Tax Type
Retail Sales and Use Tax
Description
Nonprofit organization; Basketball league for school children
Topic
Taxability of Persons and Transactions
Date Issued
12-07-1988
December 7, 1988
Re: Ruling Request/ Sales and Use Tax Nonprofit organizations
Dear*********
This will reply to your letter of September 22, 1988, seeking a sales and use tax exemption for the**************(taxpayer).
FACTS
The taxpayer is a nonprofit organization, exempt from federal income taxation under §501(c)(3) of the Internal Revenue Code. You seek an exemption for the taxpayer's purchases of equipment and trophies in connection with its winter-spring basketball league for elementary and secondary school students.
RULING
There is no general exemption from the sales and use tax for nonprofit organizations (See, Virginia Regulation 630-10-74, enclosed). The only exemptions from the tax are those set forth in Virginia Code §58.1-608. While I am mindful of the worthwhile purposes that the taxpayer serves, absent some specific statutory exemption that would permit the taxpayer to make purchases exempt from the tax, the department has no authority to grant such an exemption.
Moreover, the equipment and trophies purchased by the taxpayer in this case do not qualify for exemption from the tax as "certified school equipment", since such items are neither purchased for donation to a nonprofit elementary or secondary school, nor purchased in connection with fundraising activities the net proceeds of which are contributed directly to such schools. (See, Va. Code §58.1-608(63), enclosed).
Therefore, the taxpayer must pay the tax on all of its purchases of tangible personal property, such as equipment and trophies. If any of the taxpayer's vendors are not registered to collect the tax, the taxpayer must report and pay the use tax directly to the department on a Consumer Use Tax Return, Form ST-7, copy enclosed.
Please let me know if the foregoing does not accurately reflect the taxpayer's current method of operation or if the department can be of further assistance.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner