Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, private schools, and churches; Organization promoting education and community service
Topic
Taxability of Persons and Transactions
Date Issued
11-17-1994
November 17, 1994
Re: Request for Ruling: Retail Sales and Use Tax
Dear*****************
This will reply to your letter of November 6,1994 in which you request a ruling on the application of an exemption from the Virginia sales and use tax for purchases made by *******
(the "Taxpayer" ) .
FACTS
The Taxpayer is a nonprofit, nonstock corporation exempt from taxation under 501 (c)(3) of the Internal Revenue Code. Its purpose is to support with voluntary efforts, including financial contributions, the*************for promotion of research, education, and community service. You ask if the Taxpayer qualifies for the exemption provided by Code of Virginia §58.1-609.9(10).
RULING
There is no general exemption from the Virginia Retail Sales and Use Tax for nonprofit organizations. While there are several exemptions set out in Code of Virginia § 58.1 -609.9 that apply to specific nonprofit museums and parks, the Virginia courts have consistently required strict construction of these exemptions, i.e., where there is any doubt as to the application of an exemption, the doubt is resolved against the one claiming the exemption. See Golden Skillet Corporation v. Commonwealth, 214 Va. 276, 199 S.E.2d 511 (1973).
The exemption which you cite, Code of Virginia §58.1 -609.9(10), applies to the nonprofit, nonstock corporation exempt from taxation under Internal Revenue Code § 501 (c)(3) and organized exclusively to provide a public park and botanical garden for the citizens of the Commonwealth, and to promote the advancement of botanical science through research and education of science students. Based on the information provided, the Taxpayer is not organized exclusively for the purposes set forth in the exemption. The Taxpayer is organized for support purposes and to promote research, education, and community service. The scope of operations and purpose of the Taxpayer are more comprehensive than those of the parks and botanical gardens that qualify for exemption. Therefore, the exemption is inapplicable under the doctrine of strict construction. Furthermore, the exemption provided by Code of Virginia §58.1-609.9(10) applies to the park and botanical garden itself, as opposed to support organizations such as the Taxpayer.
While mindful of the worthwhile purpose the Taxpayer serves, based on the information you have provided, it is clear that the Taxpayer does not satisfy the necessary criteria for exemption under Code of Virginia §58.1-609.9(10). The Taxpayer is required to pay the tax on all purchases of tangible personal property. If a retailer is not registered, the Taxpayer must remit the tax on the consumer use tax return, Form ST-7.
Enclosed is a questionnaire for legislative consideration of a sales and use tax exemption request and Tax Bulletin 94-13, which explains the procedure and information required. If you are interested in pursuing exemption legislation during the 1995 General Assembly session, the questionnaire should be completed and forwarded to the legislator who will sponsor the bill for exemption. The legislator must sign the questionnaire and submit it to the department by December 1.
If you have any questions regarding this matter, you may contact**************.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/8627F
Rulings of the Tax Commissioner