Tax Type
Corporation Income Tax
Retail Sales and Use Tax
Description
Nonprofit organization serving head injured individuals
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
10-17-1989
October 17, 1989
Re: Request for Ruling: Sales and Use Tax
Corporate Income Tax
Dear***********************
This will reply to your letter of September l, 1989 seeking exemption from the Virginia income tax and retail sales and use tax for the **************(the "Taxpayer").
FACTS
The Taxpayer is a nonprofit organization that is committed to serving head injured individuals and their families. It has been granted exempt status by the Internal Revenue Service under I.R.C. §501(c)(3). The Taxpayer seeks a similar exemption from Virginia income tax. Additionally, the taxpayer seeks exemption from the Virginia retail sales and use tax.
RULING
Corporate Income Tax
Virginia Code §58.1-401 and Virginia Corporation Income Tax Regulation 630-3-401(F) exempt from the state income tax nonprofit corporations which are exempt from federal income tax under I.R.C. §501(c).
Based on the determination by the Internal Revenue Service that the taxpayer qualifies for exemption from federal income tax under I.R.C. §501(c)(3), and the Virginia Code and regulation sections cited above, the taxpayer qualifies for exemption from Virginia income tax. However, if the taxpayer has unrelated business taxable income as defined in Internal Revenue Code §512, it must file a Virginia return and pay Virginia income tax on such income.
Retail Sales and Use Tax
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 (copy enclosed). While I am mindful of the worthwhile purpose that the taxpayer serves, absent a statutory exemption that would allow the taxpayer to make purchases exempt form the tax, the department has no authority to grant such an exemption.
Therefore, the taxpayer 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.
Let the department know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner