Tax Type
Retail Sales and Use Tax
Description
Sales made by nonprofit school store
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
10-27-1989
October 27, 1989
Re: Request for Ruling/Sales and Use Tax
Dear ******************
This will reply to your letter of October 5, 1989 concerning sales made by the school store located in nonprofit school.
FACTS
**********(the Taxpayer) is a nonprofit school exempt from the Federal Income Tax under §501(c)(3) of the Internal Revenue Code. The Taxpayer operates an internal school store which sells various items to students and faculty of the school. All proceeds from these sales are distributed directly to the school for use in carrying on the operations of the school. The Taxpayer is seeking a ruling as to their sales tax obligation on items sold through the store.
RULING
§58.1-608(4)(h) of the Virginia Code exempts from the Virginia retail sales and use tax the following:
-
- Tangible personal property purchased for use, consumption, or sale at retail by an elementary or secondary school conducted not for profit,... or other group associated with an elementary or secondary school conducted not for profit for use in fund-raising activities, the net proceeds (gross receipts less direct expenses) of which are contributed directly to the school or used to purchase certified school equipment, and certified school equipment purchased by such groups for contribution directly to the school. For the purposes of this division, "certified school equipment" shall mean the equipment for which the... group has received certification from the school that it will accept a donation of equipment... Notwithstanding the other provisions of this subdivision, the tax shall not apply to the sale of class rings, school photographs, and other fund-raising programs from which an elementary or secondary school conducted not for profit receives a commission or the net proceeds after the payment of vendors and other direct expenses.
As can be seen from the above, purchases and sales made by a nonprofit school, or organization associated with the school, are not subject to the tax as long as all proceeds are turned over to the school for use in carrying on the activities of the school. For this reason, the department will delete the dealers registration account number from its record and it will no longer be necessary to collect the sales tax on sales made by the school store.
If you should have any questions, please feel free to contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner