Tax Type
Retail Sales and Use Tax
Description
Nonprofit organization; Criteria for exemption
Topic
Exemptions
Date Issued
11-06-1995
November 6, 1995
Re: Ruling Request: Sales and Use Tax
Dear*****************:
This will respond to your letter of October 22, 1995 seeking a ruling on the application of the retail sales and use tax to *****************(the "Taxpayer").
FACTS
The Taxpayer is a nonprofit organization exempt from income taxation under § 501 (c) (3) of the Internal Revenue Code. You seek an exemption for the Taxpayer's purchases of meals, accommodations and tangible personal property in connection with dinners and other fund-raising activities which it hosts at various hotels.
RULING
There is no general exemption from the Virginia retail sales and use tax for nonprofit organizations. See Virginia Regulation (VR) 630-10-74, copy 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, i.e., where there is any doubt as to the application of an exemption, the doubt is resolved against the one claiming the exemption.
Although the Taxpayer may serve charitable, educational or benevolent purposes, absent a copy of the Taxpayer's articles of incorporation or any other information which sufficiently describes the Taxpayer's organizational purposes and operations, we have no choice but to presume that the Taxpayer does not satisfy all of the criteria for a specific exemption. Therefore, in the absence of a specific or general exemption that would allow the Taxpayer to make purchases exempt of the tax, the department has no authority to grant such an exemption.
Assuming that the Taxpayer does not qualify for exemption from the tax, the Taxpayer is required to pay the tax to its vendors on all purchases of tangible personal property and taxable services, such as meals and lodging. If a vendor is not registered to collect the tax, the Taxpayer must report and pay use tax on a consumer use tax return, Form ST-7. See P. D. 89-205 (7/28/89), copy enclosed.
Additionally, any nonprofit organization which regularly engages in selling tangible personal property is required to register as a dealer and collect and pay the tax on its retail sales, unless it is specifically exempt by statute from collecting the tax. Alternatively, the Taxpayer may qualify for an exemption from the collection of the tax on its fund-raising activities if it meets the "occasional sale" exemption set out in VR 630-10-75 (copy enclosed). In such instances, however, the Taxpayer would be required to pay the tax to its vendors on any items purchased for resale. See the enclosed copy of P. D. 91-23 (3/4/91) which addresses this issue.
Enclosed is a questionnaire for legislative consideration of a retail sales and use tax exemption request and Tax Bulletin 94-13 which explains the procedure and information required. If you are interested in pursuing legislation which would exempt all purchases of tangible personal property, the questionnaire should be completed and forwarded to the legislator who will sponsor the bill for exemption. The legislator should sign the questionnaire and submit it to the department as soon as possible but no later than December 1, 1995.
For a determination as to whether the Taxpayer is entitled to an exemption from any of the taxes imposed by localities, please contact the Commissioner of the Revenue for the particular locality in which the Taxpayer's Virginia chapter is located.
If you have additional questions or would like to furnish additional information, please contact**********at**************.
Sincerely
Danny M. Payne
Tax Commissioner
OTP/10334R
Rulings of the Tax Commissioner