Tax Type
Retail Sales and Use Tax
Description
Environmental organization; Strict construction of exemption criteria
Topic
Exemptions
Date Issued
05-14-1993
PD 93-126
Re: Request for Ruling: Retail Sales and Use Tax
Dear*************
This will reply to your letter of April 14, 1993 whereby you seek an exemption from the retail sales and use tax for ***********(the Taxpayer).
FACTS
The Taxpayer is a Virginia based environmental organization which is exempt from federal income taxation under §501(c)(4) of the Internal Revenue Code. The Taxpayer is organized to fund projects, programs and measures designed to (i) alleviate the effects of Kepone upon the environment; (ii) improve the quality of the environment in and about Virginia; and, iii) foster the preservation, protection and enhancement of water quality in and about the various states of the country.
DETERMINATION
Virginia law does not provide a general exemption from the sales and use tax for nonprofit organizations. The only exemptions from the tax are those set out in Va. Code §58.1-608(A) (enclosed).
Va. Code §58.1-608(A)(9)(i) provides an exemption from the tax for:
-
- [t]angible personal property purchased for use or consumption by a national and international, nonprofit, scientific, and educational organization exempt from taxation under § 501(c)(3) of the Internal Revenue Code whose resources are devoted to preserving ecologically significant areas in order to safeguard rare or endangered species or critical natural habitats.
Under principles established by the courts, taxation is the rule and exemption is the exception. Therefore, exemptions from the sales and use tax are strictly construed, and to qualify for an exemption, an organization must meet all of the enumerated criteria.
Based upon of the information you have provided, the Taxpayer is organized primarily to provide grants, loans and other assistance to environmental groups and projects. Thus, applying the rule of narrow construction for exemption from taxation, the Taxpayer does not qualify for the environmental exemption authorized by Va. Code § 58.1-608(A)(9)(i).
I regret that I am not able to provide you with a more favorable response; however, please let me know if you have any additional questions or if I can be of any further assistance.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/6908I
Rulings of the Tax Commissioner