Local non-profits adjusting to new state sales tax
On July 1st, the state of Kentucky enacted a law that now requires 17 business services to add a 6% sales tax to all their transactions. That new law also applies to local non-profit organizations like WKU Athletics, SKyPAC, and Orchestra Kentucky, who never before had to apply such a tax to their ticket sales.
"This is just something that really took us by surprise," said Scott Watkins, Executive Director for Orchestra Kentucky.
Watkins wasn’t the only one caught off guard by the new tax.
"My initial thoughts were it was going to complicate things for the customer, " Tom Carto, President and CEO of SKyPAC said. "It’s going to complicate things for us from a financial standpoint."
While the tax will primarily be applied to ticket sales, with any sold before July 1st being exempt, both groups understand that the box office won’t be the only area they expect to see an impact.
"There’s also some complex things that we do in rentals for our clients that we’re going to have to tax labor and some things on those invoices," said Carto.
Non-profits normally don’t deal with this kind of tax regulations because they already face challenges to break even within their budget. The new tax law has both SKyPAC and Orchestra Kentucky worried that they could lose customers because of it.
"We’re trying to maintain our business, and we’re trying to grow the business," Watkins mentioned. "We feel a good, established support base, and we are concerned that that will cut into that."
According to Carto and Watkins, the Kentucky Department of Revenue never consulted with non-profit organizations about the tax and how it might affect them, so now groups just like SKyPAC and Orchestra Kentucky are catching up with the full details behind the reason for the forced implementation of this new sales tax.
"I think it was just something the state decided they wanted to do to get income into state coffers," Carto said. "We became part of that."
"We weren’t informed about it and we weren’t educated about what was happening until after the fact," Watkins added. "We’re trying to catch ourselves up to speed."