Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, Children's health care organization
Topic
Taxability of Persons and Transactions
Date Issued
12-08-1995
December 8, 1995
Re: Request for Ruling: Retail Sales and Use Tax
Dear******************:
This is in response to your letter of November 20, 1995, seeking a ruling on whether ********* (the "Taxpayer") qualifies for an exemption from sales and use taxes.
FACTS
The Taxpayer is a nonprofit organization exempt from income taxation under § 501 (c) (3) of the Internal Revenue Code. Based on the Taxpayer's articles of incorporation, it is organized to receive, maintain, and administer assets in perpetuity exclusively for charitable, religious, and educational purposes, and to use and apply the whole or any part of the income and principal therefrom for such purposes, either directly or by contributions to other organizations established and operated exclusively for such purposes. However, you informed a member of my staff that the Taxpayer specifically acts as an intermediator, at no cost, between children of poverty stricken families and the health care community to ensure that such children receive adequate and free health care.
RULING
There is no general exemption from the Virginia retail sales and use tax for nonprofit organizations. See VR 630-10-74, copy enclosed. The only exemptions from the tax are set out in Code of Virginia §§ 58.1-609.1 through 58.1-609.10, 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.
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 sales tax charged by its vendors on purchases of tangible personal property, meals and lodging.
If a vendor does not charge the sales tax on a taxable sale, the Taxpayer is liable for payment of the use tax and reporting it to the department on a consumer use tax return, Form ST-7. If the Taxpayer were to engage in making retail sales of tangible personal property in Virginia on a regular basis, it must register as a dealer to collect, report and remit the sales tax to the department.
It is my understanding that a member of my staff recently sent you 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 the purchases discussed above, 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 28, 1995.
If you have any questions concerning this matter, please contact*************at **************.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/10563R
Rulings of the Tax Commissioner