Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, private schools, and churches; Wildlife organization
Topic
Taxability of Persons and Transactions
Date Issued
05-24-1996
May 24, 1996
Re: Request for Ruling: Retail Sales and Use Tax
Dear*****************
This is in reply to your letter of April 11, 1996 in which you seek exemption from the retail sales and use tax for ********* ("the Taxpayer").
FACTS
The Taxpayer is a nonprofit charitable and educational corporation, exempt from federal taxation under § 501(c)(3) of the Internal Revenue Code which fosters conservation of land, environmental preservation of wildlife, and restoration of waters, in Virginia.
The Taxpayer is contemplating changing its state of incorporation from the District of Columbia to Virginia and has recently relocated to Virginia. The Taxpayer requests a ruling as to whether it qualifies for exemption from the retail sales and use tax under Code of Virginia § 58.1-609.8(24), which provides an exemption for nonprofit organizations engaged in promoting and supporting conservation and environmental issues.
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 (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.
The exemption cited by the Taxpayer is limited by the language contained in the statute. The statute limits the exemption to those organizations that are "... organized exclusively for the purpose of promoting and supporting conservation and environmental issues throughout the Commonwealth by encouraging the protection and restoration of waters, wildlife and land; safeguarding the public health by eliminating pollution; nurturing and improving wildlife stocks; promoting the highest standards of sportsmanship and strengthening farmer sportsmen understanding; and performing other environmental services." (emphasis added) To qualify for the cited exemption, the Taxpayer's purpose must conform to the language contained in the exemption following the rule of strict construction explained above.
Based on a review of the Articles of Incorporation and the by-laws, the Taxpayer does not qualify for the cited exemption. The Taxpayer also does not qualify for the exemption in*** § 58.1-609.9(9), which exempts a national and international nonprofit organization devoted to preserving ecologically significant areas to safeguard rare or endangered species or habitats.
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. The Taxpayer, therefore, 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 legislation during the 1997 General Assembly Session, the questionnaire should be completed and forwarded to a legislator who will sponsor the exemption bill. The legislator must sign the questionnaire and submit it to the department by November 1, 1996.
If you have any questions concerning this matter, you may contact ***** at ******* .
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11127J
Rulings of the Tax Commissioner