Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, private schools, and churches; Organization providing emergency food and financial assistance
Topic
Taxability of Persons and Transactions
Date Issued
06-14-1996
June 14, 1996
Re: Request for Ruling: Retail Sales and Use Tax
Dear******************
This is in reply to your letter of June 3, 1996, in which you request a ruling on the availability of a retail sales and use tax exemption for purchases by **********(the "Taxpayer").
FACTS
The Taxpayer is a nonprofit charitable corporation exempt from federal income taxation under § 501(c)(3) of the Internal Revenue Code. The Taxpayer provides emergency food and financial assistance to those in poverty.
RULING
There is no general exemption from the Virginia 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 58.1-609.13. The Virginia courts have consistently required strict construction of these exemptions, i.e., where there is any doubt as to the application of the exemption, the doubt is resolved against the one claiming the exemption.
Code of Virginia §58.1-609.8(38) provides an exemption for tangible personal property purchased for use or consumption by a nonprofit organization organized to provide emergency food and supplies for a limited period of time to needy recipients within the boundaries of the Nineteenth Planning District. The Taxpayer's purpose closely resembles that set out in the statute; however, the type of assistance provided differs from that outlined in the exemption provision. The exemption is available for a nonprofit organization which provides emergency food and supplies for a limited period of time to needy recipients. The Taxpayer provides emergency food and financial assistance to those in poverty. Furthermore, it appears that the recipients of the Taxpayer's assistance are not located within the boundaries of the Nineteenth Planning District, which consists of the counties of Dinwiddie, Greensville, Prince George, Surry, and Sussex, and the cities of Colonial Heights, Emporia, Hopewell, and Petersburg. Based on the information provided and strict construction of the exemption, as required by the Virginia courts, this exemption is not available to your organization.
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 is required 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 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 Session of the General Assembly, 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 matter, you may contact ****at ******* .
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11283F
Rulings of the Tax Commissioner