Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, private schools, and churches; Graduation of students
Topic
Taxability of Persons and Transactions
Date Issued
10-29-1996
October 29, 1996
Re: Request for Ruling: Retail Sales and Use Tax
Dear*********
This is in reply to your letter of October 15, 1996, in which you inquire about the application of Virginia's retail sales and use tax to tangible personal property purchased by the******************(the "Foundation").
FACTS
The Foundation is operated exclusively for educational purposes within the meaning of § 501(c)(3) of the Internal Revenue Code. It provides education to raise the professionalism of participants in the business printing and information services industry through training material, publications, technical information, seminars, schools, industry studies, and certification programs. It furthers the professional education of the industry to meet prescribed standards of academic achievement and to demonstrate a high professional potential and commitment to the industry and the public it serves.
You ask if the Foundation may purchase tangible personal property exempt of the tax.
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.
Code of Virginia § 58.1-609.4(2) provides an exemption for a nonprofit college or "other institution of learning." To qualify for this exemption, Virginia Regulation (VR) 630-10-96 states that an educational organization must:
-
- employ a professionally-trained faculty;
enroll and graduate students on the basis of academic achievement;
prescribe courses of study; and
provide instruction at regular intervals over a reasonable period of time.
- employ a professionally-trained faculty;
This exemption has been strictly construed since its enactment, and to qualify an organization must meet all of the above criteria. These criteria have been upheld by the Virginia Supreme Court in Commonwealth of Virginia v. The Progressive Community Club of Washington County, Virginia, Inc., 215 Va. 732, 213 S.E.2d 759 (1975).
Based on the information provided, the Foundation does not satisfy all the criteria. For example, the Foundation does not graduate students on the basis of academic achievement. Accordingly, the Foundation does not qualify for the exemption.
While I am mindful of the worthwhile purpose the Foundation serves, absent a statutory exemption that would allow the Foundation to make purchases exempt of the tax, the department has no authority to grant such an exemption. The Foundation 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 Foundation must report and pay the use tax on a consumer use tax return, Form ST-7.
If you have any questions regarding this matter, you may contact**********of the department's Office of Tax Policy at***********.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11725F
Rulings of the Tax Commissioner