The combination of a Kentucky Supreme Court ruling and tax reform passed by the General Assembly earlier this year got the attention of nonprofit organizations that were hit where it hurts – in the pocketbook.

Now, with a new legislative session scheduled to start in January, it’s the turn of those nonprofits to get the attention of state legislators who can do something about a new environment that finds nonprofits from churches to entertainment venues having to charge a 6 percent sales tax on fundraising events.

“A lot of people are concerned,” Orchestra Kentucky Executive Director Scott Watkins said. “It may seem like a small amount, but some people have said it puts the ticket price to where it’s a little more than they can afford.”

Arising out of a March Supreme Court ruling that nonprofits aren’t exempt from collecting taxes, and exacerbated by the state legislature’s revenue bill that imposed taxes on numerous services and expanded the definition of “admissions” to include participatory events often sponsored by nonprofits, the sales tax requirement hit nonprofits in July. Many have begun to feel the effects.

“We have had people complain verbally to us about the tax,” Watkins said. “We know that if there’s one person talking about it, there are others we don’t hear from who won’t buy tickets.”

At the recent Bowling Green International Festival, the president of the festival’s board of directors saw firsthand how the sales tax mandate affected that event.

“The impact we felt was both on the gate admissions and on the fees we charge vendors,” Angela Jones said. “We did assess the sales tax when we calculated vendor fees this year. Several expressed frustration with the fee.”

Jones said the International Festival didn’t raise ticket prices this year, opting to absorb the cost of the sales tax.

“We calculate that we will owe about $1,500,” Jones said. “That’s money that we won’t be able to invest back into the festival.”

Although her nonprofit hasn’t held any fundraisers since the revenue bill took effect, Ashley Reynolds of South Central Kentucky Kids on the Block has heard from colleagues in other charitable organizations who have already had to ante up that 6 percent.

“It has already started impacting nonprofits in the area,” Reynolds said. “It would affect us with events we have coming up next year. It’s definitely weighing heavily on nonprofits. It’s one more thing to deal with. I’m hoping it will be overturned, but we’re operating like it’s not.”

Nonprofit leaders like Reynolds have been voicing their opinions about the sales tax mandate, and legislators are listening.

In fact, a bill prefiled by State Rep. David Osborne, R-Prospect, has picked up endorsements from 37 of his colleagues in the House of Representatives. Called Bill Request 76, Osborne’s proposed legislation would maintain a tax exemption on the purchase of admission tickets sponsored by any nonprofit, charitable or religious organization.

“There was clearly never any intent for a tax on these types of purchases, but unfortunately the Department of Revenue has interpreted House Bill 366 differently,” Osborne said. “What this bill does is clarify a portion of the law so that admission to events sponsored by these organizations are not taxed in the future. We will continue to evaluate other concerns and misinterpretations and make sure the bill is being interpreted as the legislature intended.”

With many of his fellow legislators already on board, Osborne said: “I fully anticipate that we’ll pass the bill shortly after going into session. I think it’s going to have broad support.”

Osborne admits to being prompted by some nonprofits into crafting the bill.

“There was quite a bit of concern in the nonprofit community,” he said. “There was quite a bit of pushback, and there should be.”

Kentucky Senate President Robert Stivers is on board with Osborne’s bill and expressed his support in a guest article in the Kentucky Gazette.

“It was never the intent of the legislature to force nonprofits to charge sales tax on tangible items or admissions to events,” Stivers wrote. “I expect the General Assembly to act quickly on this measure to provide relief for the nonprofit community in the commonwealth.”

That would suit nonprofit leaders like the International Festival’s Jones.

“That (reinstating the tax exemption) would make life simpler and make it easier for us to provide the best event possible for Bowling Green,” Jones said.