Tax Type
Retail Sales and Use Tax
Description
Occasional Sales, Including Mergers; Annual Cultural Festival
Topic
Taxability of Persons and Transactions
Date Issued
06-05-1992
June 5, 1992
Dear*****************:
This will reply to your letter of April 22, 1992 in which you seek exemption from the retail sales and use tax under the "occasional sale' exemption for sales by your organization, * * * (the "Taxpayer'), for sales made at its annual event.
FACTS
The Taxpayer, a nonprofit organization exempt from federal income taxation under I.R.C. § 501(c)(3) and organized to bring together artists, musicians and other performers to celebrate arts and culture in the * * * sponsors an annual festival which is held over an eleven day period in May. It sells soft drinks, snowcones, cotton candy, buttons (for admission to concerts and discounts on T-shirts), beer, the T-shirts. It seeks a ruling whether its sales at the event may be made exempt from the tax under the occasional sale exemption in Va. Code § 58.1-608(A)(10)(b).
RULING
Va. Code § 58.1-608(A)(10)(b) provides an exemption from the tax for occasional sales defined in Virginia Regulation (VR) 630-10-75 as including "[a] sale by a person who is engaged in sales on three or fewer occasions within one calendar year, except that sales at fairs, flea markets, circuses and carnivals and sales made by peddlers and street vendors are not occasional sales.'
Applying the facts in this case to the statute and regulation cited above, I find that the Taxpayer's sales do not qualify for the exemption as "occasional sales' as the Taxpayer's festival falls within the category of "fairs, flea markets, circuses and carnivals.'
When making sales, the Taxpayer in effect holds itself out as a retailer and is in competition with businesses or other organizations which are required to collect the tax due to their sales activities. Thus, the Taxpayer is required to collect the tax on its sales of tangible personal property. However, sales of tickets, fees, charges or voluntary contributions for admissions to concerts or places of entertainment, exhibition or display are not taxable provided no entitlement or provision for food, drinks, or tangible personal property is included in the amount.
The Taxpayer may, however, 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). This Code section, effective July 1, 1990 through June 30, 1994 provides an exemption from the sales and use tax for:
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- tangible personal property purchased for use or consumption by a nonprofit organization which is exempt from taxation pursuant to § 501(c)(3) of the Internal Revenue Code and which coordinates and promotes art in the Roanoke Valley.
When making its purchases for its own use, the Taxpayer should provide its suppliers with a copy of this letter to obtain the exemption.
You should note that persons selling at the festival also do not qualify for the occasional sale exemption and thus must obtain a certificate of registration for the purpose of making such sales (see copy of VR 630-10-38, copy enclosed). However, it is possible to reduce the administrative burden placed upon the organizations participating in the Taxpayer's event if the Taxpayer will agree to obtain a single temporary sales tax registration to cover all organizations making sales at the event. If such a temporary registration is desired, the Taxpayer should contact the *********** District Office at **************.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner