Tax Type
Retail Sales and Use Tax
Description
Nonprofit Purchases of brochures and other promotional materials
Topic
Exemptions
Property Subject to Tax
Date Issued
05-11-1992
May 11, 1992
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear ****
This will reply to your letter in which you seek a correction of an assessment for brochures and other promotional materials purchased by * * * (the Taxpayer).
FACTS
The Taxpayer, a nonprofit corporation exempt from income taxation under § 501(c)(3) of the Internal Revenue Code, was organized to preserve the historically significant estate of * * * The Taxpayer purchases brochures and other materials to promote the estate and for fund-raising purposes. The Taxpayer was audited for the period April 1988 through February 1991 and held liable for the tax on those materials distributed in Virginia. While some of the materials are distributed outside of Virginia, the auditor found that the majority of the materials were distributed at places within the Commonwealth. The Taxpayer seeks correction of the assessment contending that a majority of the promotional materials are distributed outside the state and thus exempt.
DETERMINATION
Va. Code § 8.1-608(A)(6)(d) provides an exemption for "[c]atalogs, letters, brochures, reports, and other similar printed materials . . . when stored for twelve months or less in the Commonwealth and distributed for use without the Commonwealth." In the present case, the Taxpayer purchases brochures and other printed materials for promotional and fund-raising purposes.
For certain printed materials, i.e., brochures, flyers, etc., the auditor allocated a 35% ratio to the amount of printed materials for distribution without the Commonwealth and 65% for those materials retained for use within the Commonwealth. The percentages allocated by the auditor were reasonable absent any documentation from the Taxpayer that would indicate the actual amount of printed materials sent outside the Commonwealth. Additionally, while some of the materials were picked up by out-of-state persons, they were picked up at locations within the Commonwealth, e.g., Virginia Visitors Centers, and thereby do not qualify for the printed materials exemption.
While some of the printed materials (calendar of events, invitations, etc.) were promotional type items that might qualify for the exemption, the Taxpayer provided no documentation to dispute the auditor's findings that the items were for distribution within the Commonwealth and therefore taxable.
Guidance as to the application of the tax to printed materials is also found in Virginia Regulation 630-10-86 (Copy enclosed). Promotional materials for out-of-state use are discussed in § 8 of the regulation (the June 30, 1989 expiration date for the exemption should be disregarded as the 1989 General Assembly made the exemption permanent).
Additionally, there is no general exemption from Virginia retail sales and use tax for nonprofit organizations. While I am mindful of the worthwhile cause the Taxpayer serves, absent a specific exemption that would allow the Taxpayer to make purchases exempt from the tax, the department has no authority to grant such an exemption.
Therefore, absent a specific exemption for the Taxpayer, I find no basis for correction of the tax assessed, which is due and payable in full.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner