Tax Type
Retail Sales and Use Tax
Description
Parts purchased for school automobile repair class
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
05-10-1988
May 10, 1988
Re: Ruling Request/ Sales and Use Tax
Dear**************
This will reply to your letter of October 21, 1987 seeking a ruling on the correct application of. the sales and use tax to parts- purchased for use in auto body and mechanical repair classes offered by the ************** (school system).
FACTS
According to your letter, to provide high school students with hands-on experience in performing auto body and mechanical repairs, the school system permits local residents to bring their automobiles to the school for repairs, to be performed by students enrolled in the auto body and mechanical repair classes.. Any parts needed to perform the repairs are purchased by the school system. You state further that when the repairs are completed, the local residents are billed for the cost of any repair parts provided, plus a small mark up. The school system retains any profits realized as a result of these transactions.
In the past the taxpayer has paid sales tax on all parts purchased for use in the auto body and mechanical repair classes. However, based on the recently expanded exemption found in §58.1-608.63 of the Virginia Code, you ask whether the school system must continue paying the tax in making such purchases.
RULING
Effective July 1, 1987, retroactive to July 1. 1986, §58.1-608.63 of the Virginia Code provides an exemption from the sales and use tax for, "[t]angible personal property purchased for use, consumption, or sale at retail by an elementary or secondary school conducted not for profit, ... for use in fund-raising activities, the net proceeds (gross receipts less direct expenses) of which are contributed directly to the school or used to purchase certified school equipment."
Since any profits earned on the parts purchased by the school system, as a result of auto body and mechanical repairs performed by its students, are retained by the school system, and help to defray the costs of running the entire school system, I conclude that such purchases qualify for exemption from the tax under the above referenced code section.
In addition, the school system may seek a refund from the department for any sales tax paid in purchasing repair parts since July 1, 1986. However, the refund request must be supported by documentation showing payment of the tax by the school system at the time of making such purchases. In order to claim this refund, please contact the department's Taxpayer Assistance Section, office Services Division, P.O. Box 6-L, Richmond, Virginia 23282. I hope that this has responded to your question, but please let me know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner