90-39 | Virginia Tax

Tax Type

Retail Sales and Use Tax

Description

Christmas trees sales by a nonprofit organization

Topic

Exemptions

Taxability of Persons and Transactions

Date Issued

03-19-1990

March 19, 1990

Re: Request for Ruling/ Sales and Use Tax

Dear*****************

This will reply to your letter of January 19, 1990 in which you requested a ruling whether the qualifies for exemption from the Virginia retail sales and use tax on sales of Christmas trees.

Facts

***************("The Club") is a nonprofit organization engaged in a wide range of humanitarian and civic activities. As a fund-raising activity, the Taxpayer sells Christmas trees during the holiday season. The Taxpayer requests a ruling whether it is required to collect and remit the sales tax on its sales of Christmas trees.

RULING

§58.1-603 of the Virginia Code imposes the sales tax "upon every person who engages in the business of selling at retail or distributing tangible personal property in this Commonwealth..." The term "sale at retail" is defined in Virginia Code §58.1-602 to mean "a sale to any person for any purpose other than for resale..."

However, Virginia Code §58.1-608(10)(b) exempts from the sales and use tax occasional sales of tangible personal property. Interpreting Va. Code §58.1-608(10)(b), Virginia Retail Sales and Use Tax Regulations §630-10-75 provides that:

- The tax does not apply to an occasional sale provided the sale or exchange is not one of a series of sales or exchanges sufficient in number, scope and character to constitute an activity requiring the holding of a certificate of registration.
  
  The term "occasional sale" means...[a] sale by a person who is engaged in sales on three or fewer separate occasions within one calendar year...

Applying the facts in this case to the statutes and regulation cited above, an organization such as the Club would normally not be required to register and collect the tax provided that it conducts three or fewer sales per year. However, registration is necessary when an organization conducts sales on more than 3 occasions during the year or makes regular sales on a seasonal basis. The Club sells the Christmas trees over approximately a 30 day period. In effect, the Club in such instances holds itself out as a retailer and may be in competition with businesses or other organizations which are required to collect the tax due to their sales activities.

Based on the above, I find no basis in this case for waiving the requirement that the sales tax be collected. However, it should be possible to reduce the administrative burden upon the Club by allowing it to file a temporary or seasonal registration. If such a temporary or seasonal registration is desired, please contact the department's ************* District office.

Sincerely,

W. H. Forst
Tax Commissioner

Rulings of the Tax Commissioner