Can you use tax ID number for tax free purchases?

Renae,

I'm thinking your question stems from the fact that your HOA is a nonprofit corp. If this is correct, then I must state that "nonprofit" does not necessarily mean tax exempt. Only a tax exempt corp can use their tax ID # to avoid paying sales taxes. Most HOAs are nonprofits but are not tax exempt corps. To be a tax exempt HOA you must be a 501C corp - a designation issued by the IRS. In which case your fed tax returns would be filed on form 990 instead of 1120H (specific to HOAs) or 1120 (corps).

I agree with Mary, but I'll take it a step further, The Tax ID (the one used by the HOA to file their income taxes) may not be the same as the one needed to be exempt from paying sales tax. I am familiar with the sales tax laws of a few states, having purchased and sold merchandise in them. Generally, a sales and use tax exemption certificate is required. To get one, you typically have to be a 501c tax-exempt organization, as Mary said, or you have to be a vendor that sells goods at retail. The laws in the states I'm familiar with require that the vendor selling the merchandise have on file a copy of the state sales tax exemption certificate issued to the organization or vendor that the merchandise is being sold to. Providing a tax ID number is not enough.

Also, even a vendor that sells merchandise at retail must pay sales and use tax on goods that are used and not sold. The only difference being that the vendor doesn't have to pay the tax to the vendor that he/she bought the goods from. The vendor can pay the tax on the goods he/she used directly on the same return that the vendor pays the tax collected on the goods he/she sold.

Yes, that has been my experience, too.

Dwight,

BTW, Thanks for the nice response last week on a personal note.