Tax Type
Retail Sales and Use Tax
Description
Youth softball association; Once a year sale
Topic
Exemptions
Date Issued
03-28-1991
March 28, 1998
Re: Request for Ruling: Retail Sales and Use Tax
Dear ****
This will reply to your letter of February 8, 1991 in which you request a ruling on the applicability of the Virginia retail sales and use tax to the * * * * (the Taxpayer).
FACTS
The Taxpayer is a nonprofit organization exempt from income taxation under § 501 (C) (3) of the Internal Revenue Code, organized to educate girls of the community, regardless of race or financial status, in the principles of good sportsmanship and to provide a recreational outlet through competitive softball games. The Taxpayer seeks a ruling on the applicability of the retail sales and use tax on its purchases and on the collection and remittance of the tax on its yearly candy sale.
RULING
There is no general exemption from the Virginia retail sales and use tax for purchases made by nonprofit organizations. The only exemptions from the tax are set out in Va. Code § 58.1-608 (copy enclosed). While Va. Code § 58.1-608 (8) (k) provides an exemption for nonprofit organizations exempt from federal income taxation and local real estate taxation organized exclusively to foster, sponsor and promote physical education, athletic programs and contests for youths in the Commonwealth, the Taxpayer fails to qualify for this exemption because the Taxpayer does not meet the local real estate exemption requirement.
However, nonprofit organizations are exempt from the collection of the tax on "occasional sales" as provided in 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 the regulation, an organization is not required to register and collect the sales tax when it conducts sales on three or fewer occasions each year during a one year period. Since the Taxpayer only conducts a sale once a year, it is not required to collect the sales tax from the persons to whom sales are made.
The Taxpayer is still required to pay the tax to its vendor on all purchases of tangible personal property, including the candy purchased for fund-raising. If the vendor is not registered to collect and remit the tax, the Taxpayer must report and pay use tax on the tangible personal property purchased on a Consumer's Use Tax Return, Form S-7.
If you have any further questions, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner