Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, private schools, and churches; Christian ministry camp
Topic
Taxability of Persons and Transactions
Date Issued
07-28-1994
July 28, 1994
Re: Request for Ruling: Sales and Use Tax
Dear*****************
This will reply to your letter of December 10, 1993 in which you request a ruling as to the application of the Virginia sales and use tax to your client's organization, *********(the Taxpayer).
FACTS
The Taxpayer is a nonprofit corporation exempt from federal taxation under § 501(c)(3) of the Internal Revenue Code. The Taxpayer was organized for the purpose of acquiring real estate in Virginia on which to develop a camp which is devoted to providing a Christian ministry to high school students. The camp will consist of dormitories, a cafeteria, and buildings which will be used for ministry purposes. The Taxpayer is an outgrowth of a national organization which is located in another state. The Taxpayer is seeking a sales and use tax exemption as a nonprofit church under Va. Code §58.1-609.8(2).
RULING
There is no general exemption from the Virginia Retail Sales and Use Tax for nonprofit organizations. The only exemptions from the sales tax are set out specifically in Va. Code §§58.1-609.1 through 58.1-609.10.
Va. Code §58.1-609.8(2) provides an exemption from the tax for certain tangible personal property purchased by a nonprofit church. To qualify for this exemption, however, a church must i) be exempt from taxation under IRC § 501(c)(3) or exempt from local property taxation under Va. Code §58.1-3606, and ii) have a congregation or membership that meets at a single location for regularly scheduled worship services. This exemption includes purchases by a nonprofit church of tangible personal property used in religious worship services by the congregation or membership while meeting in a single location, and tangible personal property used in 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. This exemption also extends to food, disposable serving items, cleaning supplies and teaching materials used in the operation of camps of conference centers by the church or an organization composed of churches that are exempt under this code section.
The department's policy with respect to exemptions from the sales and use tax is dictated by the rule of strict construction established by the Virginia courts. The Virginia Supreme Court has consistently held that "exemption from taxation is the exception, and where there is any doubt, the doubt is resolved against the one claiming exemption." Golden Skillet Corp. v. Commonwealth, 214 Va. 276, 199 S.E.2d 511 (1973).
As set forth in your letter, the Taxpayer is organized for the purpose of promoting evangelistic Christian testimony among adolescents and to establish and maintain places of public worship. However, based on the strict construction of the exemption set forth above, in order to enjoy the exemption, there must be a congregation or membership meeting in a single location or the tangible personal property must be used in a public church building in carrying out the work of the church. It is apparent from the information provided, the Taxpayer does not have a regular congregation or membership that meet at a single location for regularly scheduled worship services, thus denying the exemption. Also, in order for a church camp to enjoy the exemption, the camp must be run by a church or an organization consisting of churches. As established above, the Taxpayer does not qualify as a church, therefore the exemption available to church camps would likewise not apply. While I am mindful of the worthwhile purpose that the Taxpayer serves, absent a statutory exemption that would allow the Taxpayer to make purchases exempt from the tax, the department has no authority to grant such an exemption.
The Taxpayer is required to pay the tax on all purchases of tangible personal property. If the retailer is not registered for the collection of the tax, the Taxpayer must report and pay the use tax on a Consumer Use Tax Return, Form ST-7.
If you should have any questions, please feel free to contact the department.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/7548K
Rulings of the Tax Commissioner