Tax Type
Retail Sales and Use Tax
Description
Nonprofit organization providing health care delivery program
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
01-16-1986
January 16, 1986
Re: Ruling Request: Sales and Use Tax
Dear ****************
This will reply to your letters of October 10, 1985 and December 9, 1985, in which you request an exemption from the Virginia Retail Sales and Use Tax for purchases made by ********** (Agency).
FACTS
Agency is a nonstock corporation chartered under the laws of this Commonwealth and it has met the requirements of §501(c)(3) of the Internal Revenue Code as a nonprofit organization. It is "organized for the purpose of planning and developing health delivery systems... so that an optimal health care delivery program of equal access is provided for all citizens of the designated health service area...
Agency meets the requirements of 42 U.S.C.A. §300 1-1(b)(1)(a) and has been designated by the Secretary of the Department of Health and Human Services as a "health systems agency." As such, it receives its funding through federal grants, the amount of which are determined by the Secretary of Health and Human Services under the guidelines prescribed under 42 U.S.C.A. §300 1-5.
You request a ruling regarding Agency's qualifications for an exemption from the Virginia Retail Sales and Use Tax.
FACTS
All sales of tangible personal property in Virginia are subject to the Virginia Retail Sales and Use 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 §630-10-35.2). There is no general exemption from sales and use tax available for nonprofit organizations. Based upon the information that you have provided, the exemption afforded by Virginia Code §58.1-608.18 and Retail Sales and Use Tax Regulation §630-10-45 for the United States and instrumentalities of the United States, does not apply to your agency.
Under the above referenced statute and regulation section, only sales made to the United States are exempt if the purchases are made pursuant to required official purchase orders to be paid out of public funds. While Agency is funded by the federal government, is it not "the United States" or an instrumentality of the United States.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner