Tax Type
Retail Sales and Use Tax
Description
Residential shelter for abuse victims
Topic
Taxability of Persons and Transactions
Date Issued
11-03-1989
November 3, 1989
Re: Request for Ruling/Sales and Use Tax
Dear***************
This will reply to your letter of July 24, 1989 in which you request whether ********* (the Taxpayer) qualifies for exemption from the sales and use tax under 58.1-608 of the Virginia Code.
FACTS
The Taxpayer is a nonprofit corporation exempt from taxation under §501(c)(3) of the Internal Revenue Code. The purpose of the organization is to educate the public about the serious problem of the abuse of women and to provide residential shelter for women and their children who are victims of such abuse. The Taxpayer is funded by grants received from local governments and also from the Virginia Department of Social Services. The Taxpayer is a residential facility which can house up to 20 people. The Taxpayer is seeking a ruling as to the sales and use tax exemption status of their organization.
RULING
There is no general exemption from the Virginia retail sales and use tax for nonprofit organizations (see §630-10-74 of the Virginia Retail Sales and Use Tax Regulations). The only exemptions from the tax are set out in Virginia Code §58.1-608 (copy enclosed). §58.1-608(8)(g) of the Code provides an exemption for the following:
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- Tangible personal property, including food and food products, purchased for use or consumption by a residential youth shelter organization exempt from taxation under §501(c)(3) of the Internal Revenue Code, provided such organization is organized exclusively for maintaining and operating group homes for the shelter and care of abused and neglected children in the Commonwealth on a long-term or short-term basis. Emphasis added.
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 the exemption set out in §58.1-608(8)(g) of the Code, the organization must be operated exclusively as a residential shelter for abused and neglected children. While the Taxpayer does provide shelter for abused and neglected children, the primary purpose of the organization is to provide shelter for abused women and to educate the public on the problem of the abuse of women.
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 from 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.
If I can be of further assistance, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner