Tax Type
Retail Sales and Use Tax
Description
Class ring sales to students of nonprofit school; Commissions paid to nonprofit school
Topic
Exemptions
Date Issued
03-08-2001
March 8, 2001
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear ****
This will reply to your letter in which you seek correction of the retail sales and use tax audit assessment issued to **** (the "Taxpayer"), for the period March 1996 through March 1999.
FACTS
The Taxpayer is in the business of selling class rings and yearbooks to students attending elementary and secondary schools throughout Virginia. As a result of an audit, the Taxpayer was assessed tax on the sales of class rings to students attending nonprofit elementary and secondary schools. The Taxpayer paid to the nonprofit schools a commission on the sales of class rings to the students. The auditor assessed the tax on the sales of class rings because the Taxpayer had not indicated on the sales invoice that a commission was to be paid to the nonprofit school. The Taxpayer is taking exception to the audit findings based on the exemption provided under Code of Virginia § 58.1-609.4(8).
DETERMINATION
Code of Virginia § 58.1-609.4(8) provides, in part, that "the tax shall not apply to the sale of class rings, school photographs, and other fund-raising programs from which a nonprofit elementary or secondary school receives a commission on the net proceeds after the payment of vendors and other direct expenses." There is no provision in the exemption statute, or the regulations, which mandates that the invoice must state that the nonprofit school will receive a commission on sales of class rings.
The auditor relied on Public Document (P.D.) 88-107 (5/12/88) in making the assessment. However, it was not the intent in P.D. 88-107 to mandate that the amount of commission paid to nonprofit schools on the sale of class rings be shown on the invoice. The ruling merely required that when a vendor did provide a separate line item amount on an invoice, and the separately stated amount did represent a commission, it must be identified as a commission on the invoice.
Based on all of the above, and upon verification by the auditor that the Taxpayer did in fact pay a commission to nonprofit schools on the sales of class rings to students, the audit will be adjusted accordingly. If you should have any questions concerning this determination, please contact **** Office of Tax Policy, at ****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/31957K
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear ****
This will reply to your letter in which you seek correction of the retail sales and use tax audit assessment issued to **** (the "Taxpayer"), for the period March 1996 through March 1999.
FACTS
The Taxpayer is in the business of selling class rings and yearbooks to students attending elementary and secondary schools throughout Virginia. As a result of an audit, the Taxpayer was assessed tax on the sales of class rings to students attending nonprofit elementary and secondary schools. The Taxpayer paid to the nonprofit schools a commission on the sales of class rings to the students. The auditor assessed the tax on the sales of class rings because the Taxpayer had not indicated on the sales invoice that a commission was to be paid to the nonprofit school. The Taxpayer is taking exception to the audit findings based on the exemption provided under Code of Virginia § 58.1-609.4(8).
DETERMINATION
Code of Virginia § 58.1-609.4(8) provides, in part, that "the tax shall not apply to the sale of class rings, school photographs, and other fund-raising programs from which a nonprofit elementary or secondary school receives a commission on the net proceeds after the payment of vendors and other direct expenses." There is no provision in the exemption statute, or the regulations, which mandates that the invoice must state that the nonprofit school will receive a commission on sales of class rings.
The auditor relied on Public Document (P.D.) 88-107 (5/12/88) in making the assessment. However, it was not the intent in P.D. 88-107 to mandate that the amount of commission paid to nonprofit schools on the sale of class rings be shown on the invoice. The ruling merely required that when a vendor did provide a separate line item amount on an invoice, and the separately stated amount did represent a commission, it must be identified as a commission on the invoice.
Based on all of the above, and upon verification by the auditor that the Taxpayer did in fact pay a commission to nonprofit schools on the sales of class rings to students, the audit will be adjusted accordingly. If you should have any questions concerning this determination, please contact **** Office of Tax Policy, at ****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/31957K
Related Documents
Rulings of the Tax Commissioner