Sales made by entities or organizations engaged in educational, religious, or charitable activities are exempt if they meet the following requirements:
- The profits from the sale must be used by or donated to one of the following:
- An entity that is exempt from federal income tax under Internal Revenue Code section 501(c)(3);
- A government entity; or
- A private nonprofit educational institution
- The profits must be expended on educational, religious, or charitable activities.
An exemption from tax is allowed to the extent net proceeds are expended for qualifying educational, religious, or charitable purposes.
NOTE: Most nonprofit organizations are not exempt from tax on their purchases.
For additional information, please see Iowa Tax Issues for Nonprofit Entities.