89-146 | Virginia Tax

Tax Type

Retail Sales and Use Tax

Description

Juvenile Rehabilitative Institute

Topic

Taxability of Persons and Transactions

Date Issued

04-28-1989

April 28, 1989

Re: Ruling Request/ Sales and Use Tax

Dear******************

This will reply to your letter of January 10, 1989 seeking an exemption from the sales and use tax for the*************** (institute). This also has reference to additional information recently submitted by the institute to the department's Tax Policy Division.

FACTS

The institute is a private, nonprofit organization which provides an educational/rehabilitation program for adjudicated delinquent youth generally between the ages of 14 and 17. The institute's primary mission is to reduce and prevent recidivism and delinquent behavior in such youth by increasing their vocational and academic skills. The institute receives youth assigned by the state juvenile court system, for instruction for periods of between six and nine months. Assignment to the institute is often in lieu of commitment to the Department of Corrections.

Courses offered by the institute include Navigation, Marine Maintenance, Scuba Diving, Marine Science, GED Preparation, and Computer Literacy. The institute also sponsors ski trips and educational trips to places such as Washington, D.C., to reward individual achievement, and to provide educational experiences which are both physically and mentally challenging.

RULING

Virginia Code §58.1-608(23) provides an exemption from the sales and use tax for purchases for use or consumption by nonprofit colleges or other institutions of learning. Virginia Retail Sales and Use Tax Regulation (VR) 630-10-96(A)(1), copy enclosed, provides that for an organization to qualify as an "institution of learning" for purposes of sales and use tax exemption, it must:

- a) Employ a professionally trained faculty;
  
  b) Enroll and graduate students on the basis of academic achievement;
  
  c) Prescribe courses of study; and
  
  d) Provide instruction at regular intervals over a reasonable period of time.

Based on the rule of strict construction of all exempting statutes long accepted by the courts, (See, e.g., Commonwealth v. Community Motor Bus Co., 214 Va. 155, 198 S.E. 2d 619 (1973), I must conclude that the institute in this case does not meet all of the above listed criteria for tax exemption as a nonprofit "institution of learning". It is our understanding that while "points" are awarded to reward work ethic and individual achievement, the youth are not "graduated" from the institute on the basis of academic achievement. In addition, while one of the institute's courses may help to prepare some of the youth for their GED, the youth who complete this course do not automatically qualify for their GED.

Therefore, notwithstanding its salutary goals and objectives, the institute is subject to the tax on all of its purchases of tangible personal property from suppliers. If a supplier of the institute is not registered to collect the tax, the institute itself must remit the use tax on a Consumer Use Tax Return, Form ST-7, copy enclosed.

Please let me know if you have any further questions.

Sincerely,

W. H. Forst
Tax Commissioner

Rulings of the Tax Commissioner