Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, private schools, and churches; Material distributed by church association
Topic
Taxability of Persons and Transactions
Date Issued
10-08-1996
October 8, 1996
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear***********
This is in reply to your letter in which you seek correction of sales and use tax assessed to **********(the "Taxpayer"), for the period July 1992 through May 1995.
FACTS
The Taxpayer, a nonprofit organization exempt from federal taxation under § 501 (C)(3) of the Internal Revenue Code, operates as the administrative arm and the legal corporation that holds property for the ************** (the "Association"). The Association consists of 1,560 autonomous churches throughout Virginia. The Taxpayer conducts the business of the Association between annual meetings of the Association churches.
As a result of the audit, the Taxpayer takes exception to the tax assessed upon pamphlets, brochures, booklets and other printed materials given to the member churches based on the determinations rendered in P.D. 90-164 (9/11/90) and P.D. 88-216 (7/27/88). The Taxpayer does not assert that it is a church, but instead believes that its distribution of the disputed materials to member churches qualifies for exemption consistent with the rulings.
DETERMINATION
Code of Virginia § 58.1-609.8(2) provides an exemption from the sales and use tax for "tangible personal property....purchased by churches organized not for profit....for use (i) in religious services by a congregation or church membership while meeting together in a single location, and (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 land its related ministries...."
In P.D. 90-164, the Tax Commissioner held that while denominational governing bodies and related organizations of churches do not qualify for the exemption afforded to churches, such organizations may purchase exempt of the tax tangible personal property for resale or given to member churches for use in religious worship services and public church buildings for use in carrying out the work of the member churches. P.D. 88-216 explained that the term "public church buildings" includes a building that houses regularly scheduled worship services as well as any adjacent buildings on the public church site. The Tax Commissioner concluded that the church exemption not only applies to purchases for use in the building where regularly scheduled worship services are held, but also in offices or buildings adjacent to such building.
The Taxpayer purchased various types of printed materials and gave the items to its member churches for use in the public church buildings in classroom teaching and training and for reference purposes in church libraries. Specifically, the printed materials relate to Christian development, stewardship training and practices, budgeting matters, and conference planning. The materials also include administrative and resource items.
I agree with the Taxpayer that the disputed items qualify for exemption similar to the purchases given away in P.D. 90-164. A review of the materials indicates that the items are of an instructional or informational nature for use in church work and related ministries. As such, these items will be removed from the audit.
If you have questions concerning the determination in this letter, please contact *********** at **************..
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/10533J
Rulings of the Tax Commissioner