Tax Type
Retail Sales and Use Tax
Description
Nonprofit organization providing childhood assistance programs
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 July 24, 1989, requesting a ruling as to whether your organization qualifies for exemption from the sales and use tax under Virginia Code §58.1-608(8)(n).
FACTS
*********("the Taxpayer"), a nonprofit organization exempt from income taxation under §501(c)(3) of the Internal Revenue Code, is organized for the purpose of providing a child, from a single family home, with education training services and an adult volunteer role model. The Taxpayer assists these children in their social, emotional and character development through specified techniques in human services.
RULING
Virginia law does not provide a general exemption from the sales and use tax for nonprofit organizations. The only exemptions from the tax are set out in §58.1-608 of the Code of Virginia.
Virginia Code §58.1-608(8)(n), enacted by the 1989 Virginia General Assembly, provides an exemption from sales and use tax for:
-
- Tangible personal property purchased for use or consumption, or to be sold at retail, by any nonsectarian youth organization exempt from taxation under 501(c)(3) of the Internal Revenue Code which is organized for the character development and citizenship training of its members using the methods now in common use by Girl Scout or Boy Scout organizations in Virginia. (Emphasis added).
Under principles established by the courts, taxation is the rule and exemption is the exception. Therefore, exemptions from the sales and use tax are strictly construed. See §630-10-35.2 of the Va. Retail Sales and Use Tax Regulations, copy enclosed, and Golden Skillet Corp. v. Commonwealth, 214 Va. 276, 234 S.E.2d 511 (1973). Based on this rule of strict construction used in interpreting sales and use tax exemptions, not all nonsectarian youth organizations qualify for the above exemption.
To qualify for the exemption, the youth organization must be organized not-for-profit, organized for the character development and citizenship training of its members, and must use the methods now in common use by Girl Scout or Boy Scout organizations in Virginia. If the organization does not meet all of these criteria, it will not qualify for the exemption.
Based upon our review of the information which you provided and applying the rule of narrow construction for exemptions from taxation, the Taxpayer does not meet all of the necessary criteria for exemption under Virginia Code §58.1-608(8)(n). Notwithstanding the worthwhile purpose which the Taxpayer serves, absent such a statutory exemption that would allow the Taxpayer to make purchases exempt of the tax, the department has no authority to grant an exemption to the Taxpayer. Therefore, all tangible personal property purchased by the Taxpayer will be subject to the tax.
I regret that I was not able to provide you with a more favorable response. If you have additional questions or if we may be of any further assistance, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner