Nonprofit organizations in Nebraska must generally collect sales tax on items they sell. Exceptions include raffles, bingo, and free will donation car washes. To collect sales tax, nonprofits must obtain a sales tax permit from the Nebraska Department of Revenue. They must also provide documentation of the fair market value of items received through donations and fundraisers to determine the portion subject to sales tax. Bingo and raffles are also regulated activities in Nebraska that require licenses, with specific rules around prize amounts, frequency of events, and use of proceeds. Nonprofits must provide donor acknowledgment letters for contributions over $250 to allow donors to claim tax deductions.

1. LIBRARY LAW
Collecting Sales Tax
By: Stephanie R. Otto1
I. General
For a summary of nonprofit sales tax obligations, see the Information Guide for
Nonprofits from the Nebraska Department of Revenue at
http://www.revenue.nebraska.gov/info/7-215.pdf. Nonprofit organizations, with very limited
exceptions, must collect sales tax on items they sell. The Nebraska Department of Revenue
provides rules and examples for the following situations:
 Items Purchased and Resold (Yes)
 Book Sale (Yes)
 Sales (In General) (Yes)
 Sales (Donated Items) (Yes)
 Rummage Sale (Yes)
 Fundraisers (in General) (Yes)
 Pancake Feed (Yes)
 Car Washes (Yes – unless free will donation)
 Raffles (No)
 Bingo (No)
Raffle, bingo, and free will donation car washes do not require collecting sales tax. Otherwise,
sales tax generally needs to be collected because the purchaser is receiving a good or service for
a price paid. There are no special exceptions that would help a nonprofit avoid collecting sales
tax in these instances, such as holding a one-time activity or shortened event.
Governmental entities are also required to collect sales tax. For a summary of
governmental entity sales tax obligations, see the Information Guide for Governmental Units
from the Nebraska Department of Revenue at http://www.revenue.nebraska.gov/info/6-352.pdf,
and the Notice of Sales Tax Collection Responsibilities of Governmental Units at Fundraising
Events at http://www.revenue.nebraska.gov/info/6-529.pdf.
II. Best Practices
For donations received from event admissions, transferring property, or receiving
services, the organization must determine the fair market value of the admission, property, or
service. The amount the organization receives that represents the fair market value of the
admission, property, or service is a retail sale and sales tax must be collected on this amount. The
organization must state the fair market value of the admission, property, or service on the ticket.
If the fair market value and donation amount are not stated, the total charged is taxable. The
Department of Revenue provides the following examples of how to state this on the ticket.
1 Law Clerk – Knudsen, Berkheimer, Richardson & Endacott, LLP

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Example 1: A nonprofit organization holds a pancake feed in Lincoln. The amount
charged to contributors is $15. The fair market value of the pancake meal is $5. The
organization indicates on the ticket:
Pancakes $5.00
Tax at 7% .35
Contribution 9.65
Total $15.00
Example 2: A nonprofit organization offers a big screen TV (provided by the local
furniture store) or one year of house cleaning service (provided by a local house cleaning
business) in exchange for a contribution. The amount of the contribution is $3,000. The
TV and the house cleaning service are each valued at $1,000 (fair market value).
If the contributor’s receipt indicates only the total contribution amount of $3,000, then
the organization must collect and remit the Nebraska and local sales tax on the total
amount contributed of $3,000. If, however, the contributor’s receipt indicates that the fair
market value of the TV or the cleaning service is $1,000, then tax is collected and
remitted only on the $1,000 fair market value amount indicated.
While most items are taxable, certain items are not. The most notable item is food. In
Nebraska, the sale of food ingredients which are generally for home preparation and
consumption are not taxable, such as fruits, meats, and vegetables. Prepared foods are taxable,
such as pancakes, hamburgers, and ice cream sundaes.
III. Collecting Sales Tax
Obtain a Nebraska sales tax permit by submitting Nebraska Tax Application, Form 20, to
the Department of Revenue at http://www.revenue.nebraska.gov/tax/current/fill-in/f_20.pdf.
Current state and local sales tax rates are between 6.0% and 7.5%. Always use the most recent
area rates available online at http://www.revenue.nebraska.gov/ratefinder.html. Currently,
Dakota County is the only county imposing a 0.5% county sales tax. To remit sales tax, file Form
10 online at https://ndr-efs.ne.gov/revefs/allPages/login.faces. The due date of Nebraska sales tax
returns depends on the amount of sales made.
Yearly Tax
Liability
Filing Frequency
Less than $900 Annually
$900 to $2,999 Quarterly
$3,000 or more Monthly
Nebraska sales tax returns are due by the 20th of the month following the reporting
period.
IV. More Information
For more information on Nebraska sales tax filing and rates, see
http://www.revenue.nebraska.gov/salestax.html. A copy of the sales tax regulations is at
http://www.revenue.nebraska.gov/legal/regs/slstaxregs.html. If you have further questions,
contact Nebraska Taxpayer Assistance at 1-800-742-7474 or 402-471-5729.

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Fundraising Laws
I. Nebraska Charitable Gift Annuity Registration
No filing is required in Nebraska for charitable gift annuities, but charities must have
been in continuous operation for at least 3 years in order to issue gift annuities. The Charitable
Gift Annuity Act can be found at Neb. Rev. Stat. §59-1801 to §59-1803.
II. Nebraska Charitable Solicitation Registration
Nebraska’s charitable registration law was repealed in 1996.
III. Nebraska Class I or II Bingo License (§9-201 to §9-266)
The Nebraska Bingo Act can be found at
http://www.revenue.nebraska.gov/gaming/statute/bingoact.pdf. The Nebraska Department of
Revenue – Charitable Gaming Division is in charge of regulating bingo. The primary
requirement for an organization to qualify for bingo licensure is to be in existence for 5-years
continuously immediately prior to licensure. Additional requirements for operating bingo are
detailed and can be found at http://www.revenue.nebraska.gov/gaming/bingo.html. Some of the
notable requirements are:
 Participants may be under 18 years of age as long as no alcohol is served at the event
and prize values do not exceed $25 per game.
 Bingo gross receipts must be kept in a separate checking account.
 No single bingo game can exceed $1,000 and the aggregate value of all bingo prizes
at any bingo occasion cannot exceed $4,000.
 At least 50% of gross bingo receipts are to be awarded as prizes during the calendar
quarter.
 The percent of gross receipts paid as prizes from the prior quarter is to be posted.
 No more than 10 bingo occasions can be held per month.
 Bingo premises cannot be used more than 2 times per week.
 Bingo cannot be held for longer than 6 consecutive hours; and cannot begin within 3
hours of completing another bingo occasion on the same premises. (exception for
special event or limited period bingo).
 There is a state tax of 3% of bingo gross receipts.
 Food and beverage expenses served at the event cannot be paid with bingo receipts.
 Bingo equipment must be obtained from a licensed distributor.
There are two classes of Bingo: Class I and Class II. Class I licensure is for organizations
with gross bingo receipts less than $100,00 per 12-month period beginning October 1st. Class II
licensure is for organizations with gross bingo receipts of $100,00 or more per 12-month period
beginning October 1st. For bingo application forms, visit the Nebraska Department of Revenue’s
website at http://www.revenue.nebraska.gov/gaming/bingoform.html.
To register for a bingo license, complete the Nebraska Application for Bingo, Lottery, or
Lottery by Pickle Card, Form 50. The fees associated with bingo depend on the type of license.
For a Class I license, fees include the $30 application fee plus $40 for each utilization of funds
member. For a Class II license, fees include the $100 application fee plus $40 for each utilization
of funds member plus $100 for each gaming manager. Licenses need to be renewed biennially by

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September 30. Renewal applications are mailed 45 days prior to the due date. All information
must also be filed with the county clerk and city clerk where the bingo is conducted.
A bingo licensee is eligible to request a limited period bingo authorization. A limited
period bingo is a bingo occasion in which the Department of Revenue authorizes a licensed
organization to conduct in addition to the organization’s regularly scheduled bingo occasions.
A. Special Event Bingo (§9-230.01)
For Libraries, Special Event Bingo may be an option. Qualifying nonprofit organizations
may conduct small stakes bingo games up to two times per calendar year, and are exempt from
the licensing, reporting, and bingo tax requirements which apply to licensed, ongoing bingo
games.
There are limitations on holding Special Event Bingo. These limitations include:
 The two special events must not exceed a total of 14 days.
 Bingo cannot be the primary function of the event; the bingo event must be held more
for social or recreational purposes, as opposed to being a major fundraising activity.
 Bingo cards can cost no more than $0.25.
 No single prize can exceed $25 in value.
 Special event bingo workers must be volunteers; they cannot be paid and must be at
least 18 years old.
 The event must be held in the county where the organization has its principal office.
 The gross receipts from special event bingo may only be used for awarding prizes and
expenses associated with the special event bingo game. Any remaining funds must be
used only for a lawful purpose as defined in the Nebraska Bingo Act, which includes
any activity conducted by a charitable organization.
Qualifying nonprofit organizations may conduct a special event bingo after applying for
and receiving a special event bingo permit from the Charitable Gaming Division of the Nebraska
Department of Revenue. To obtain a permit, complete Form 50j and submit the $15 fee at least
10 days prior to the state date of the event. For more information on special event bingo, see the
Nebraska Department of Revenue’s Information Guide at
http://www.revenue.nebraska.gov/gaming/infoguide/spec_bingo.pdf
IV. Nebraska Class I or II Lottery by Pickle Card License (§9-401 to §9-437; §9-501 to §9-
513)
While not typically thought of for fundraising, pickle card is regulated by the Nebraska
Department of Revenue - Charitable Gaming Division. The primary requirement for an
organization to qualify for bingo licensure is to be in existence for 5-years continuously
immediately prior to licensure. For more information on pickle card licensure, visit
http://www.revenue.nebraska.gov/gaming/pickcard.html.
V. Nebraska Lottery/Raffle License (§35-400 to 35-410; §35-500 to 35-504)
The Nebraska Department of Revenue – Charitable Gaming Division is in charge of
regulating lotteries and raffles. In general, the difference between lotteries and raffles is that
lotteries involve cash prizes and raffles involve merchandise prizes. The primary requirement for
an organization to qualify for a lottery/raffle license is to be in existence continuously for the 5-
years immediately prior to licensure. Additional requirements for operating bingo are detailed

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and can be found at http://www.revenue.nebraska.gov/gaming/lottraff.html. Some of the notable
requirements are:
 The organization must have at least 10 members.
 A separate bank account must be used exclusively for lottery/raffle activities.
 At least 65% of gross proceeds of each licensed lottery/raffle must be awarded as
prizes to participants.
 Up to 10% of gross proceeds may pay lottery/raffle expenses.
 Participants must be at least 18 years of age.
 The profits must be used for charitable or community betterment purposes.
A lottery/raffle license is required if gross proceeds exceed $1,000 for a lottery, or $5,000
for a raffle. If licensed, an organization can conduct as many lotteries and raffles as desire. If the
organization is located in Lincoln or Omaha, or Lancaster or Douglas County, the organization
may need to obtain an additional local permit. Contact the city or county clerks to see if a local
permit or tax obligations apply.
An organization licensed to conduct lotteries/raffles must designate at least one member
to be licensed as the Utilization of Funds Member (UFM). The UFM is responsible for all
lottery/raffle activity. This involves supervising and coordinating, as well as ensuring all laws,
rules, and regulations are met by all persons involved in the lottery/raffle. The UFM must be a
member of the organization for at least one year to be licensed.
A licensed organization is required to file quarterly and annual reports. There is also a 2%
state tax on gross proceeds on lotteries exceeding $1,000 and raffles exceeding $5,000. There is
also federal tax Form W-2G that may need to be completed. Refer to IRS Publication 3079 for
more information on Form W-2G. Further, there is a required federal withholding of 28% if the
value of the prize is more than $5,000. There is also a Nebraska withholding of 5%.
A. Special Permit
For an organization who wishes to conduct a small lottery or raffle, a special permit may
provide an easier route. A licensed organization may apply for a one special permit in a 12-
month period beginning October 1. The permit is valid for up to 3 consecutive months and
exempts the organization from the following limits:
 65% prize payout
 10% expense limitation
 18 years of age participation restriction
 No separate bank account
 No taxes
 No reporting requirements
 Having at least 10 members
Qualifying organizations may conduct one lottery per month that does not exceed $1,000
gross proceeds, and an unlimited number of raffles that do not exceed $5,000 gross proceeds per
month. However, if a organization begins selling tickets under the Nebraska Small Lottery and
Raffle Act, it must stop selling tickets when it reaches the $1,000/$5,000 limits. It cannot
upgrade a small lottery/raffle to a licensed lottery/raffle once ticket sales have begun.
To register for a lottery/raffle license or special permit, complete the Nebraska
Application for Bingo, Lottery, or Lottery by Pickle Card, Form 50 which is available at
http://www.revenue.nebraska.gov/gaming/bingoform.html. Complete Form 50h to designate the
Utilization of Funds Member which is available at
http://www.revenue.nebraska.gov/gaming/forms/fillable/f_50h.pdf. The fee is $30 for a

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lottery/raffle license, $10 for a special permit, and $40 for each utilization of funds member.
Renewals are due biennially by September 30. Renewal application are sent in the mail 45 days
prior to the due date.
Donor Acknowledgment Letters
Donors giving more than $250 in a single contribution to a charitable organization need a
written acknowledgment from the organization to claim the deduction on income tax return.
Providing the donor with a letter by the time the person files their tax return is sufficient –
providing it right after the donation is received is best! Include the following items on the
acknowledgment:
 Organization’s name.
 Donor’s name.
 Date of the donation.
 Contribution description or amount. List the dollar amount of any cash received
and describe any non-cash items received. Do not list the value of non-cash items
received.
 Value of goods/services the donor received. Describe any goods or services the
donor received in exchange for their donation, and estimate of the value of the goods
or services. If no goods or services were received by the donor, state this.
Also, use this as an opportunity to show your appreciation for the donation. They might
think of organization again next year! For more information, see IRS Publication 1771 at
https://www.irs.gov/pub/irs-pdf/p1771.pdf.