Tax Type
Retail Sales and Use Tax
Description
Nonprofit organization; Criteria for exemption
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
11-20-1995
November 20, 1995
Re: Request for Ruling: Retail Sales and Use Tax
Dear**************:
This will reply to your letter of October 26, 1995, in which you seek an exemption from Virginia sales and use taxes on behalf of the
FACTS
The is a volunteer, nonprofit organization exempt from federal taxation under § 501 (C)(3) of the Internal Revenue Code that is dedicated to improving reading programs and teaching procedures in Virginia public schools.
According to its bylaws, the*******purposes include promoting reading and reading instruction in Virginia through research, training programs, and cooperation among educators. The****also sponsors the formation of new local and special interest councils in areas not adequately served by the and provides information support to its local and special interest councils. It supports legislation to promote the improvement of reading instruction in Virginia and sponsors an annual reading conference. The********conducts an annual leadership workshop for officers and members of local and special interest councils.
The ***requests exemption from the sales and use tax due to its educational purposes. To support its request, the *********also cites several exemptions in Code of Virginia § 58.1-609.5 which have been granted to similar educational organizations.
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.
The exemptions cited by the are limited by the language contained in the statute. For example, Code of Virginia § 58.1-609.4(5) limits the exemption to those organizations that are ".... organized solely to distribute such books and reading materials to school-age children." (emphasis added) Code of Virginia § 58.1-609.4(14) applies to organizations that are ".... organized and operated exclusively for the purpose of enhancing education by assisting a city public library ...." (emphasis added) To qualify for the exemptions cited, the must conform to the language contained in the exemption following the rule of strict construction explained above.
Based on the information presented, the********does not qualify for the exemptions in Code of Virginia § 58.1-609. 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 should continue 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 December 8, 1995.
If you have any questions concerning this letter, you may contact **********at**********.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/10485S
Rulings of the Tax Commissioner