Tax Type
Corporation Income Tax
Retail Sales and Use Tax
Description
Nonprofit foundation; Application of income and sales taxes
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
09-07-1984
September 7, 1984
Re: Request For Ruling/Sales Tax; Corporate Income Tax
Dear **************
This responds to your letter of May 4, 1984, requesting a ruling on your organization's tax-exempt status under Virginia law.
FACTS
The foundation was authorized on ***** 1979, by the ***** Act (Public Law ****) "to promote initiative, achievement and excellence among youths in the areas of public service, personal development and physical expedition fitness." The Act authorized a national board to incorporate a nonprofit charitable organization to receive private sector contributions and prohibited the acceptance of any federal, state or local government funds.
The foundation was incorporated in *****. As a registered nonprofit foundation, it is exempt from federal income taxation under I.R.C. §501(c)(3).
RULING
Income Tax
Code of Virginia § 58-151.038 exempts from state income tax corporations "not organized or conducted for pecuniary profit which by reason of their purposes or activities are exempt from income tax under the laws of the United States." The foundation has substantiated its exempt status by furnishing a copy of the federal exemption letter. The foundation is accordingly exempt from Virginia income tax.
Sales and Use Tax
All sales of tangible personal property in Virginia are subject to sales tax. A complementary use tax is imposed on the use or consumption of tangible personal property in Virginia. Taxation is the rule and exemptions are strictly construed (Retail Sales and Use Tax Regulation §51-35.2). There is no general exemption from sales and use tax available for nonprofit organizations. The exemption afforded by Code of Virginia §58-441.6(p) and Retail Sales and Use Tax Regulation §1-45 does not apply to the foundation. Under the regulation, sales to the United States are exempt if the purchases are pursuant to required official purchase orders to be paid for out of public funds. Since the foundation cannot accept any public funds, it is not eligible for the sales and use tax exemption.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner