Wrong.
In the majority of states that have sales tax – excluding Alaska, Delaware, Montana, New Hampshire and Oregon – the key to earning a sales tax exemption is being designated a charitable,
tax-exempt 501(c)3 nonprofit organization under the Internal Revenue Code. (For other types of tax-exempt nonprofits, state sales tax exemption is much less certain and requires a careful reading of each state’s tax code and regulations.)
Recognition by the IRS may be enough in some states to be exempted from state sales tax. Charities in Wyoming just have to provide the state with a copy of the organization’s IRS determination letter in order to receive an exemption approval letter. Illinois simply requires a form or letter of request from nonprofits while other states, like Connecticut and Michigan, require that nonprofits just provide their vendors with a form that claims they are exempt from state sales tax for their purchases. In North Carolina, charities must pay sales taxes but can
file semiannually for a refund of sales taxes paid.
In other states, the process for obtaining exemption from state sales tax can vary significantly. Most states that offer sales tax exemptions (about 30) generally require a short application form along with some or all of the following supporting documents:
- IRS Determination Letter and/or IRS Form 1023 or 1024.
- Articles of Incorporation and/or Bylaws.
- Financial Statements and/or Form 990.