Generally, this will only include purchases by nonprofit organizations from businesses or other persons located in Michigan. Sales tax will not apply to purchases where the tangible personal property is shipped by mail or common carrier to the nonprofit organization from a location outside of Michigan. The new exemption is retroactive to January 1, 1994. To be exempt, the purchase of tangible personal property must be used or consumed primarily in carrying out the purposes of the institution or agency, as stated in the bylaws or articles of incorporation of the exempt entity. While the bylaws or articles of incorporation of an exempt nonprofit organization probably allow the organization to perform fund-raising activities such as bingo, Las Vegas Nights, and raffles, fund raising is not the stated purpose of the organization.
Fund raising is merely a means to an end.
The stated purposes of nonprofit organizations are the end goals, which are generally of a health, welfare, educational, cultural arts, charitable, or benevolent nature. Therefore, purchases of property used in fund-raising activities are taxable. Similarly, the sale of a vehicle to the exempt nonprofit organization may or may not be exempt from sales tax. The sale would be exempt if, for instance, the administrative duties of the director required transportation, and the vehicle would be used primarily for that purpose. The sale would not be exempt if the vehicle is given to the director for personal use as a fringe benefit or as compensation, or it will be used as the prize in a fund-raising raffle.