Tax Type
Retail Sales and Use Tax
Description
Nonprofit Occasional sale exemption criteria
Topic
Taxability of Persons and Transactions
Date Issued
12-28-1992
December 28, 1992
Re: Request for Ruling: Retail Sales & Use Tax
Dear***************
This will reply to your letter of September 25, 1992 in which you seek reconsideration of a prior Ruling of the Commissioner, P.D. 92-91 (6/5/92), in which the department ruled that the annual arts celebration event sponsored by your organization, ***********(the "Taxpayer"), does not qualify for exemption from the retail sales tax as an occasional sale.
FACTS
In P.D. 92-91 the department determined that the taxpayer's event-an eleven-day "celebration of the arts" at which all types of music and a variety of dance are presented, fine arts and crafts are on display, hands-on children's activities are offered, and theater is presented - does not qualify as an "occasional sale." Specifically, it was determined that the event falls within the category of "fairs, flea markets, circuses and carnivals." The Taxpayer attempts to distinguish its event from fairs, etc., and maintains that it is a single event which should be exempt from the tax.
RULING
Based upon a review of your recent letter, I continue to find no basis for concluding that the Taxpayer's event qualifies as an occasional sale. Virginia Regulation (VR) 630-10-38 states that "[a]ny person selling tangible personal property at fairs, flea markets, carnivals, circuses, etc. must hold a certificate of registration to collect the sales tax and is required to collect and remit the tax on all such sales." (Emphasis added.) This provision, thus, is applicable not only to the listed types of events but to other similar types of events. The rationale behind this provision is to prevent dealers at these events from being placed at a competitive advantage over other registered dealers in the community.
While obviously not a flea market, circus, or carnival, the Taxpayer's event may be likened to a fair or similar type event as it has family entertainment, sports competitions, music, arts and crafts, children's activities, and other events.
Further, the department has consistently required tax collection on sales made at long-term events such as the Taxpayer's eleven-day festival. Events of such duration clearly have the potential to place other local dealers at a competitive disadvantage and provide a ready contrast to the 1990 ruling cited by the Taxpayer in its ruling request (which involved a two-day event).
However, as indicated in my June 5, 1992 letter, the Taxpayer may purchase tangible personal property for use and consumption by it in its festival as well as throughout the year pursuant to Va. Code §58.1-608(A)(9)(k).
I regret that I am unable to provide you with a more favorable reply. However, you should note that under principles established by the courts, taxation is the rule and exemption is the exception. Thus, exemptions from the tax are strictly construed.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/6471H
Rulings of the Tax Commissioner