LANSING, Mich.—State Sen. Mike Green introduced a package of bills Tuesday to exempt veteran service organizations (VSOs) from charging or paying sales tax on fundraiser revenue.
Current state law provides an exemption to 501(c)(3) nonprofit organizations if their annual revenue is less than $5,000. VSOs do not qualify because they were originally chartered by Congress as 501(c)(19) entities.
Green’s legislation would make these veteran groups eligible for the exemption and increase the allowable sales threshold for all groups to $25,000. The threshold has not been updated since the 1990s.
“Michigan should recognize the critical role that local veterans groups fill in assisting our veterans by treating them in the tax code the same as we do other charitable causes,” said Green, R-Mayville. “Without these dedicated posts in our communities, so many veterans would fall through the cracks and that, to me, is unacceptable.”
VSOs include the Veterans of Foreign Wars, American Legion, and American Veterans, among others. Although VSOs provide extensive charitable and honorary services to active duty service members and local veterans, they are not offered the sales tax exemption.
Many local VSO posts are struggling financially due to declining membership, increased costs and tough economic times. While the legislation would have a negligible impact on the state budget, it could mean a lot for posts on the verge of closure.
“This small change may be just enough to help a post keep its doors open and continue helping their fellow soldiers, sailors, airmen and marines,” Green said.
During the 2011-12 legislative session, Green introduced a similar bill after a local veterans group in his district was subjected to the sales tax on proceeds raised during a fundraiser for a soldier severely wounded during combat operations in Afghanistan.