92-240 | Virginia Tax

Tax Type

Retail Sales and Use Tax

Description

Nonprofit organization providing recreational activities to children with cancer

Topic

Exemptions

Property Subject to Tax

Date Issued

11-20-1992

November 20, 1992

Re: Request for Ruling; Retail Sales and Use Tax

Dear****************

This will reply to your letter of November 20, 1991, in which you request a ruling on the application of the Virginia sales and use tax on purchases made by***********(the "Taxpayer").

FACTS

The Taxpayer is a nonprofit organization exempt from income taxation under §501(c)(3) of the Internal Revenue Code, organized to provide camping and recreational activities to children with cancer and their families. You seek an exemption to allow the Taxpayer to purchase items exempt from the Virginia retail sales and use tax.

RULING

Va. Code §58.1-608(7)(h) provides, an exemption from the retail sales and use tax for:

- Tangible personal property purchased by a voluntary health organization exempt from taxation under §501(c)(3) of the Internal Revenue Code and organized exclusively for the purpose of providing direct therapeutic and rehabilitative services, such as speech therapy, physical therapy, and camping and recreational activities, to the children and adults of the Commonwealth regardless of the nature of their disease or socio-economic position.

To qualify for the above exemption, an organization must meet all of the criteria set forth above. Although the Taxpayer meets some of the criteria above, its overall focus appears to be narrower than that of the organization for which the exemption was enacted. None of the information provided indicates that the Taxpayer is a voluntary health organization. In addition, the fact that the Taxpayer is providing camping and recreational activities to children and adults of the Commonwealth is not enough to qualify for the exemption; the organization must provide direct therapeutic and rehabilitative services. The information submitted does not indicate that such services are provided by the Taxpayer. Therefore, based on the doctrine of strict construction adopted by the Virginia courts in interpreting sales tax exemptions, the Taxpayer does not qualify for the exemption.

Notwithstanding the worthwhile purpose the Taxpayer serves, absent a statutory exemption that would allow it to make purchases exempt of the tax, the department has no authority to grant an exemption to the Taxpayer. Therefore, the Taxpayer is required to pay the tax to the retailer 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 tax on a Consumer Use Tax Return, Form ST-7 (copy enclosed).

If you have any questions, please contact the department.

Sincerely,

W. H. Forst
Tax Commissioner

OTP/5773F

Rulings of the Tax Commissioner