Tax Type
Retail Sales and Use Tax
Description
Institution of learning; Sale of textbooks and software
Topic
Exemptions
Property Subject to Tax
Date Issued
04-28-1994
April 28, 1994
Re: Ruling Request: Retail Sales & Use Tax
Dear**********
This will reply to your letter regarding the sales and use tax status for certain sales made by ********* (the "Taxpayer").
FACTS
The Taxpayer is a nonprofit language foundation that teaches English as a second language to students traveling from abroad. The department's August 18, 1988, letter, copy enclosed, stated that the Taxpayer was a nonprofit institution of learning which satisfied the criteria for exemption of its purchases of tangible personal property under Va. Code §58.1-608(23) [now recodified as Subdivision 2 of Va. Code §58.1-609.4]. In a phone conversation with a member of my staff, you indicate that the Taxpayer's operations have not changed since the Commissioner's letter.
In order to better serve the Virginia and out-of-state students, instructors, and other customers, the Taxpayer is considering selling books and software disks. In that Virginia Regulation (VR) 630-10-74 has been revised, the Taxpayer is requesting clarification of the tax status for sale of books and software.
RULING
Institution of Learning
Subdivision 1 of Va. Code §58.1-609.4, copy enclosed, provides that a nonprofit institution of learning may sell school textbooks to its students exempt of the tax when the textbooks have been certified by a department or instructor of the institution as required for students attending the institution's courses. Therefore, school textbooks -may be sold to students of the institution of learning exempt of the tax regardless of whether they are Virginia residents. However, there is no provision to exempt from taxation the sale of other forms of tangible personal property.
Since the Taxpayer qualifies as a nonprofit institution of learning, the Taxpayer may sell required school textbooks to students exempt of the tax regardless of the whether they are Virginia residents. However, under the doctrine of strict construction, as indicated in the enclosed copy of VR 630-10-35.2, this exemption does not apply to the sale of software or to the sale of school textbooks to instructors, or other persons who are not students of the institution. The Taxpayer must charge the tax on the sales price of such items and remit the tax to the department.
Interstate Commence
VR 630-10-51, copy enclosed, provides that, "The tax does not apply to sales of tangible personal property in interstate or foreign commerce." Therefore, when the purchaser takes possession of the property outside of Virginia and no use is made in Virginia, then the seller is not required to charge the tax.
In this instance, textbooks, software, or other tangible personal property that is sold to customers and shipped by the Taxpayer to the customers outside of Virginia using a common carrier, the United States mail, or other methods represented in VR 630-10-51, are exempt from the tax.
If further assistance in needed, please contact the department.
Sincerely,
Danny M. Payne
Acting Tax Commissioner
OTP/7414N
Rulings of the Tax Commissioner