Tax Type
Individual Income Tax
Retail Sales and Use Tax
Description
Nonprofit organizations: Civic or political groups; Deductions
Topic
Taxability of Persons and Transactions
Taxable Income
Date Issued
10-25-1984
October 25, 1984
Re: Request for Ruling: Income and Sales and Use Taxes
Dear ***********
********* has asked that I reply to your letter of October 10, 1984 regarding your application to the Commonwealth for tax-exempt status for the *****.
Va. Code § 58-151.03(c) provides that any corporation (which is defined as including "associations") which is religious, educational, benevolent or otherwise not organized or conducted for pecuniary profit and which is exempt from federal taxation by reason of its activities, is not subject to Virginia income tax, except with respect to unrelated business income (as defined by Internal Revenue § 512). Therefore, if your association receives a federal income tax exemption as set forth above, you will similarly be entitled to a Virginia income tax exemption, except with respect to any unrelated business income. Substantiation of your federal certification as an exempt organization must be retained.
No similar exemption is available with respect to the sales and use tax. All sales of tangible personal property are presumed to be subject to the tax absent a specific statutory exemption. Currently, the sales and use tax statutes contain neither a general exemption for nonprofit organizations nor a specific exemption for civic or political groups. Therefore, your organization will be subject to the sales and use tax on all purchases of tangible personal property, including administrative supplies, office equipment, etc.
The treatment of contributions to your organization for individual income tax purposes will parallel the treatment for federal tax purposes because the determination of Virginia taxable income allows the subtraction of federally allowed itemized deductions (excluding certain taxes).
Therefore, if the contributions are allowed as a deduction for federal purposes, they will also be allowed for state purposes. If a contributor elects to use a federal credit for contributions or if a deduction for contributions is not allowed for federal purposes, no Virginia deduction will be available.
Your questions regarding any local property tax exemption are more properly handled by the localities in which any property will be located.
If we can answer any additional questions, please let us know.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner