Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, private schools, and churches; Meals sold to schools
Topic
Taxability of Persons and Transactions
Date Issued
08-14-1996
August 14, 1996
Re: Request for Ruling: Retail Sales and Use Tax
Dear***************
This will reply to your letter of July 23, 1996, in which you request a ruling on the application of the sales and use tax to sales of food by ******* . You question the application of the tax in the following instances.
Example A: Sales of box lunches to a church affiliated school which are served to students. The school is an accredited elementary school located on the church grounds and operated by the church.
Code of Virginia § 58.1-609.8(2) provides an exemption from the sales tax for "tangible personal property ... purchased by churches organized not for profit and which are exempt from taxation under § 501 (c)(3) of the Internal Revenue Code... for use ... (ii) in the libraries, offices, meeting or counseling rooms or other rooms in the public church buildings used in carrying out the work of the church and its related ministries, including kindergarten, elementary and secondary schools." Emphasis added.
Your description of the school indicates that it operates as a related ministry of the church and as such, sales of food to the school would qualify for exemption under the statute.
Example B: Sales of prepared food to a high school for a teachers' social event during regular school hours. Code of Virginia § 58.1-609.4(2) provides an exemption for tangible personal property for use or consumption by a college or other institution of learning.
The department has consistently held that food purchased by nonprofit colleges and schools is not used or consumed by the college or school, but instead by the
individuals to whom it is served. See Public Document 96-153 (6/24/96) and Public Documents 95-127 (5/19/95) and 96-98 (5/24/96), attached thereto. In the rulings, it was found that food was sold to nonprofit schools to be consumed by individuals and not provided in connection with the provision of educational services. The food sales in this case are made under similar circumstances, and therefore the tax applies.
Public school systems also qualify for the exemption from the sales tax provided to federal, state, and local governments under Code of Virginia § 58.1-609.1(4). Virginia Regulation (VR) 630-10-45, interpreting the exemption, however, clearly states in section 1.2(A) that charges for meals and catered events are subject to the tax when purchased by a state or local or public institution of learning, or employees of such, regardless of whether the purchases are pursuant to official purchase orders. Emphasis added.
Example C: Sales of prepared food to a school for a school dance.
The same rationale applies as stated in Example B.
Example D: Sales of prepared food to be served as lunches during a meeting of a school board office.
Again the same rationale applies as stated in Example B.
I have enclosed copies of the cited statutes, regulations, and ruling letters and I hope the foregoing has responded to your inquiry. If you have additional questions, you may contact *********at*************.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11474J
Rulings of the Tax Commissioner