Tax Type
Retail Sales and Use Tax
Description
Tax Bulletin Nonprofits
Topic
Exemptions
Date Issued
09-15-1992
VIRGINIA SALES AND USE TAX:
NONPROFIT ORGANIZATION EXEMPTIONS
Generally
There is no general exemption from the Virginia retail sales and use tax for nonprofit organizations. The only exemptions from the tax are those specifically enacted by the General Assembly and set out in Va. Code §§ 58.1-608 and 58.1-608.1. Therefore, an organization that is exempt from federal and state income taxes, (i.e., Internal Revenue Code §501(c)(3) corporations) will not necessarily be exempt from the Virginia Sales and Use Tax.
In determining which organizations qualify for the exemptions from the tax, the Department of Taxation is bound by court decisions to strictly construe laws granting tax exemptions. This means that for an organization to qualify for an existing exemption, the organization must meet all of the requirements provided in the specific law.
Purchases
All tangible personal property purchased for use or consumption by religious, charitable, civic, cultural and other nonprofit organizations is taxable unless specifically exempt. To claim an exemption, a purchaser is required to furnish the seller with the applicable exemption certificate, or a letter of exemption issued by the Department of Taxation. If the nonprofit organization is not regularly engaged in selling tangible personal property and buys its merchandise from a dealer who is registered to collect the sales or use tax, the organization pays the tax to its supplier for payment to the state. If the supplier is not registered to collect the sales or use tax, the organization must report and pay the tax on a Consumers Use Tax Return, Form ST-7. This includes purchases made by a chapter of an organization from its parent organization.
Sales
If a nonprofit organization regularly engages in selling tangible personal property, it is required to register as a dealer and collect and pay the tax on retail sales unless specifically exempted. There is no exemption for transfers or sales between separately organized chapters of an organization, including sales to or from a chapter of an organization and its parent organization.
Sale for Resale
A sale for resale is a "retail sale" of tangible personal property that is not subject to tax. Therefore, a nonprofit organization that is regularly engaged in selling tangible personal property may purchase such tangible personal property exempt from the tax using a resale exemption certificate (Form ST-10).
Occasional Sales
The occasional sale exemption may be applied to certain sales by a nonprofit organization that is not regularly engaged in making sales. An organization that makes sales on three or fewer separate occasions within one calendar year, is not required to register as a dealer and to collect the tax (sales made at fairs, flea markets, festivals and carnivals are not considered occasional sales). An occasional sale also includes the sale or exchange of all or substantially all the assets of any business, provided that such sale does not require the holding of a certificate of registration.
Confirmation of Exemption
Organizations that have questions regarding their taxable status are encouraged to contact either the department's Taxpayer Assistance Section, Post Office Box 1880, Richmond, Virginia 23282-1880, phone (804) 367-8037, or their nearest District Office.
Rulings of the Tax Commissioner