Liability Information for Extension Volunteers
Volunteers and Insurance
Tax Information for Extension Volunteers
Originally prepared by Mary S. Bowie, Operations Administrator, University of Maine Cooperative Extension, October, 1994. Revised October, 1999.
Paying State Sales Tax
University of Maine Cooperative Extension is exempt from Maine state sales tax under the Sales and Use Tax Law. University of Maine Cooperative Extension at the state level is exempt from paying state sales taxes on purchases because it is part of the University.
Individual 4-H leaders, volunteers and clubs are not sales tax exempt. To take advantage of the sales tax exemption, purchases must be made by the County Extension office or with County Extension office authorization. Direct billing to Cooperative Extension or presentation of a petty cash voucher is the correct way to obtain the exemption. Local merchants often know and accept 4-H leaders and other Extension volunteers, but if there is any question, a purchase should be made by direct billing to the County Extension office. The invoice should be marked “Sales Tax Exempt.”
Collecting State Sales Tax
Non-profit groups, including 4-H and other volunteer Extension groups, are required to register with the Maine Bureau of Taxation and collect and remit sales taxes if the sales, such as fund raisers, are “on a continuing basis” or if the club or association “continuously holds itself out to the public as a seller.”
Volunteer organizations such as Extension groups are exempt from paying sales tax on fund-raising efforts “of limited duration,” although the activities are no longer limited to a specific number of days. If a fund-raising effort is on going, sales tax must be both collected by the organization and transmitted to the Maine Sales Tax Division.
If a volunteer organization is required to pay sales tax, it must register with the state Sales Tax Division. Because of the record-keeping involved, it is strongly suggested that Extension volunteer organizations limit their fund-raising activities to a few days or some other limited period of time in order to remain exempt.
Federal Income Tax Exemption for 4-H Organizations
4-H organizations that are authorized by University of Maine Cooperative Extension to use the 4-H name and clover emblem are exempt from federal income tax. A publication outlining all the details of this income tax exemption is available from the office of the Financial Administrator, UMaine Cooperative Extension, 5741 Libby Hall, Orono, ME 04469-5741.
Even though tax exempt, 4-H organizations receiving $10 or more of interest in any one calendar year are required to furnish their savings institutions with an Internal Revenue Service (IRS) identifying number. An identifying number may be obtained by filing an application for Employer Identification Number (Form SS-4) with the IRS. Although the form was designed primarily for organizations paying wages, it is also used by all organizations that are required to have an identifying number.
Applications for an Employer Identification Number may be obtained from any Social Security Administration or IRS office. Your county Extension educator can help you with this form. When completing item 10 on this form, for “Nature of Business,” use either “4-H Club” or “Affiliated 4-H Organization,” whichever is appropriate for the group. The complete form should be mailed to the IRS office handling this area’s federal income tax returns. In our case, the appropriate IRS office is in Andover, Massachusetts.
Remember, 4-H clubs are exempt from federal and state income taxes but are not exempt from state sales taxes. In order to avoid paying sales tax on club-related purchases, the purchasing MUST be done by the County Extension Association.