Tax Type
Corporation Income Tax
Retail Sales and Use Tax
Description
Nonprofit organization; Exemption criteria
Topic
Exemptions
Date Issued
02-04-1986
February 4, 1986
Re: Ruling Request: Sales and Corporation Income Tax
Dear ****************
This will respond to ************* letter of January 2, 1986 requesting information on tax-exempt status for ************************** ("Taxpayer").
FACTS
Taxpayer, incorporated in Virginia in 1983, has been determined by the Internal Revenue Service to be exempt from federal income tax under I.R.C. §501(c)(3).
DETERMINATION
Pursuant to Corporation Income Tax Regulations, VR 630-3-401 F., Taxpayer is exempt from Virginia income tax to the same extent that it is exempt from federal income tax. However, any unrelated business taxable income, as defined in I.R.C. §512, which Taxpayer might have would be subject to Virginia income tax. We have been furnished the front side of the I.R.S. determination letter declaring Taxpayer to be exempt from federal income tax under I.R.C. §501(c)(3). Accordingly, except for any unrelated business taxable income, Taxpayer would be exempt from Virginia taxable income.
With respect to applicability of the retail sales and use tax, I would note that 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 (Virginia Retail Sales and Use Tax Regulations, VR 630-10-35.2). There is no general exemption from sales or use tax available for nonprofit organizations. However, there are a number of specific exemptions, one of which may apply to Taxpayer. If you would send us information concerning Taxpayer's operations, we can determine if any of the exemptions apply.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner