Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations
Topic
Taxability of Persons and Transactions
Date Issued
07-05-1989
July 5, 1989
Re: Request for Ruling: Sales and Use Tax
Dear*****************
This will reply to your letter dated April 13, 1989, in which you requested a ruling whether your organization qualifies for exemption from sales and use tax.
FACTS
*********("The Taxpayer"), a nonprofit organization exempt from income taxation under §501(c)(3) of the Internal Revenue Code, serves as a clearing house for gifts-in-kind donations made by private corporations to social, educational and public nonprofit organizations. The Taxpayer obtains the donations through solicitation of philanthropic businesses which are located throughout the Commonwealth and the United States. The donee organization must pay annual membership dues to the Taxpayer in order to receive the donations.
The Taxpayer specifically requests whether they qualify for exemption from the tax.
RULING
Virginia Code §58.1-608(59), copy enclosed, provides an exemption from the tax for tangible personal property that is "withdrawn from inventory and donated to [charitable organizations]...or...the Commonwealth, any political subdivision of the Commonwealth, or any school, agency or instrumentality thereof." Thus, the donor does not incur a use tax liability when it withdraws from inventory to donate to the Taxpayer.
As for purchases by the Taxpayer, however, there is no general exemption from the Virginia Retail Sales and Use Tax for nonprofit organizations. The only exemptions from the tax are set out in Virginia
Code §58.1-608. While I am mindful of the worthwhile purpose that the Taxpayer serves, absent a statutory exemption that would allow the Taxpayer to make purchases (not donations) exempt from the tax, the department has no authority to grant such an exemption.
Therefore, the Taxpayer is required to pay the tax on all purchases of tangible personal property to the retailer at the time of purchase. If the retailer is not registered to collect the tax, the Taxpayer must report and pay the use tax on a Consumer Use Tax Return, ST-7.
If I can be of further assistance, please contact the department.
Sincerely,
W. H.Forst
Tax Commissioner
Rulings of the Tax Commissioner