Tax Type
Retail Sales and Use Tax
Description
Sale of athletic shirts to church
Topic
Taxability of Persons and Transactions
Date Issued
06-19-1996
June 19, 1996
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear*******************
This will reply to your letter in which you seek correction of the sales and use tax audit of ***(the "Taxpayer") for the period October 1990 through September 1993.
FACTS
The Taxpayer is in the business of selling shirts. As the result of a sales and use tax audit, the Taxpayer was assessed tax on the sale of athletic shirts to churches. The Taxpayer is taking the position that the athletic shirts are used in carrying out the ministry of the church and are exempt from the tax.
DETERMINATION
Code of Virginia § 58.1-609.8(2) exempts from the sales and use tax "tangible personal property... purchased by churches... for use (I) in religious worship services by a congregation of church membership while meeting together in a single location, and (ii) in the libraries, offices, meeting or counseling rooms or other rooms in the church building used in carrying out the work of the church and its related ministries...".
Virginia Regulation (VR) 630-10-22.1 (copy enclosed) interprets the church exemption and provides an exemplary listing of taxable and exempt purchases for nonprofit churches. While the exemption is broad in it's application, it does not apply to all tangible personal property purchased by churches. This exemption has been expanded in recent years to include (I) church bulletins, programs, newspapers, and newsletter distributed outside the church; (ii) gifts distributed outside the church; (iii) baptistries; and (iv) food, disposable serving items, cleaning supplies and teaching materials used in the operation of a camp or conference center which are used in carrying out the work of the church.
The department's regulation is based upon a mandate by the Virginia courts that all sales and use tax exemptions are to be strictly construed, i.e., where there is any doubt as to the applicability of the exemption, the exemption must be denied. As noted above, the law does not exempt all tangible personal property purchased by a church. While I am mindful of the fact the shirts are being worn by members of the church congregation and are being paid for out of church funds, based on the rule of strict construction, it is the department's position that athletic shirts are not used in carrying out the work of the church and it's related ministries.
Based on all of the above, the department finds no basis for revising the audit. If you should have any questions, please contact ****Office of Tax Policy, at*******.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/9417K
Rulings of the Tax Commissioner