Tax Type
Retail Sales and Use Tax
Description
Nonprofit criteria
Topic
Exemptions
Property Subject to Tax
Date Issued
01-28-1994
January 28, 1994
Re: Request for Ruling: Retail Sales and Use Tax
Dear****************
This is in response to your letter of September 20, 1993 in which you seek an exemption from the sales and use tax on behalf of **************("the Taxpayer").
FACTS
The Taxpayer is a nonprofit corporation exempt from taxation under §501 (c)(3) of the Internal Revenue Code whose purpose is to provide parents an opportunity to learn and practice positive ways to interact and to teach their children. Through collaboration with the Richmond City Schools and other agencies, the Taxpayer provides parents opportunity for exposure to a quality early childhood environment and to give parents time to be directly involved in the educational experiences of their children.
DETERMINATION
There is no general exemption from the retail sales and use tax for nonprofit organizations. However, Va. Code §58.1-609.8(15), formerly §58.1-608(8)(o), provides an exemption from the tax for:
-
- tangible personal property purchased for use or consumption by a nonprofit organization which under contract with a municipality operates Head Start programs, extended day care programs, and a shelter for runaways.
Further, Va. Code §58.1-609.4(15) [formerly 608(4)(o)] provides an exemption from the tax for a nonprofit organization "organized exclusively to combat illiteracy ... within the metropolitan Richmond area." (Emphasis added)
Under principles established by the courts, taxation is the rule and exemptions from the tax are strictly construed. Therefore, in order to qualify for exemption under §58.1-609.8(15), an organization must provide all the programs set forth in the statute and do so under contract with a municipality. Furthermore, the exemption set out in §58.1-609.4(15) is reserved for organizations organized exclusively to combat illiteracy.
Based on our review of the information you provided, and applying the rule of narrow construction for exemptions from taxation, it does not appear that the Taxpayer meets the necessary criteria for either of these statutes. Absent a statutory exemption that would allow the Taxpayer to make purchases exempt of the tax, the department has no authority to grant an exemption.
Therefore, notwithstanding its worthwhile purposes, the Taxpayer is required to pay the tax to retailers on all purchases of tangible personal property. If the retailer is not registered to collect the tax, the Taxpayer must remit the tax directly to the department on a Consumer Use Tax Return, Form ST-7.
I regret that my response cannot be favorable, but please contact the department if you need further assistance.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/7601I
Rulings of the Tax Commissioner