Tax Type
Retail Sales and Use Tax
Description
Formation of school; Initial purchases
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
10-26-1989
October 26, 1989
Re: Request for Ruling/Sales and Use Tax
Dear****************
This will reply to your letter of July 18, 1989 in which you request a ruling on behalf of the ******* (the "School") as to whether it qualifies for an exemption from retail sales and use tax.
FACTS
School has recently incorporated for the purpose of forming and operating a private, non-profit school for general, educational and religious instruction. once operating, it is anticipated that the School will have a permanent faculty and be operated for the purpose of educating enrolled students through prescribed courses of study.
School questions whether purchases of tangible personal property such as desks, books and other materials made in the formative stage, prior to the time it has students, would be exempt from the retail sales and use tax.
RULING
Virginia Code §58.1-608(4) (b) provides an exemption from the sales and use tax for "tangible personal property for use or consumption by a college or other institution of learning ... provided that such college, 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:
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- a) Employ a professionally trained faculty.
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- b) Enroll and graduate students on the basis of academic achievement. c) Prescribe courses of study.
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- d) Provide instruction at regular intervals over a reasonable period of time.
When an institution meets these criteria and is not operated for profit, it is entitled to an exemption from the tax.
Based on the information provided, it is not possible to make a determination of the School's eligibility for exemption from the sales and use tax. However, if the School meets the above criteria once it is operational, after obtaining a certificate of exemption from the Department it may claim a refund of taxes paid on purchases made in the formative stages of the School which qualify for the exemption. The School must request such refund within three years of the due date of the return for the period in which the tax was paid. If you have any further questions, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner