Tax Type
Retail Sales and Use Tax
Description
Nonprofit organization; sales and purchases
Topic
Collection of Tax
Exemptions
Property Subject to Tax
Date Issued
05-23-1994
May 23, 1994
Re: Request for Ruling: Retail Sales & Use Tax
Dear***********
This will reply to your letter seeking a ruling on whether your organization, the ****** (the "Taxpayer"), qualifies for exemption from the retail sales and use tax on its purchases and sales.
FACTS
The Taxpayer, a nonprofit organization exempt from income taxation under IRC §501(c)(3), is a garden club whose primary project has been the establishment and maintenance of a garden at a local nonprofit hospital. You seek an exemption for the Taxpayer from the sales and use tax.
RULING
There is no general exemption from the Virginia retail sales and use tax for nonprofit organizations. The only exemptions from the tax are set out in Va. Code §§58.1-609.1 through 58.1-609.10. While there is an exemption in subdivision 10 of Va. Code §58.1-609.9 for purchases by certain botanical gardens, from the information provided, it does appear that the Taxpayer meets the exemption criteria. To qualify for the botanical garden exemption, an organization must meet all of the following criteria. It must:
-
- 1) be exempt from taxation under IRC §501(c)(3);
2) be organized exclusively to provide a public park and botanical garden for the citizens of the Commonwealth; and
3) promote the advancement of botanical science through research and education of science students.
- 1) be exempt from taxation under IRC §501(c)(3);
Furthermore, the fact that certain of your purchases are for the garden of a nonprofit hospital has no bearing on the tax status of such purchases. The Taxpayer is required to remit the tax on all purchases of tangible personal property for its own use or consumption or for donation to the nonprofit hospital or another organization. However, if the hospital itself makes the purchases, such purchases may be made exempt of the tax under subdivision 4 of Va. Code §58.1-609.7.
With respect to your question on your organization's poinsettia sale, I am enclosing a copy of Virginia Regulation (VR) 630-10-75 which describes the occasional sale exemption. Under the regulation, an organization is not required to register and collect the sales tax when it conducts sales on three or fewer occasions each year. While you did not indicate the duration of the sale, if it is for a short period of time (e.g., 3 to 4 days) it would qualify as an occasional sale and the Taxpayer would not be required to collect the tax on its sales of poinsettias. The Taxpayer, instead, would be required to pay the tax to its suppliers on the purchase of the poinsettias.
However, if the Taxpayer's poinsettia sale lasts for more than a few days, the Taxpayer is deemed to be a retailer as it may be in competition with businesses or other organizations which are required to collect the tax due to their sales activities. In such event, the Taxpayer is required to register as a dealer with the department and collect and remit the tax on its sales. As a registered dealer, however, the Taxpayer may purchase items for resale exempt of the tax using a resale exemption certificate, Form ST-10. I am enclosing a copy of P.D. 90-39 (3/19/90) which addresses this issue.
If you have any other questions about this matter, please let me know.
Sincerely,
Danny M. Payne
Acting Tax Commissioner
OTP/7227H
Rulings of the Tax Commissioner