Tax Type
Retail Sales and Use Tax
Description
Exemption criteria; Nonprofit organization
Topic
Exemptions
Date Issued
03-25-1994
March 25, 1994
Re: Request for Ruling: Retail Sales and Use Tax
Dear**********
This will reply to your letter of November 21, 1993 in which you seek a sales and use tax exemption for the *********("the Taxpayer").
FACTS
The Taxpayer is a nonprofit corporation exempt from taxation under §501 (c)(3) of the Internal Revenue Code. It is organized to conserve, maintain, protect and restore the natural resources of the United States; and to promote means and opportunities for the education of the public with respect to such resources and their enjoyment and utilization. Also, through collaboration with state and local government agencies, the Taxpayer is active in updating safe hunting and fishing regulations and teaching courses in hunter education and firearm safety.
DETERMINATION
There is no general exemption from the retail sales and use tax for nonprofit organizations. However, Va. Code §58.1-609.8(24) provides an exemption from the tax for:
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- tangible personal property purchased for use or consumption by a nonprofit organization exempt from taxation under §501 (c)(3) of the Internal Revenue Code and organized exclusively for the purpose of promoting and supporting conservation and environmental issues throughout the Commonwealth by encouraging the protection and restoration of waters, wildlife and land; safeguarding the public health by eliminating pollution; nurturing and improving wildlife stocks; promoting the highest standards of sportsmanship and strengthening farmer-sportsmen understanding; and performing other environmental services. (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(24), an organization must be organized to exclusively provide all the programs set forth in the statute.
Based on a review of the information you provided, it is apparent that the Taxpayer meets many of the environmental criteria set out in the exemption. However, it also appears that the Taxpayer exceeds the statutory limitations in regard to its activities in hunter education and firearm training.
Additionally, legislation was introduced during the 1994 General Assembly under House sill 139 which would have extended a sales and use tax exemption to the Taxpayer. House Bill 139 was not enacted, but the introduction of that legislation further indicates that the Taxpayer does not enjoy the exemption set forth in §58.1-609.8 (24).
Accordingly, and applying the rule of strict construction for exemptions from taxation, the Taxpayer does not qualify for the exemption noted above. 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 my response cannot be favorable, but please contact the department if you need further assistance.
Sincerely,
Danny M. Payne
Acting Tax Commissioner
OTP/7530I
Rulings of the Tax Commissioner