Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, private schools, and churches; Church-affiliated day care center
Topic
Taxability of Persons and Transactions
Date Issued
01-11-1994
January 11, 1994
Re: §58.1-1821 Application: Retail Sales and Use Tax
Dear********************
This will reply to your correspondence in which you seek a determination regarding the application of sales and use tax to the*************** (the"Center").
FACTS
The Center is a church affiliated day care provider for preschool children located on church premises. The Center considers itself exempt from the imposition of sales and use tax by authority of Va. Code §58.1-609.8(b), which grants an exemption to churches and their related ministries. The department denied the exemption to the Center and cancelled an exemption certificate held by its vendor based on P.D. 86-30 (2/6/86) which limits the church exemption to church affiliated kindergarten, elementary and secondary schools. The Center requests a determination in light of its relationship to the church.
DETERMINATION
Va. Code §58.1-609.8(b) exempts from the sales and use tax "[t]angible personal property...purchased by churches...for use (i) in religious worship services by a congregation or church membership while meeting together in a single location, and (ii) in the libraries, offices, meeting or counseling rooms or other rooms in the public church buildings used in carrying out the work of the church and its related ministries..."
The Center is supervised by a church committee composed of members elected by the congregation and the church pastor serves as the administrative supervisor. The Center is not a separate legal entity and has been financially subsidized by the church since its inception.
Upon review of the information submitted by the Center, I find basis for concluding that the Center operates as a related ministry of its affiliated church and as such qualifies for exemption from the sales tax on its purchases of tangible personal property.
Accordingly, the Center may reinstate exemption certificates with its suppliers and apply to the department for a refund of the tax paid since March 8, 1993 - the effective date of cancellation of exemption certificates previously provided to suppliers. Supporting documentation with a request for refund should be sent to *********** District Office, ********* Avenue, ************* Virginia 23230.
The department is currently revising the regulation regarding the application of sales and use tax to churches and their related activities. A copy is enclosed for review and your comments are welcomed.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner