Tax Type
Retail Sales and Use Tax
Description
Net proceeds contributed directly to school or used to purchase certified school equipment.
Topic
Exemptions
Nonprofits
Date Issued
11-30-2007
November 30, 2007
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****:
This will reply to your letter in which you request a ruling on the application of the retail sales and use tax to the sale of products from ***** (the "Company") to the ***** ("the Orchestra") for resale in a fundraising event.
FACTS
The Orchestra, a nonprofit high school orchestra program, is holding a fundraiser in which the Company's products will be sold. The Company sells kitchen tools and products through independent consultants. The Company requests a ruling on the application of the retail sales and use tax to the sale of their products by the Orchestra. The Orchestra has provided the Company with a retail sales and use tax certificate of exemption.
RULING
Prior to July 1, 2004, the Code of Virginia set out specific exemption statutes for certain nonprofit organizations, including schools. Among the specific exemptions was an exemption for tangible personal property purchased for use, consumption, or sale at retail by a nonprofit elementary or secondary school or group associated with a nonprofit school for use in fundraising activities, the net proceeds of which are contributed directly to the school or used to purchase certified school equipment.
Effective July 1, 2004, the General Assembly enacted a nonprofit exemption for any nonprofit organization that meets certain criteria. Also effective July 1, 2004, the General Assembly enacted a new process by which nonprofit organizations obtain sales and use tax exemptions. See Va. Code § 58.1-609.11 B and C.
Virginia Code § 58.1-609.11 A provides that any nonprofit organization that held a valid exemption certificate on June 30, 2003 would retain its exemption. The exemption for tangible personal property purchased for use or consumption, or sale at retail by a nonprofit elementary or secondary school or group associated with a nonprofit elementary or secondary school previously under Va. Code § 58.1-609.4 8 was grandfathered under Va. Code § 58.1-609.11 until expiration on July 1, 2007. After July 1, 2007, nonprofit elementary and secondary schools are subject to the nonprofit exemption as provided under Va. Code § 58.1-609.11 E.
The Orchestra has followed the nonprofit process as outlined under Va. Code § 58.1-609.11 and obtained a retail sales and use tax certificate of exemption. The Orchestra's certificate of exemption entitles the Orchestra to purchase and sell tangible personal property without paying or collecting the Virginia sales and use tax. Therefore, the Orchestra may purchase and sell the Company's products exempt of the retail sales and use tax as part of its fundraising activities, provided the net proceeds are contributed directly to the school or used to purchase certified school equipment.
This ruling is based on the facts as provided as summarized above. Any change in the fact or the introduction of new facts may lead to a different result.
The Code of Virginia sections cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's website. If you have any questions about this ruling, you may contact ***** in the Department's Office of Policy and Administration, Appeals and Rulings, at *****. Additionally, you may contact the Department's Office of Customer Services, Nonprofit Exemption Unit at (804) 371-4023.
Sincerely,
Janie E. Bowen
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- Tax Commissioner
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AR/1-1789335116i
Rulings of the Tax Commissioner