Tax Type
Retail Sales and Use Tax
Description
Nonprofit association; Exempt status
Topic
Exemptions
Date Issued
03-29-2001
March 29, 2001
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear ****
This is in reply to your letter in which you seek correction of the sales and use tax assessed to the **** (the "Taxpayer"), for the period August 1994 though May 1997. I apologize for the delay in responding to your letter.
FACTS
The Taxpayer is a nonprofit membership association comprised of physicians and medical professionals who specialize in clinical oncology. The Taxpayer qualifies for exemption from federal income taxation under Internal Revenue Code § 501(c)(3) and was organized to promote and foster cancer research relating to neoplastic (tumor) diseases.
As a result of the department's audit, the Taxpayer was assessed tax on its purchases of tangible personal property. The Taxpayer disagrees with the tax and believes it qualifies for the exemption in Code of Virginia § 58.1-609.8(23).
DETERMINATION
Code of Virginia § 58.1-609.8(23) provides an exemption from the sales and use tax for:
Tangible personal property for use or consumption, or further distribution, or sold by an organization exempt from taxation under § 501(c)(3) of the Internal Revenue Code which is organized exclusively for the purpose of eliminating cancer as a major health problem by preventing cancer, saving lives from cancer, and diminishing suffering from cancer through research, education and service.
Based upon the information provided, the Taxpayer satisfies the requirements of the statute and qualifies for the exemption cited above. The exemption applies to purchases of tangible personal property made by the Taxpayer for its use or consumption or for further distribution. The exemption also applies to sales made by the Taxpayer. However, the exemption is not applicable to the purchase of taxable services, such as meals and lodging.
The 2001 General Assembly passed legislation (Senate Bill 1409) that would extend the sunset date of the exemption from June 30, 2001, to June 30, 2003. The bill is awaiting the Governor's signature. The department will notify the Taxpayer prior to June 30, 2001, regarding the extension of the exemption and the reporting requirements for nonprofit organizations under Code of Virginia § 30-19.05. Until July 1, 2001, the Taxpayer should furnish a copy of this letter to each vendor from whom exempt purchases are made as verification of the Taxpayer's exempt status.
In accordance with the determination set forth in this letter, the Taxpayer is entitled to make purchases of tangible personal property exempt of the tax. Therefore, the retail sales and use tax assessment for the period August 1994 through May 1997 will be abated. If you have questions concerning this determination, please contact **** in the Office of Tax Policy at ****. Questions concerning the reporting requirements for nonprofit organizations should be directed to **** at ****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/16584J
Rulings of the Tax Commissioner