89-341 | Virginia Tax

Tax Type

Retail Sales and Use Tax

Description

Government contractor purchases

Topic

Taxability of Persons and Transactions

Date Issued

11-27-1989

November 27, 1989

Re: Request for Ruling/Sales and Use Tax

Dear***************

This will reply to your letter of June 8, 1989, in which you request a ruling as to whether ***** (the Taxpayer) qualifies for exemption from the sales and use tax under Virginia Code §58.1-608.

RULING

Virginia Code §58.1-608(1)(e), provides an exemption from the retail sales and use for the following:

- Tangible personal property for use or consumption by the Commonwealth, any political subdivision of the Commonwealth, or the United States. This exemption shall not apply to sales and leases to privately owned financial and other privately owned corporations chartered by the United States. Emphasis added.

In interpreting this code section, §630-10-45 of the Virginia Retail Sales and Use Tax Regulations addresses government entities and states, in part, "the tax does not apply to sales to the United States if the purchases are pursuant to required official purchase orders to be paid out of public funds." While I am aware that the Taxpayer is 100% funded by the Federal government, actual purchases are made in the name of the Taxpayer and billed to the Taxpayer.

Based on the strict construction of all exemption statutes as confirmed by the Virginia Supreme Court in Winchester T.V. Cable Company v. State Tax Commissioner, 216 Va. 286, 217 S.E. 2d 885 (1975), and information provided this office by the Taxpayer, the Taxpayer makes no purchases pursuant to official purchase orders of the Federal government. For this reason I find no basis for granting the governmental exemption to the Taxpayer.

In addition, Virginia law does not provide a general exemption for nonprofit organizations. The only exemptions from the tax are set out in Virginia Code §58.1-608. While I am mindful of the worthwhile purpose 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.

If you have any further questions, please feel free to contact the department.

Sincerely,

W. H. Forst
Tax Commissioner

Rulings of the Tax Commissioner