Tax Type
Retail Sales and Use Tax
Description
Nonprofit organization offering social services; Exemption criteria
Topic
Exemptions
Date Issued
09-06-1991
September 6, 1991
Re: Request for Ruling: Sales and Use Tax
Dear********************
This will reply to your letter requesting a ruling whether************** ("the Taxpayer") qualifies for exemption from the sales and use tax.
FACTS
The Taxpayer, a nonprofit organization exempt from income taxation under §501(c)(3) of the Internal Revenue Code, provides certain social services to families. The Taxpayer is seeking an exemption from the sales and use tax under Va. Code §58.1-608 (A)(8)(q) for its purchases of tangible personal property.
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 Va. Code §58.1-608.
Va. Code §58.1-608(A)(8)(q), from July 1, 1990 until June 30, 1993, provides an exemption from the retail sales and use tax for:
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- Tangible personal property purchased for use or consumption by a nonstock, nonprofit charitable corporation exempt from taxation under §501(c)(3) of the Internal Revenue Code and organized and operated to offer social services, including, but not limited to, transitional housing for homeless individuals, employment counseling, placement and referral services to persons in financial need, health-related assistance, child care for children whose parents are either employed or enrolled in job training programs, emergency assistance (including the provision of food) to persons in financial need who may face eviction or termination of utility services, and related social welfare activities.
If an organization does not meet all of the criteria set forth in the above statute, it will not qualify for exemption under this statute. Based on the department's review of the information submitted by the Taxpayer, the Taxpayer does not meet all of these criteria. While the Taxpayer offers most of the services required by the statute for exemption, it does not presently provide "child care for children whose parents are either employed or enrolled in job training programs."
Therefore, notwithstanding the worthwhile purpose which the Taxpayer serves, absent a statutory exemption that allows the Taxpayer to make purchases exempt of the tax, the department has no authority to grant such an exemption. As such, the Taxpayer is required to pay the tax to its retailers on all purchases of tangible personal property. If a retailer is not registered to collect the tax, the Taxpayer must report and pay use tax on a Consumer Use Tax Return, Form ST-7.
However, it is our understanding that the Taxpayer is scheduled to begin offering the applicable child care services in the near future. As such, when the Taxpayer begins to offer the child care services required by the above statute, the Taxpayer will qualify for the exemption and could purchase tangible personal property for use by the organization exempt of the tax, assuming that the Taxpayer would also continue to provide all of its present services.
I hope this has answered your question; however, please contact the department if you have additional questions or if we may be of any further assistance.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner