Tax Type
Retail Sales and Use Tax
Description
Nonprofit day care center; Exemption criteria
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
07-28-1989
July 28, 1989
Re: Request for Ruling: Sales and Use Tax
Dear****************
This will reply to Your letter of May 30, 1989, in which you requested a ruling as to whether ****************("The Taxpayer") qualifies for exemption from sales and use tax under Virginia Code §58.1-608(4)(i).
FACTS
The Taxpayer operates a state licensed nonprofit day-care center in the Commonwealth. It has a regularly prescribed curriculum but does not hire only state certified public school teachers. The Taxpayer requests an exemption from the tax for tangible personal property purchased in connection with operating the day-care center.
RULING
Virginia law does not provide a general exemption from the sales and use tax for nonprofit organizations. However, Virginia Code §58.1-608(4)(i), recently enacted by the 1989 Virginia General Assembly, provides a limited exemption from the sales and use tax for:
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- Tangible personal property purchased for use or consumption by an organization exempt from taxation under §501(c)(3) of the Internal Revenue Code, and organized primarily for the purpose of operating a state-licensed day-care center or a preschool that hires only certified Public school teachers, and which has a regularly prescribed curriculum. (Emphasis added).
- Tangible personal property purchased for use or consumption by an organization exempt from taxation under §501(c)(3) of the Internal Revenue Code, and organized primarily for the purpose of operating a state-licensed day-care center or a preschool that hires only certified Public school teachers, and which has a regularly prescribed curriculum. (Emphasis added).
To qualify for the exemption, a day-care center (or preschool) must be state licensed, organized not-for-profit, have a regularly prescribed curriculum, and hire only certified public school teachers. If the day-care center does not meet all of these criteria, it will not qualify for the exemption.
Since the Taxpayer in this case hires teachers without state certification, it does not meet all of the necessary criteria for this exemption. Based on the foregoing, I find no basis at this time for granting the Taxpayer an exemption from the tax. Thus, all tangible personal property used in operating the day-care center would be subject to the tax.
If you have any questions, please contact us.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner