TRENTON – Legislation sponsored by Senators Barbara Buono and Joseph Vitale that would exempt nonprofit organizations such as the YMCA from having to collect sales taxes on membership fees was approved by the Senate Budget and Appropriations Committee today.
“It was never the intent of the Legislature that non-profit groups would ever have to collect sales taxes,” said Senator Buono, D-Middlesex. “We knew it would place a severe hardship on groups like the YMCA, which look to serve broad communities while keeping their membership fees as low as possible.”
“The decision by the Treasury to require non-profits to collect sales taxes was completely illogical and for some groups, nearly impossible,” said Senator Vitale, D-Middlesex. “Some groups are looking at possible program cuts in order to find the money to cover their sudden tax bills. That’s not acceptable.”
The Senators noted that the Department of the Treasury originally announced in August that organizations such at the YMCA would be exempt from the sales tax because of their non-profit status, but subsequently reversed that decision in September, ruling that the sales tax applies because they are in “substantial competition with privately operated non-exempt business entities.”
The Treasury Department ruling came just days before the sales tax changes went into effect and many groups affected by the ruling are finding it difficult to collect the sales tax retroactively on yearly dues paid before October 1. Groups such as the YMCA have reported that they will have to reduce program offerings in order to make up the difference.
“Non-profits like the YMCA play such an integral part in our communities. There is so little for the State to gain by taxing them and so much that our communities can lose. This is simply the right thing to do,” added Senator Vitale.
Senator Buono added, “We need make sure these groups can continue help New Jersey’s children and families to grow and succeed. I can’t imagine what we would do without the programs they provide every single day.”
The bill, S-2269/2289, would exclude the charges for fees and dues of certain public and nonprofit clubs and organizations from the sales and use tax. In particular, the bill would exempt the fees and dues that are charged for access to health and fitness, athletic, sporting, and shopping clubs and facilities of nonprofit organizations and local governments, which were made taxable under the provisions of the sales tax extensions enacted in July.
In addition, the bill would exempt initiation fees that are imposed on all health and fitness, athletic, sporting or shopping clubs or organizations in New Jersey, as well as parking fees if the services are provided by a county or local government.
The bill passed by a vote of 13-0 and now goes to the full Senate for their consideration.