Tax Type
Retail Sales and Use Tax
Description
Nonstock, nonprofit corporation controlled by the Commonwealth
Topic
Taxability of Persons and Transactions
Date Issued
01-22-1985
January 22, 1985
Re: Request for Ruling: Sales and Use Tax
Dear ********
This will reply to your letter of November 29, 1984 and subsequent conversations by my staff with ***** of *********** regarding the applicability of the sales and use tax to the ******* A.
Facts
The ***** Act ("the Act") (Virginia Code ***** et. seq.) created an ***** Authority ("Authority"). ***** ("A" ) was created by the Governor as a nonstock corporation under the authority of Virginia Code ***** which provides that such corporation shall not be deemed to be a state or governmental agency for various purposes. The A is organized as a nonprofit organization pursuant to Section 501(c)(3) of the Internal Revenue Code.
The A is engaged in purchasing tangible personal property for its use and consumption. Funding for the A is from both public and private funds. A requests a determination on the applicability of the sales and use tax to its purchases.
Determination
The A is created as a nonprofit, nonstock corporation and is an entity separate and distinct from the Authority. Virginia Code ***** specifically exempts the Authority from the sales and use tax on property used in its operation, but the Act provides no comparable exemption for the A Although the Authority may eventually attain title to any property purchased, the A itself is the actual purchaser upon whom any incidence of the sales and use tax rests. Pursuant to the federal court's decision in U. S. v. Forst, 442 F. Supp. 920 (W. D. Va. 1977), aff'd. 569 F. 2d 811 (4th Cir. 1978), the fact that title to the property purchased may eventually rest with the government is not sufficient to embody the purchaser with the government's sales and use tax exemption. That principle is clearly relevant in the instant case to the extent that the A cannot depend upon the Authority's statutory sales and use tax exemption.
Virginia Code §58.1-608(18) exempts tangible personal property for use or consumption by the Commonwealth or its political subdivisions. The Authority is granted statutory status as a political subdivision of the Commonwealth (Virginia Code *****); however, the A is not specifically granted such status. To the contrary, Virginia Code ***** specifically states that the A shall not be an agency of the state for many purposes. The fact that the A is organized as a separate entity, i.e., a nonstock corporation lends further evidence of its nongovernmental status.
The department has consistently held that a nonstock, nonprofit corporation, even when controlled by the Commonwealth, or one of its political subdivisions is a separate and distinct entity and is not entitled to the sales and use tax exemption set forth in Virginia Code §58.1-608(18). We are, in fact, currently in litigation on this issue in Virginia International Terminals, Inc. v. Commonwealth. Therefore, absent a specific statutory exemption for the A or a statutory designation as an agency or political subdivision of the Commonwealth, I find no basis for an exemption from the sales and use tax.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner