Photo Credit: Mississippi Corvette Club
Two things in life are said to be certain: death and taxes.
Apparently the latter part of that saying applies even if you’re a Corvette Club that’s just raising money for charity.
That’s what officials with the 2015 Mississippi Corvette Classic car show in Jackson were shocked to find out recently for the first time.
“We raise money for charity every year,” said Tom Gerity, vice president and treasurer of the Mississippi Corvette Club and a retired lawyer. “This is the first year we’ve ever been told this.”
The car show leaders were informed by the state Department of Revenue that even though the Corvette Club is a registered 501 (c) (7) non profit social club, exempt from federal and state income taxes, it isn’t exempt from paying 4 percent sales tax on admissions and in addition, vendors at the show are required to pay 7 percent sales tax.
Last year’s show netted about $13,000 for the Make-A-Wish charity, while this year’s profits are slated for the Diabetes Foundation of Mississippi.
Gerity said he was told by DOR that he had to serve as an uncompensated deputy tax collector, collecting sales taxes from all the vendors at the event.
“They’re wanting a 3-percent tax on the $5 donation we request at the door when you come in the show, plus 1 percent to the city of Jackson,” Gerity added. “Then, we have a fee of $40 for cars to be in the show, and they want taxes from that. A nonprofit civic organization is not subject to taxes on admissions.”
State Department of Revenue spokeswoman Kathy Waterbury said the agency “looked carefully” to make sure the Corvette Club wasn’t exempt but found that the club still had to collect sales tax. On the other hand, if the Diabetes Foundation had been the promoter, it would qualify, she said.
She declined to explain the difference between the two organizations.
“The promoter in this case did not meet the definition required in law for exemption,” Waterbury said. “… Unless you are specifically exempt by law, an admission tax is due, even if you call it a donation but require it for people who enter.”
The bottom line is that the Corvette Club was required to provide DOR a $500 bond on Friday “I guess to make sure we collect the taxes,” Gerity said.
Still, he and the club believe that since it gives every cent of what it raises to charity, “this is not right.”