FAQ: Book Sales & Sales Tax

Does my library need to collect sales tax during our book sale(s)?

It depends on the number of book sales and the total length of book sales. According to the Pennsylvania Public Library Accounting Manual (pages 88-89):
804.4 However, exempt libraries are required by Pennsylvania to collect sales tax on merchandise that they sell, unless the merchandise is specifically excluded from sales tax collection. Merchandise can be excluded from sales tax if sales take place less than three times per year and for less than 7 days [total] per year. Refer to PA Code Section 32.4(b)(6)(i) [Isolated Sales]. This assumes that they are not selling these books at a location (farmer’s market, e.g.) that a for-profit bookstore is also selling at (i.e. directly competing with a vendor that is required to collect sales tax). 

If the library is required to collect sales tax, it must complete Form PA-3, “Sales Tax Return.” This form must be filed online through MyPath. For instructions on Migrating an Existing E-Tides Account to My PATH. Refer to the MyPath website for instructions. Note that a library that has received a Pennsylvania sales tax exemption number must also apply for a sales tax account number if it is making taxable sales for which it needs to collect and remit Pennsylvania sales tax. The library would do this via the Form PA-100, which can be filed online at MyPath. (Google: MyPath PA Gov because the website does not allow us to share the link directly) Payment options include ACH Debit, ACH Credit, and Credit Card. Libraries must file the Sales Tax Return and remit sales tax on a monthly, quarterly, or semiannual basis. Refer to the MyPath website last row, first block titled Additional Services; Tax Due Dates: for sales and use tax filing deadlines for the current year.
Please refer to the Retailer’s Information Guide on the PA Dept of Rev Website for a list of taxable items. Taxable items that a library might sell include, but are not limited to books, book bags/tote bags, photocopies, and rental income.

[UPDATE: IN February 2023, E-Tides migrated to MyPath. Above is still the language as it reads in the PA Public Library Accounting Manual.]

What if my organization has a year-round book sale space?

Unless the sales are a true donation (only giving, no taking), then the library will
have to submit sales tax.

What is a “true donation”?

In this case, a true donation is where any money received is disconnected from the goods available. A person can take however much they want for whatever amount of money they desire – even if the amount of money is zero. If there is any expectation of receiving money in exchange for the goods, it is not a true donation.

What if our signs say “Suggested Donation” with suggested prices or “All Sales by Donation”? Can we host more sales and not pay tax?

No. Because there is an exchange of money and item(s) and it’s not a true donation, a “suggested donation” or “by donation” is still considered a price and does not excuse less than three sales per year or less than seven days in a year.
PA Sales and Use Tax Webinar – PA Library Staff Academy (Video: 28:29)

Can we sell items such as book bags, sweatshirts, mugs, and other library branded merchandise without paying sales tax?

That depends on whether the item is taxable in Pennsylvania. For example, most clothing is non-taxable in PA, so you would not have to collect sales tax for that. Everything that is taxable in PA would require you to collect sales tax. (Review the Retailer’s Information Guide for details.)
Additionally, libraries must be careful not to incur Unrelated Business Income Tax (UBIT). An tax-exempt organization is only exempt from taxes while performing the exempt purpose of the organization, so if your sales comprise too much of your income the IRS sees it as another non-exempt business. See the UBIT FAQ for more details.