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At the Louisiana Restaurant Association, we frequently receive questions from our members regarding sales tax exemptions for non-profit organizations. Many assume that being a “tax-exempt” organization automatically means exemption from all taxes, but that is not the case.

This clarification comes from the Louisiana Department of Revenue Attorney, Tax Policy and Planning, and we encourage restaurant operators, event venues, and their accounting teams to take note.

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Do Non-Profit Organizations Pay Sales Tax on Food Purchases?

In Louisiana, non-profit organizations that are exempt from federal income tax under 501(c)(3) are not automatically exempt from state sales tax. If food is prepared and served at a restaurant or event space, it is generally subject to Louisiana state sales tax, regardless of the organization's tax-exempt status.

Key Louisiana Sales Tax Regulations:

• Louisiana Revised Statute (R.S.) 47:301(12)(a) defines a taxable sale as the transfer of possession of property in exchange for payment, including the preparation and serving of food for consumption on the premises.
• La. Admin Code. tit. 61, Pt I, § 4301 reinforces that food served at restaurants or event spaces is taxable.

Are There Any Exemptions?

Yes, some organizations are exempt, but only under specific circumstances.

Who is Exempt?

Government Entities & Public Institutions

• Government agencies, public universities, and public schools are fully exempt from state and local sales taxes, including on food purchases.
• These entities must provide a sales tax exemption certificate to vendors. If documentation is unavailable, vendors can verify the exemption with the Louisiana Department of Revenue (LDR).

Non-Profits with Specific Sales Tax Exemptions

• Some non-profit organizations may have a Louisiana state sales tax exemption, but this is not automatic.
• Vendors should presume tax is due unless the customer provides proof of exemption.

What Should Restaurants and Event Venues Do?

1. Ask for Documentation – If a non-profit claims sales tax exemption, request a valid Louisiana sales tax exemption certificate.
2. Verify Government Exemptions – For public institutions, a quick check with LDR can confirm their status.
3. When in Doubt, Charge Sales Tax – Unless an organization proves exemption, vendors should collect and remit sales tax to avoid liability.

Final Takeaway

While non-profit organizations are often exempt from federal income tax, this does not automatically extend to Louisiana state sales tax. Food prepared and served at restaurants or event spaces is generally taxable, unless a specific exemption applies.

For further details, consult with your CPA, bookkeeper, or contact LRA Communications at communications@lra.org.