89-204 | Virginia Tax

Tax Type

Retail Sales and Use Tax

Description

Nonprofit organization providing adult tutoring in languages

Topic

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 June 29, 1989, in which you requested a ruling whether the**********("The Taxpayer"), qualifies for exemption from the sales and use tax under Virginia Code §58.1-608(4)(b).

FACTS

The Taxpayer, a nonprofit organization exempt from income taxation under §501(c)(3) of the Internal Revenue Code, provides tutoring to English speaking adults in reading and writing skills, tutoring to speakers of other languages in English skills, and tutoring to youths of any language. Classes take place at least once a week for a minimum of two hours and the course of study teaching method is the Laubach System. The Taxpayer continues tutoring until the student reaches a minimum of the 5th grade competency reading and writing level and will go beyond that level if the student so desires.

Specifically, the Taxpayer contends that it is an institution of learning and seeks an exemption to allow it to make purchases of items of tangible personal property exempt from the Virginia retail sales and use tax.

RULING

Virginia Code §58.1-608(4)(b), exempts from the sales and use tax tangible personal property used or consumed "by a college or other institution of learning...provided that such college...[or] institution of learning...is not conducted for profit. "

Virginia Retail Sales and Use Tax Regulation §630-10-96(A)(1), provides that for an organization to qualify as an "institution of learning" for purposes of sales and use tax exemption, the organization must:

- a) Employ a professionally trained faculty;
  
  b) Enroll and graduate students on the basis of academic achievement; c) Prescribe courses of study;
  
  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 (1973)), I must conclude that the Taxpayer in this case does not meet all of the above criteria for tax exemption as a nonprofit "institution of learning." While the Taxpayer does have prescribed courses of study (the Laubach system) and may provide instruction at regular intervals over a reasonable period of time, it does not employ a professionally trained faculty or enroll and graduate students on the basis of academic achievement.

Therefore, the Taxpayer is required to pay the tax on all purchases of tangible personal property to the retailer at the time of purchases. 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, Form ST-7. If you have any further questions, please contact us.

Sincerely,

W. H. Forst
Tax Commissioner

Rulings of the Tax Commissioner