Tax Type
Retail Sales and Use Tax
Description
Student Yearbook Organization; Yearbook production costs
Topic
Taxability of Persons and Transactions
Date Issued
05-10-1988
May 10, 1988
Re: Request for Ruling/Sales and Use Tax
Dear***************
This will reply to your letter dated February 23, 1988 in which you request a ruling on the application of the sales and use tax to the ************* (The Web).
FACTS
********* is a private, educational institution exempt from federal income tax under §501(c)(3) of the Internal Revenue Code. ************** (Publications) is an organization, associated with the********** whose sole purpose is to publish the ******** student newspaper, yearbook and literary magazine. The board of directors of Publications is composed of seven ********* students and five ******** faculty, staff and alumni. Publications is also exempt under §501(c)(3) of the Internal Revenue Code.Each full-time student of the ********* is entitled to receive a yearbook. Yearbook revenues are derived from ******* student fees, sitting fees, endowment income and miscellaneous income. The yearbook is produced by a student editorial staff. The yearbook is not a fund-raising activity and the editorial staff is authorized to expend all of the resources available each year. Therefore, you request a ruling on the applicability of the Virginia sales and use tax to the yearbook.
RULING
§58.1-608(23) of the Code of Virginia exempts from the sales and use tax "[t]angible personal property for use or consumption by a college or other institution of learning...provided such college, institution of learning...is not conducted for profit." As provided in Virginia Regulation 630-10-96, this exemption applies only when tangible personal property is purchased for use or consumption by a nonprofit college and is paid for out of the college's funds.
With respect to purchases of tangible personal property paid for out of funds other than funds of the nonprofit institution of learning, VR 630-10-96(6)(a) states "the tax applies if such tangible personal property is for the use of any school class, club, group, organization, association or individual. Such items cannot be purchased under certificates of exemption, and the tax must be paid to dealers. These items include yearbooks...etc., for use by students." Additionally, as provided in VR 630-10-96(5), the tax does apply to sales to independent associations, whether or not affiliated with a nonprofit institution of learning.
Publications is a separate corporation from the *********Items purchased for the yearbook are paid for by Publications and are not paid for out of the University's funds. While Publications is affiliated with the ************* materials and supplies purchased by Publications are not consumed and used by the University, but are used to produce the yearbook, newspaper and literary magazine.
Therefore, based on the foregoing, I find no basis for granting a sales and use tax exemption to the yearbook.
If you have any further questions about the issues raised in this correspondence, please do not hesitate to contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner