Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, Clothing distributions
Topic
Taxability of Persons and Transactions
Date Issued
08-09-1995
August 9, 1995
Re: Request for Ruling: Retail Sales and Use Tax
Dear*******:
This will reply to your letter of July 19, 1995 in which you seek a Virginia sales and use tax exemption number to make exempt purchases on behalf of the********* (the "Taxpayer"). Based on the circumstances of this case, it will be treated as a ruling request.
FACTS
The Taxpayer is a nonprofit organization exempt from federal taxation under § 501(C)(3) of the Internal Revenue Code. Membership is open to churches located in the ******** geographic area. The Taxpayer's purpose as stated in its bylaws is ".... to collect used clothing and make it available to those in need of it."
The Taxpayer conducts an annual clothing project in August to purchase new clothing which is furnished to needy school children in the community. The Taxpayer requests a tax exempt number to enable it to purchase this clothing exempt of the tax.
RULING
There is no general exemption from the retail sales and use tax for nonprofit organizations (see Virginia Regulation [VR] 630-10-74 enclosed). The only exemptions from the tax are set out in Code of Virginia §§ 58.1-609.1 through 58.1-609.13 (copy enclosed). The Virginia courts have consistently required strict construction of these exemptions, ie., where there is any doubt as to the application of an exemption, the doubt is resolved against the one claiming the exemption. Based on the information presented, there is no exemption in § 58.1-609 that would apply to your organization.
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 of the tax, the department has no authority to grant such an exemption. Therefore, the Taxpayer is required to pay the tax to its vendors on all purchases of tangible personal property. If a vendor is not registered to collect the tax, the Taxpayer must report and pay use tax on a Consumer's 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 1996 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 November 1, 1995.
If you have any questions concerning this letter, you may contact***********.
Sincerely
Danny M. Payne
Tax Commissioner
OTP/9990S
Rulings of the Tax Commissioner