Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, private schools, and churches; Food sold by nonprofit college
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 is in response to your correspondence and subsequent meeting with the department in regard to sales and use tax assessments issued to****** and *****(the "Taxpayers") for the period April 1991 through March 1994.
FACTS
The Taxpayers are private, nonprofit colleges located in Virginia. The only issue under protest is the untaxed sales of food items (including meals, beverages, and refreshments) provided to faculty, alumni and trustees, college guests, and other non-students.
DETERMINATION
The department has addressed this issue to analogous taxpayers, most recently in Public Document 96-98. In that document, and the information attached thereto, the department determined that the exemptions available to nonprofit colleges or other institutions of learning set out in Code of Virginia § 58.1-609.4(2) did not extend to food to be consumed by non-students.
The Taxpayers' charges to its various departments for food and related items constitute "sales" as defined in Code of Virginia§ 58.1-602. Accordingly, the tax applies to the total amount for which the food items and related services are sold. In this regard, see Public Document 84-227 which also address food sales by an institution of learning.
Accordingly, the contested charges are taxable as assessed. As you are aware, the department has reviewed its tax policy applicable to food transactions by colleges and other institutions of learning. The department's position, as set forth in this determination, is consistent with long-standing policy which has been applied to state and local government agencies and other nonprofit organizations which enjoy sales tax exemptions only on their purchases of tangible personal property.
The department will work with you and the Taxpayer should you decide to pursue a legislative exemption on this issue. Enclosed is a questionnaire for legislative consideration of a sales and use tax exemption and Tax Bulletin 94-13 which explains the procedure and information required. If you are interested in pursuing legislation which would provide an exemption for the food transactions addressed in this determination, the questionnaire should be completed and forwarded to a legislator who will sponsor the bill for exemption in the 1997 General Assembly.
Based on the information now before me, the assessments are correct. Audit interest assessed to the Taxpayer will be accrued only through January 5, 1995, which is the date of the last correspondence from other schools and colleges regarding these issues.
If you have any questions regarding this letter, you may contact ***** at ****** .
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/8723I
Rulings of the Tax Commissioner