Tax Type
Retail Sales and Use Tax
Description
Nonprofit organization providing educational services to handicapped individuals
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
11-20-1989
November 20, 1989
Re: Request for Ruling/Sales and Use Tax
Dear***********
This will reply to your letter of August 30, 1989 in which you request a ruling whether your organization qualifies for exemption from the sales and use tax.
FACTS
*********** (the "Taxpayer"), a nonprofit organization exempt from income taxation under §501(c)(6) of the Internal Revenue Code, was organized to develop and maintain "an effective collaborative relationship with public sector educational and human service agencies" in providing and promoting educational services to handicapped individuals in the Commonwealth. It encourages research in special education and acts as an accrediting agency for private facilities providing services to the handicapped.
You seek exemption to allow the Taxpayer to purchase items exempt from the Virginia retail sales and use tax.
RULING
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).
Certain organizations that provide education, training and services to retarded individuals are exempt from the tax under Virginia Code §58.10-608(4)(c); however, this exemption is limited only to organizations that receive more than 50% of their funding from government sources. The fact that the Taxpayer does not receive any government funding disqualifies the Taxpayer from the exemption.
Additionally, legislation designed to exempt from the sales and use tax tangible personal property used or consumed by nonprofit educational accrediting agencies was introduced during the 1986 session of the General Assembly but was never enacted.
While I am mindful of the worthwhile purposes 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