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Finance committee adopts amendment and reports temporary sales-tax exemption for new nonprofits (HB 2305)
Summary
The House Finance Committee reported HB 2305 as amended, creating a two-year temporary sales-and-use tax exemption window for newly formed nonprofits to meet criteria under the Institutions of Purely Public Charity Act; the committee adopted an amendment delaying the effective date to Jan. 1, 2027 (or 90 days, whichever is later).
The House Finance Committee called up House Bill 2305 and, after adopting an amendment to revise its effective date, reported the bill to the full House. The bill creates a temporary sales-and-use tax exemption that would give newly established nonprofits two years to meet the statutory criteria under the Institutions of Purely Public Charity Act; if they fail to qualify after two years, the Department of Revenue may assess unpaid sales tax.
Senior research analyst Shannon Snell summarized the bill's intent and described the statutory challenge newer organizations commonly face: meeting the "community service" criterion required to qualify as a purely public charity. Snell said newer organizations often lack documentation showing they donate or render a substantial portion of goods and services gratuitously to those in need.
As chair, Greiner called up amendment A2846 to change the bill's effective date provision from 60 days to Jan. 1, 2027 or 90 days, whichever is later. The amendment was adopted unanimously. After no further discussion, the committee reported HB 2305 as amended from the Finance Committee.
What happens next: HB 2305, as amended, proceeds to the House for further consideration. The committee record indicates the amendment was intended to give implementing agencies and organizations additional time to prepare for the exemption window.
