Tax Type
Retail Sales and Use Tax
Description
Nonprofit assisting immigrants; Merchandise sales
Topic
Collection of Tax
Exemptions
Date Issued
11-09-1990
November 9, 1990
Re: Request for Ruling: Retail Sales and Use Tax
Dear****************
This will reply to your letter in which you request a ruling on whether********* (the Taxpayer) is exempt from collection of the sales and use tax. You also seek an abatement of penalties assessed for failure to timely file and pay sales tax.
FACTS
The Taxpayer, a nonprofit organization exempt from income taxation under Section 501(c)(3) of the Internal Revenue Code, provides services to immigrants to help in the transition from the ******* to the American culture. The Taxpayer receives support from grants, sales of crafts and various merchandise, and concerts and presentations.
The Taxpayer requests a ruling whether it is required to collect and remit the sales tax on the crafts it sells at bazaars, silent auctions, concerts, and other presentations, and "walk-in" sales at its office. The Taxpayer also requests that penalties assessed because of untimely filing of past returns be abated due to misunderstandings regarding the application of the tax to its activities.
RULING
Sales Tax Registration
Va. Code §58.1-603 imposes the sales tax upon "every person who engages in the business of selling at retail or distributing tangible personal property in this Commonwealth." The term "sale at retail" is defined in Va. Code §58.1-602 as "a sale to any person for any purpose other than for resale."
Generally, infrequent sales by nonprofit organizations are exempt from the tax by virtue of the "occasional sale" exemption found at Va. Code §58.1-608(10)(b). I have enclosed a copy of Virginia Regulation (VR) 630-10-75, which describes the occasional sale exemption. Under this exemption, an organization is not required to register and collect the tax, provided that it conducts sales on three or fewer occasions during a one year period. However, nonprofit organizations are required to register and collect the tax when making sales of tangible personal property on a regular basis.
Because the Taxpayer's activities are sufficient enough to require it to register, sales tax will need to be collected for sales of tangible personal property at bazaars, "walk in" sales at the Taxpayer's office, silent auctions, food sales and concerts. However, sales of tickets, fees, charges or voluntary contributions for admissions to places of entertainment, exhibition or display are not taxable, provided no entitlement or provision for food, drinks, or tangible personal property is included in the amount.
Penalties
Va. Code §58.1-615 states that a sales tax return shall be filed by each dealer even though the dealer is not liable to remit any tax for the period covered by the return. Additionally, VR 630-10-80 (copy enclosed) states that a dealer who fails to file a return and pay the full amount of tax by the required due date is subject to a penalty. Thus, the Taxpayer is required to file a timely return for each reporting period, even if no tax is due. However, based upon the circumstances outlined in your letter, I find basis for the relief of penalty assessed for March through October 1989, provided returns are filed for March and June 1989. Interest on all taxes, however, is mandatory and will not be waived.
If you have any further questions regarding this matter, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner