Tax Type
Corporation Income Tax
Description
Nonprofit corporations
Topic
Exemptions
Date Issued
10-31-1991
October 31, 1991
Re: Request for Ruling: Corporation Income Tax
Dear***************
This will reply to your letter of September 4, 1991, in which you request a ruling concerning exemption from Virginia income taxation for**********(the Taxpayer).
FACTS
The Taxpayer is a Virginia corporation exempt from federal income tax under Internal Revenue Code (IRC) §501(c)(3) and as such, request a ruling as to the extent to which the income of the corporation is exempt from Virginia income tax.
RULING
Va. Code §58.1-401 and Virginia Regulation (VR) 630-3-401(F), copies enclosed, exempt from the state income tax nonprofit corporations which are exempt from federal income tax under IRC §501(c)(3).
Based on the determination by the Internal Revenue Service that the Taxpayer qualifies for exemption from federal income tax under IRC §501(c)(3), and the Virginia statute and regulation cited, the Taxpayer qualifies for exemption from Virginia income tax. However, if the Taxpayer has unrelated business taxable income as defined in IRC §512, it must file a Virginia return and pay Virginia income tax on such income.
Qualification for tax exempt status in Virginia is dependent upon continued status as a tax exempt organization by the Internal Revenue Service. Loss of federal status would void the analogous Virginia status.
Although the Taxpayer is exempt from the Virginia corporation tax on income it may receive, it is not exempt from the requirement that it withhold Virginia individual income tax from the wages of its employees.
If you have any further questions relating to income and withholding taxes, please contact the department. For information regarding liability for Virginia unemployment taxes, please contact the Virginia Employment Commission.
Sincerely,
W. H. Forst
Tax Commissioner
TPD/5582J
Rulings of the Tax Commissioner