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Bill would equalize sales‑tax treatment for nonprofit fundraisers in public and private venues
Summary
Senate Bill 2,369 would remove a sales‑tax disparity that currently subjects nonprofits’ gross proceeds over $10,000 to tax when events are held in public facilities but exempts similar events in private venues; nonprofits testified that the rule diverts charitable dollars from missions and creates administrative confusion.
Senate Finance and Taxation Committee members heard testimony on Senate Bill 2,369, which would apply the same sales‑tax treatment to nonprofit fundraising events held in publicly owned venues as currently applies to private venues when the nonprofit pays market‑rate rental fees.
Senator Sean Clary, sponsor of the bill, said the change would avoid arbitrary differences based on venue ownership and that the key test should be whether the nonprofit pays market rates for facility use. ‘‘If a nonprofit’s paying to use a facility in the same way they’d pay to use a private facility, the law should apply equally,’’ Clary told the committee.
Amanda Godfried, regional director for Make‑A‑Wish North Dakota, described two recent large galas hosted at a public college facility in Bismarck where the nonprofit paid market rental fees and incurred standard event production costs. Godfried said her organization believed the event was tax‑exempt in earlier years but this year was informed the state interprets the law to tax gross receipts above $10,000 for events in public facilities, which “means thousands of dollars that generous North Dakotans have donated … were instead redirected to state sales tax.” She said the statute and online guidance led to confusion about whether the taxable base is total gross receipts or some subset of sales.
Sean McKenna of the North Dakota Association of Nonprofit Organizations and other nonprofit advocates urged the committee to adopt the bill, saying nonprofits often choose public venues for size and availability, not cost, and that the current rule creates an arbitrary competitive distortion between public and private venues.
Tax department staff explained the statutory history: admissions to entertainment or athletic activities are taxable in North Dakota, with an exemption introduced in 2001 and raised to $10,000 in 2011 for certain facilities. Associate Director Shannon Fleisher clarified that the current exemption applies differently depending on venue ownership and that “nonprofits are not sales tax exempt in North Dakota” for purchases; she noted complexities in how admissions and donations interact with the taxable base and said the department has guidance but that some aspects are administratively confusing.
Committee members asked whether the rule could be gamed by structuring events as donations rather than admissions and about competitive effects if public venues are effectively treated like private venues. Tax department staff cautioned that draft language could have unintended administration effects if it alters the statutory structure protecting against routine commercial competition; they recommended careful drafting to preserve existing caveats (for regular recurring activities, online sales, seasonal locations) that the current law contains.
The hearing record shows broad nonprofit support and commercial venue concerns flagged by committee members; the committee closed the hearing without immediate action to allow staff and sponsors to refine statutory language.
