Sales taxUnder the provisions of the California Sales and Use Tax Law, student body organizations are required to pay sales tax for selling tangible personal property at retail. If no tax is paid when the goods are purchased by the student body, then they are required to pay sales tax on the gross sales price of the items sold. If goods are purchased at retail and sales tax is paid at that time, then the student body is required to pay sales tax on the difference between the purchase price and the selling price. Student bodies are exempt from paying taxes on items sold on an irregular or intermittent basis (fundraisers). Sales tax laws change each year. It is important that current sales tax laws are known by the student body. The internal auditor can assist the student body with the current law.
Other TaxesThe student body does not pay any other taxes. In particular, they do not pay payroll taxes since employees must be paid by the district. The district is considered the employer in all cases. The student body must reimburse the district for employees paid by the district on behalf of the student body.
IRS 1099 FormWhen services are performed for the student body by a non-district employee, the amount paid each calendar year (January to December) must be reported to the Internal Revenue Service. IRS Form 1099, Amounts Paid to An Independent Contractor, is used for this purpose. This form can be filed district wide by the district office since the student body is not a separate entity.