Tax Type
Retail Sales and Use Tax
Description
College Auxiliary Foundation; Nonprofit criteria
Topic
Exemptions
Property Subject to Tax
Date Issued
03-20-1991
March 20, 1991
Re: Request for Ruling: Retail Sales and Use Tax
Dear********************
This will reply to your letter of November 29, 1990 in which you request a ruling regarding the applicability of the retail sales and use tax on purchases directly connected with the operations of the*********************(the Taxpayer).
FACTS
The Taxpayer is a charitable foundation exempt from income taxation under §501(C)(3) of the Internal Revenue Code and exempt from local property taxes under Va. Code §58.1-3618 organized to promote, support, and aid the ***********in its operation and support of enterprises such as athletics, recreation, student health and fellowship. Profit derived from the activities of the Taxpayer are used exclusively for the benefit of the University********************.
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 (copy enclosed). Absent a statutory exemption that would allow the Taxpayer to make purchases exempt of the tax, the department has no authority to grant such an exemption.
While there is an exemption for colleges and institutions of learning, based on the facts provided, the Taxpayer would not qualify under this exemption. In order to qualify for the college and institution of learning exemption, the organization must be "similar to a college." Merely being a foundation that supports a college or institution of learning is not sufficient in this case as the Taxpayer is a corporation organized separate and apart from the University (See, P.D. 88-4, 1/4/88).
Further, the Taxpayer would not qualify under the Parent Teacher Association or other association exemption provided under Va. Code §58.1-608(4)(h) because the Taxpayer does not qualify under the requirement that the group or association must be associated with an elementary or secondary school (See. P.D. 88-291, 10/27/88).
Based on the information provided by the Taxpayer, I can find no statutory exemption that would allow the Taxpayer to make purchases exempt of the tax. 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 use tax on a Consumer Use Tax Return, Form S-7.
If you have additional questions, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner