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Frequently Asked Questions

Here are posted questions/answers for FAQ's concerning Library Development

Friends & Foundations

Are there any health regulations that must be followed for bake sale items?

Our State Library research staff person, Patsy Kringel, called the State Health Dept. Doug Kozel, (605)773-3499, who said that if it is for a non-profit there are no specific regulations. Or, at least they do not check those. Use your own judgment if you are serving something that will breed bacteria (banana cream pie topped with meringue was the example he gave). He also said you should check with the city to see if there are any local codes one must follow.

Would an auditor consider a library having a petty cash fund an acceptable practice?

Answered by Jo Riley, Dept. of Revenue and Regulations: An auditor would not tax a petty cash fund unless you purchased items with the money & did not pay sales tax at the time of purchase. Sales or use tax is due only if a "transaction" occurs which would be the sale of tangible personal property (tpp) or services. (I'm not sure this actually answers the question, but she did not indicate that there was anything wrong with having a petty cash fund. You may want to ask an attorney or accountant if you want more information.)

Let's say that a library has a donation jar out and people drop money into it. This money is then put into a petty cash fund. Since it is from private donations, is sales tax owed?

Answered by Jo Riley, Dept. of Revenue and Regulations: Donations are not subject to sales tax unless you sold items to receive the "donations."

Agricultural products and livestock are exempt products, so would any tax apply?

When State Library staff received this training, the question came up about tax on a cow donated for a Friends Group or Foundation raffle. The answer at that time was that the Friends or Foundation does not owe state sales tax, but would owe Use Tax on the fair market value of the beef.

Answered by Jo Riley, Dept. of Revenue and Regulations: The purchase of livestock for the producing, raising, growing, or harvesting of food or fiber upon agricultural land, including dairy products, livestock, and crops is exempt from sales or use tax, but you don't meet the definition (for agricultural purposes), so your gift of the cow would be subject to sales or use tax. Jo used the word "purchase" although the cow was donated for the purpose of the Foundation and it would be subject to sales or use tax if it was purchased from the rancher or processor.

If a library has a gift or memorial fund, can that money be transferred into a Foundation to get a Foundation started?

Answered by Teresa Bray at the Secretary of State’s office: contact a tax attorney, as this is outside the boundaries of the Secretary of State’s office.