Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, private schools, and churches; Professional societies
Topic
Taxability of Persons and Transactions
Date Issued
10-27-1994
October 27, 1994
Re: Request for Ruling: Retail Sales and Use Tax
Dear**********
This will reply to your letter of September 19, 1994 in which you seek a ruling on the application of the sales and use tax.
FACTS
**********(the Taxpayer) is an accounting firm with many nonprofit organizations as clients. The Taxpayer requests a ruling on the application of the tax to these nonprofit organizations and specifically to medical and legal professional societies.
RULING
Virginia law does not provide a general exemption from the sales and use tax for nonprofit organizations. The only exemptions from the tax are those set out in Code of Virginia §§ 58.1 -609.1 through 58.1 -609.10. The exemptions available to nonprofit organizations are codified primarily in §58.1-609.8 (nonprofit civic and community service exemptions) and § 58.1-609.9 (nonprofit cultural organization exemptions). Also refer to§§ 58.1 -609.4 and 58.1 -609.7 which set out educational and medical related exemptions, respectively. Further, 58.1-608.1 addresses refunds of sales and use taxes paid by certain nonprofit organizations which build, repair or rehabilitate low-cost housing.
There is not enough information in your correspondence to determine which of the Taxpayer's nonprofit clients may enjoy an exemption from the tax. However, a review of the applicable statutes indicates that currently there are no exemptions for nonprofit medical or legal professional societies. Lacking a statutory exemption, the department has no authority to grant an exemption. Accordingly, these societies are required to pay the tax on their purchases of tangible personal property. If the societies' vendors are not registered to collect the tax, the organizations must report and pay the tax on a Consumer Use Tax Return, Form ST-7.
Notwithstanding the above, even those nonprofit organizations which do not enjoy a statutory exemption may be exempt on purchases of brochures, fund raising materials and certain other printing for distribution outside Virginia as provided in Virginia Regulation (VR) 630-10-86( 8). Additionally, purchases made in connection with producing publications which are available on subscription to the general public may be exempt as discussed in the enclosed Public Documents 91-25 (3/11/91) and 91-150 (812191).
Pursuant to Senate Bill 148 enacted by the 1994 General Assembly, organizations seeking legislation for a sales and use tax exemption are required to submit to the department information relating to their operation, administration and financing. For further information on this process please refer to the enclosed Virginia Tax Bulletin 94-13 and "Request for Sales and Use Tax Exemption."
I trust that the foregoing and the enclosed information is helpful. You may contact ****************if you have any further questions regarding this issue.
Sincerely
Danny M. Payne
Tax Commissioner
OTP/8505I
Rulings of the Tax Commissioner