Tax Type
Retail Sales and Use Tax
Description
Sales Tax Exemption Request for Purchases by Non-Profit Entity
Topic
Property Subject to Tax
Taxability of Persons and Transactions
Date Issued
10-02-2001
October 2, 2001
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****
This is in reply to your letter of August 24, 2001, in which you request a ruling regarding the application of the retail sales and use tax to purchases of tangible personal property by (the "Taxpayer).
FACTS
The Taxpayer is a nonprofit organization exempt from federal income taxation pursuant to § 501(c)(3) of the Internal Revenue Code. The Taxpayer is organized to inform the general public about the arts, science and technology, including holography and laser imaging. The Taxpayer sponsors seminars, exhibitions and provides publications to promote an understanding in these areas. The Taxpayer is seeking an exemption from the sales and use tax for its purchases of tangible personal property.
RULING
Under Virginia law, 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 specifically set forth in Code of Virginia §§ 58.1-609.1 through 58.1-609.10. The Virginia courts have consistently required strict construction of these exemptions, i.e., where there is any doubt as to the application of an exemption, the doubt is resolved against the one claiming the exemption.
As stated in the department's letter of June 29, 2001, 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.
While I am mindful of the worthwhile purpose the Taxpayer serves, absent a statutory exemption that would allow the Taxpayer to make purchases exempt of the tax, the department has no authority to grant such an exemption. Therefore, the Taxpayer is required to pay the tax to its vendors on all purchases of tangible personal property. If a vendor is not registered to collect the tax, the Taxpayer must report and pay use tax on a Consumer Use Tax Return, Form ST-7.
If the Taxpayer is interested in pursuing exemption legislation, the Taxpayer must contact a Virginia state delegate or senator and request that he or she sponsor the legislation for exemption. The legislator must sign a questionnaire and submit it to the department by November 1, 2001, in order for the exemption request to be considered by the 2002 General Assembly. I am returning the Taxpayer's questionnaire for this purpose.
The signed questionnaire should be sent to ***** in the department's Office of Policy and Administration, Policy Development, Post Office Box 1880, Richmond, Virginia 23218-1880. If you have any questions regarding this matter, you may contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/36717C
Rulings of the Tax Commissioner