Tax Type
Retail Sales and Use Tax
Description
Nonprofit baseball and softball programs; Occasional sales
Topic
Exemptions
Property Subject to Tax
Date Issued
03-28-1991
March 28, 1991
Re: Request for Ruling: Retail Sales and Use Tax
Dear******************
This will reply to your letter to************* in which you requested a ruling whether the************************* (the "Taxpayer") is exempt from the retail sales and use tax.
FACTS
The Taxpayer is a nonprofit organization which sponsors baseball and softball programs and contests for youths in the **********community. The Taxpayer seeks a ruling on the applicability of the retail sales and use tax to its organization.
RULING
Va. Code §58.1-608(8)(k) provides an exemption from the retail sales and use tax for:
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- [t]angible personal property purchased for use or consumption by or sold by a nonstock, nonprofit charitable organization, exempt from taxation under §501(c)(3) of the Internal Revenue Code and from local real estate taxation and which is organized exclusively to foster, sponsor and promote physical education, athletic programs and contests for youths in the Commonwealth.
Under principles established by the courts, taxation is the rule and exemption is the exception. Therefore, exemptions from the sales and use tax are strictly construed.
Based upon the strict construction used in interpreting sales and use tax exemptions, not all nonprofit organizations providing physical education and athletic programs for youths qualify for the above exemption. In order to qualify for the exemption, an organization must be organized not-for profit, exempt from taxation under IRC §501(c)(3), exempt from local real estate taxation, and organized exclusively for the stated purpose.
While the Taxpayer is a nonprofit organization involved in athletic programs and contests for youths in the Commonwealth, it fails to meet the local real estate taxation requirement contained in the exemption. Thus, the Taxpayer fails to qualify for the exemption.
While I am mindful of the worthwhile purpose which the Taxpayer serves, absent a statutory exemption that would allow the Taxpayer to make purchases exempt from the tax, the department has no authority to grant 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 use tax on a Consumer Use Tax Return, Form ST-7.
The Taxpayer may qualify for an exemption from the collection of the tax on its fund-raising activities if it meets the "occasional sale" exemption found at Va. Code §58.1-608(10(b). However, the Taxpayer would be required to pay the tax to its vendors on any items to be sold at an occasional sale. See the enclosed copy of P.D. 91-23 which addresses this issue.
If you have further questions, please contact the department.
Sincerely,
W. F. Forst
Tax Commissioner
Rulings of the Tax Commissioner