Tax Type
Retail Sales and Use Tax
Description
Nonprofit organization funding a memorial on federal land
Topic
Taxability of Persons and Transactions
Date Issued
09-11-1989
September 11, 1989
Re: Request for Ruling/Sales & Use Tax
Dear****************
This will reply to your letter of August 15, 1989 in which you request a ruling as to whether your organization qualifies for exemption from the sales and use tax under Virginia Code §58.1-608(9)(c).
FACTS
***********(the "Taxpayer"), a nonprofit organization exempt from income taxation under §501(c)(3) of the Internal Revenue Code, is charged by Congress with the responsibility for funding and moving forward the project of having a memorial constructed to recognize the contributions of women who serve or have served in the armed forces.
The Taxpayer plans for the memorial to encompass a theater-type auditorium featuring a movie about the contributions of women in the military, a registration room with the names and photographs of registered women service members which will be available for computer review, and a reception area with commemorative souvenirs, books, and displays. The approved site for the memorial is the memorial gate area of Arlington National Cemetery. The Taxpayer requests an exemption from the sales and use tax under Virginia Code §58.1-608(9)(c).
RULING
Virginia Code §58.1-608(9)(c) provides an exemption from retail sales and use tax for "[t]angible personal property purchased for the use or consumption of a nonstock corporation, exempt from taxation under §501(c)(3) of the Internal Revenue Code, whose principal activity is conducted on real property owned by any city in the Commonwealth, organized exclusively for the purpose of operating, managing, promoting and improving a public park and museum for recreational and educational purposes."
The Virginia Courts have established the rule of strict construction in the interpretation of statutory exemptions. Thus, taxation is the rule and not the exception and statutory exemptions are construed strictly against the taxpayer, with doubts resolved against granting the exemptions (Commonwealth v. Research Analysis Corp., 214 Va. 161, 198 S.E. 2d 622 (1973)). In order to qualify for exemption under Virginia Code §58.1-608(9)(c), the Taxpayer's principal activity must be conducted on real property owned by a city in the Commonwealth and it must be organized exclusively to operate, promote and improve a public park and museum. While I appreciate the worthwhile purpose for which the Taxpayer is organized, its principal activity will be on federal land - not property owned by a city in the Commonwealth. In addition, the Taxpayer is organized for the purpose of constructing a memorial, not operating a public park and museum.
Thus, I must conclude that the Taxpayer does not qualify for exemption from the retail sales and use tax under Virginia Code §58.1-608(9)(c). It, therefore, is required to pay the tax to the retailer on all purchases of tangible personal property if the retailer is registered to collect the tax. 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 the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner