Tax Type
Corporation Income Tax
Retail Sales and Use Tax
Description
Nonprofit providing accreditation for social work education
Topic
Exemptions
Property Subject to Tax
Date Issued
04-12-1990
April 12, 1990
Re: Request for Ruling: Sales and Use Tax
Corporate Income Tax
Dear ****
This will reply to your letter of December 18, 1989 seeking exemption from the Virginia income tax and retail sales and use tax for the ***** (the "Taxpayer").
FACTS
The Taxpayer, a nonprofit organization, exempt from income taxation under §501(c)(3) of the Internal Revenue Code, is a national organization representing 2000 individual members and 108 graduate and 389 undergraduate programs of professional social work education in major colleges and universities in the United States. It is the **** accrediting agency for social work education and is so designated by the U. S. Department of Education and the Council on Postsecondary Accreditation.
The Taxpayer's purpose is to provide national leadership and collective action designed to ensure the preparation of competent and committed social work professionals. Its programs include research, accreditation, curriculum development, publications, education and training.
The Taxpayer seeks exemption from Virginia income and retail sales and use taxes.
RULING
Corporate Income Tax
Virginia Code §58.1-401 and the Virginia Corporation Income Tax Regulation 630-3-401(F) exempt from the state income tax nonprofit corporations which are exempt from federal income tax under I.R.C. 501(c).
Based on the determination by the Internal Revenue Service that the Taxpayer qualifies for exemption from federal income tax under I.R.C. 501(c)(3), and the Virginia Code and regulation sections cited above, the Taxpayer qualifies for exemption from Virginia income tax. However, if the Taxpayer has unrelated business taxable income as defined in Internal Revenue Code §512, it must file a Virginia return and pay Virginia income tax on such income.
Retail Sales and Use Tax
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). Legislation designed to exempt from the sales and use tax tangible personal property used or consumed by nonprofit educational accrediting agencies was introduced in the 1986 Session of the General Assembly but was not enacted. Thus, while I am mindful of the many worthwhile purposes that the Taxpayer serves, 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 tax on a Consumer Use Tax Return, Form ST-7 (copy enclosed).
If you have any further questions, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner