Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, private schools, and churches; Noncommercial educational telecommunications entity
Topic
Taxability of Persons and Transactions
Date Issued
05-31-1996
May 31, 1996
Re: Request for Ruling: Retail Sales and Use Tax
Dear*********************
This will reply to your letter of January 31, 1996, in which you request that the department reconsider your application for an exemption from the retail sales and use tax under Code of Virginia § 58.1-609.4(2).
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. 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.
In a previous ruling, the department found that the Taxpayer did not qualify for the exemption provided by Code of Virginia § 58.1-609.4(2) for a noncommercial educational telecommunications entity. P.D. 95-242 (9/22/95). You have provided additional information and request reconsideration of the department's prior ruling.
RULING
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 (ETV). To qualify for this exemption, a telecommunications entity must: (1) be nonprofit; (2) not accept commercial advertising; and (3) have its programming serve an educational purpose.
The exemption for ETV's was enacted in 1977 in response to a 1976 department determination that noncommercial educational broadcasting stations did not qualify for the retail sales and use tax exemption for "institutions of learning." The General Assembly enacted legislation to exempt these broadcasting stations, a noncommercial educational radio entity and a noncommercial "fixed service" entity not conducted for profit. At that time, all these organizations were providing educational services to Virginia public schools and state colleges and institutions of learning.
Based on the information provided, and under the doctrine of strict construction required by Virginia courts in applying sales and use tax exemptions, I find that the Taxpayer does not qualify for the exemption provided by Code of Virginia § 58.1--609.4(2). The Taxpayer is not a telecommunications entity as envisioned by the statute. The Taxpayer does not broadcast educational programming, but rather introduces teens to television production skills through various activities, including school video yearbook production, conflict resolution dramatic vignettes, lectures and seminars.
While mindful of the worthwhile purpose the Taxpayer serves, based on the information provided, the Taxpayer does not qualify for the exemption provided under Code of Virginia 58.1-609.4(2). 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 1997 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, 1996.
If you have any questions regarding this ruling, you may contact **** at********** .
Sincerely,
Danny M. Payne
Tax Commissioner
Enclosures (2)
OTP/10885F
Danny M. Payne
Tax Commissioner
Enclosures (2)
OTP/10885F
Rulings of the Tax Commissioner