understand taxing healthy behaviors like gym memberships.
The Kentucky Department of Revenue will be available to answer questions at a tax expansion meeting on Thursday, July 26 from 10 a.m. to 12 p.m. at the Jewish Community Center. The talk is organized by the Center for Nonprofit Excellence.
Representatives from the Kentucky Department of Revenue and CPAs that work with nonprofits will be among those answering questions during the forum.
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