Community Benefit

Sales Tax

Please Take Note: The information provided does not constitute legal or tax advice. The material is provided for informational/educational purposes only. Please consult with counsel regarding your organization's particular circumstances.

Question: Can I count the sales tax that our hospital pays as a community benefit?

Recommendation: The task force recommends not counting sales tax as a community benefit because in some (but not all states) it is paid by both for-profits and not-for-profits. This does not necessarily differentiate a not-for-profit from a for-profit organization. Conversely, given this reasoning, we also do not recommend including the amount paid in sales tax in the calculation of how much taxation the organization would have to pay if it lost exempt status — that is, unless in your state for-profit hospitals pay sales tax while tax-exempt hospitals do not.

Sales tax paid could be included in a statement about the economic impact of the organization.

(2007)