Surprise tax bites charity budgets

LOUISVILLE, KY (WAVE) - State Republican leaders are attempting damage control ahead of the November elections.

After passing tax reform in a single day, legislators discovered their latest work, combined with an unexpected state Supreme Court decision, resulted in the imposing of a 6% sales tax on some fundraising.

>> More political news on wave3.com

"Kentucky Supreme Court ruled that Section 170 of the Constitution does not exempt non-profits from collecting taxes," Senate President Robert Stivers, (R-Manchester), said Friday in an editorial entitled "LEGISLATURE DID NOT CREATE NON-PROFIT TAXATION ISSUE, BUT WILL FIX IT IN 2019 SESSION."

Kentucky House Speaker Pro Tempore David Osborne, (R-Prospect), pre-filed a bill that would correct the problem by exempting non-profits from paying the sales tax.

If passed, the fix would not go into effect until 2019.

In the meantime, the tax could cost charities like Saint Joseph Children's Home tens of thousands of dollars at its 169th annual fundraising picnic.

"We know that sponsorships, memberships, events, raffles, all of those things are in question," St. Joseph Children's Home Executive Director Grace Akers said. "And this is a big event for us. Not just the financial impact of the dollars raised, but the impact of increased forms for audit, and consultations."

Akers said the full impact on annual budgets is not yet known.

There is no provision in the proposed legislation to refund the taxes charities are currently paying.