Tax Type
Retail Sales and Use Tax
Description
Purchases by Non Profit Health Care Provider
Topic
Basis of Tax
Exemptions
Date Issued
11-16-2001
November 16, 2001
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****
This is in reply to your letter of September 17, 2001, in which you request a redetermination regarding the application of the sales and use tax to ***** ("Division A"), a division of ***** (the "Taxpayer").
FACTS
The Taxpayer is a nonprofit corporation that operates three nonprofit hospitals and is part of a healthcare system comprised of nonprofit and for-profit entities. The hospitals are unincorporated divisions of the Taxpayer and qualify for the exemption available to nonprofit hospitals provided in Code of Virginia § 58.1-609.7(4). The Taxpayer also operates Division A, separate from the hospitals, that provides administrative and management services primarily to the hospitals. Division A also provides services to the other nonprofit and for-profit entities in the Taxpayer's healthcare system.
In a prior ruling issued to the Taxpayer on May 15, 2001, I determined that Code of Virginia § 58.1-609.7(4) does not apply to purchases by the Taxpayer through Division A because neither the Taxpayer nor Division A was shown to be a licensed hospital. However, the Taxpayer has now provided additional hospital licensure documents issued by the Virginia Department of Health. Based on this additional documentation, the Taxpayer contends that it is in fact a licensed hospital consistent with prior determinations set out in Public Documents 96-51 (4/19/96) and 96-259 (9/26/96).
RULING
Code of Virginia § 58.1-609.7(4) provides an exemption from the sales and use tax for tangible personal property for use or consumption by a nonprofit hospital or a nonprofit licensed nursing home.
I have reviewed the hospital license documents information issued to the Taxpayer by the Virginia Department of Health. Based on this information and the Taxpayer's Articles of Incorporation, I agree that the Taxpayer is a licensed hospital. Division A, as a division of the Taxpayer, is considered part of a nonprofit hospital. The Taxpayer, therefore, is entitled to the nonprofit hospital exemption on its purchases of tangible personal property pursuant to Code of Virginia § 58.1-609.7(4).
I trust that the foregoing responds to your request. If you have questions regarding the determination in this letter, please contact ***** in the Office of Policy and Administration, Appeals and Rulings, at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
AR/36946J
Rulings of the Tax Commissioner