Tax Type
Retail Sales and Use Tax
Description
Nonprofit organization providing drug education programs to youth; Exemption criteria
Topic
Taxability of Persons and Transactions
Date Issued
11-28-1986
November 28, 1986
Re: Ruling Request / Sales and Use Tax
Dear *********************
This will reply to your letter of May 27, 1986 requesting a ruling on the applicability of the exemption granted under Virginia Code §58.1-608.41 to***************(Group).
FACTS
Group is a nonsectarian, nonprofit corporation exempt from income taxation under §501 (c)(3) of the Internal Revenue Code. It is organized "for the purpose of carrying out an educational program to inform the public, and particularly groups of young persons, on the dangers of habit forming alcohol, drugs and narcotics...." Each year Group holds a camping assembly in Virginia, which has historically lasted at least seven continuous days and has been attended by more than 20,000 persons. You request a ruling that Group qualifies under Virginia Code §58.1-608.41 to purchase tangible personal property for use or consumption at its annual camping assembly exempt from the tax.
RULING
The Code of Virginia imposes either a retail sales and use tax on all sales of tangible personal property in Virginia or the complementary use tax on the use or consumption of tangible personal property in Virginia. The only exemptions from the tax are the ones specifically provided by statute. There is no general exemption from the sales and use tax available for nonprofit organizations. The courts have long ruled that taxation is the rule and exemptions are strictly construed (Retail Sales and Use Tax Regulation §630-10-35.2). Unless Group's activities are statutorily exempted from the tax, no exemption is available.
Virginia Code §58.1-608.41 exempts from the sales tax:
-
- Sales of tangible personal property to a nonsectarian youth organization exempt from taxation under §501 (c) (3) of the Internal Revenue Code and sponsoring a national or international camping assembly within this State for 7 continuous days or more with attendance in excess of 20,000, which sale of tangible personal is for use or consumption at such camping assembly. (Emphasis added.)
The articles of incorporation of Group state in section 3(1) that Group is organized for "the purpose of carrying out an educational program to inform the public, and particularly, groups of young persons on the dangers of habit forming alcohol, drugs and narcotics ...." (Emphasis added.) Although the emphasis of Group's activities is on young persons, the fact that its purpose clause includes educational programs to inform the public as a whole makes it other than a "youth organization."
Based upon our review of the information that you have provided and applying the rule of narrow construction for exemptions from taxation, Group's activities do not qualify for exemption from taxation under Virginia Code §58.1-608.41. Therefore, there is no statutory authority to grant Group an exemption from the tax.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner