Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, Multimedia instruction
Topic
Taxability of Persons and Transactions
Date Issued
09-22-1995
September 22, 1995
Re: Request for Ruling: Retail Sales and Use Tax
Dear******************:
This will reply to your letter of April 25, 1995 in which you request a ruling on the application of the retail sales and use tax to ************** (the "Taxpayer").
FACTS
The Taxpayer, a nonprofit corporation exempt from federal income taxation under Internal Revenue Code § 501(c)(3), is organized to teach multimedia production skills to inner city youth and young adults. Specifically, the Taxpayer (1) conducts resident programs and nonresident workshops and classes in the areas of television, motion pictures and related media; (2) provides opportunities for hands-on experience and exposure to professional techniques; (3) teaches and trains young people to produce television, film, video and other related media products; and (4) provides opportunities for education and inspiration relating to issues relevant to young people.
The Taxpayer requests a ruling whether it qualifies for the exemption for noncommercial educational telecommunications entities under Code of Virginia § 58.1609.4(2).
RULING
There is no general exemption from the retail sales and use tax for nonprofit organizations. The only exemptions from the tax are set out in Code of Virginia § 58.1-609.1 through 58.1-609.10. 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).
Code of Virginia § 58.1-609.4(2) exempts from the retail sales and use tax tangible personal property for use or consumption by, sold by, or donated to a noncommercial educational telecommunications entity. To qualify for this exemption, an organization must: (1) be nonprofit; (2) not accept commercial advertising; and (3) have its programming serve an educational purpose.
While mindful of the worthwhile purpose the Taxpayer serves, based on the information you have provided, it appears that the Taxpayer does not satisfy all the necessary criteria for exemption under Code of Virginia § 58.1-609.4(2). The Taxpayer is not providing educational programming, but rather is introducing teens to television production skills through various activities, including school video yearbook production, conflict resolution dramatic vignettes, lectures and instruction from local and national professionals, and visits to local TV stations and cable systems. Because the Taxpayer is not actually providing educational programming itself, it is not eligible for this exemption. Therefore, the Taxpayer is required to pay the tax on all purchases of tangible personal property. If a retailer is not registered to collect the tax, 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 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 regarding this matter, you may contact***********.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/9658F
Rulings of the Tax Commissioner