Tax Type
Corporation Income Tax
Description
Determination of Exempt Status
Topic
Exemptions
Date Issued
03-02-2000
March 2, 2000
Re: Request for Ruling: Retail Sales and Use Tax
Dear ****
This is in reply to your letters of July 25,1999, and February 8, 2000, in which you request a sales and use tax exemption for ***** (the "Taxpayer"). I apologize for the delay in responding to your inquiries.
FACTS
The Taxpayer is a nonprofit organization that is exempt from federal income taxation pursuant to § 501 (c)(3) of the Internal Revenue Code. The Taxpayer is organized for the purpose of sponsoring summer camps for the youth located in the Bristol area and provides recreational activities, crafts and Bible studies. Funding for the Taxpayer's camps comes from donations and from camp fees.
RULING
There is no general exemption from the retail sales and use tax for nonprofit organizations. The only nonprofit organizations exempt from the tax are those specially set forth in Code of Virginia ' §§I58.1-609.1 through 58.1-609.13. As set out in Title 23 of the Virginia Administrative Code 10-210-1070, the vast majority of nonprofit organizations which are exempt from federal and state income taxes are not exempt from the Virginia retail sales and use tax because they do not qualify for a sales and use tax exemption set out in the Code of Virginia.
Code of Virginia § 58.1-609.8(2) provides a sales and use tax exemption for tangible personal property purchased by nonprofit churches for use in "religious services by a congregation or church membership while meeting together in a single location ...." This exemption also extends to certain items used in the operation of camps by the church. Although the Taxpayer provides Bible studies, l understand that the participants do not constitute a congregation or membership. Therefore, this exemption is not available to the Taxpayer.
Code of Virginia § 58.1-609.8(87) provides an exemption from the tax for tangible personal property used in the operation of a summer camp for "disadvantaged children ages nine through twelve without charge to the attendees or their families." Based on the information provided, the Taxpayer is partially funded by camp fees; therefore, the Taxpayer does not qualify for this exemption.
The Virginia Courts have consistently required strict construction of exemption statutes, i.e., where there is any doubt as to the application of an exemption, the doubt is resolved against the one claiming the exemption. Based on the information provided, and under the doctrine of strict construction, the Taxpayer does not qualify for either of the exemptions cited above.
Legislation is currently being considered by the General Assembly that would allow legislative consideration of sales and use tax exemptions for nonprofit organizations in any regular session. Currently, sales and use tax exemption legislation may be considered only during regular sessions of the General Assembly convened in even-numbered years. If this legislation is passed, the department will send you the required information needed to pursue exemption legislation during the 2001 General Assembly. If you have any questions, or need additional assistance, please contact **** in the Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/24227C
Re: Request for Ruling: Retail Sales and Use Tax
Dear ****
This is in reply to your letters of July 25,1999, and February 8, 2000, in which you request a sales and use tax exemption for ***** (the "Taxpayer"). I apologize for the delay in responding to your inquiries.
FACTS
The Taxpayer is a nonprofit organization that is exempt from federal income taxation pursuant to § 501 (c)(3) of the Internal Revenue Code. The Taxpayer is organized for the purpose of sponsoring summer camps for the youth located in the Bristol area and provides recreational activities, crafts and Bible studies. Funding for the Taxpayer's camps comes from donations and from camp fees.
RULING
There is no general exemption from the retail sales and use tax for nonprofit organizations. The only nonprofit organizations exempt from the tax are those specially set forth in Code of Virginia ' §§I58.1-609.1 through 58.1-609.13. As set out in Title 23 of the Virginia Administrative Code 10-210-1070, the vast majority of nonprofit organizations which are exempt from federal and state income taxes are not exempt from the Virginia retail sales and use tax because they do not qualify for a sales and use tax exemption set out in the Code of Virginia.
Code of Virginia § 58.1-609.8(2) provides a sales and use tax exemption for tangible personal property purchased by nonprofit churches for use in "religious services by a congregation or church membership while meeting together in a single location ...." This exemption also extends to certain items used in the operation of camps by the church. Although the Taxpayer provides Bible studies, l understand that the participants do not constitute a congregation or membership. Therefore, this exemption is not available to the Taxpayer.
Code of Virginia § 58.1-609.8(87) provides an exemption from the tax for tangible personal property used in the operation of a summer camp for "disadvantaged children ages nine through twelve without charge to the attendees or their families." Based on the information provided, the Taxpayer is partially funded by camp fees; therefore, the Taxpayer does not qualify for this exemption.
The Virginia Courts have consistently required strict construction of exemption statutes, i.e., where there is any doubt as to the application of an exemption, the doubt is resolved against the one claiming the exemption. Based on the information provided, and under the doctrine of strict construction, the Taxpayer does not qualify for either of the exemptions cited above.
Legislation is currently being considered by the General Assembly that would allow legislative consideration of sales and use tax exemptions for nonprofit organizations in any regular session. Currently, sales and use tax exemption legislation may be considered only during regular sessions of the General Assembly convened in even-numbered years. If this legislation is passed, the department will send you the required information needed to pursue exemption legislation during the 2001 General Assembly. If you have any questions, or need additional assistance, please contact **** in the Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/24227C
Rulings of the Tax Commissioner