Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations
Topic
Taxability of Persons and Transactions
Date Issued
02-28-1997
February 28,1997
Re: Request for Ruling: Retail Sales & Use Tax
Dear**************
This is in reply to your letter of February 4, 1997, in which you seek a ruling on the application of sales and use tax to purchases by ********** (the "Taxpayer").
FACTS
The Taxpayer is a nonprofit organization exempt from federal income taxation pursuant to Internal Revenue Code (IRC) § 501(c)(3). Articles of Incorporation provided by the Taxpayer state that the corporation is organized for educational purposes. The Taxpayer operates a museum for children providing a learning experience associated with hands-on exhibits. The Taxpayer requests exemption from the sales and use tax.
RULING
There are no general exemptions from the Virginia Sales and Use Tax for nonprofit organizations. The only exemptions are those set out in Code of Virginia §§ 58.1-609.1 through 58.1-609.10. The only exemption listed in the statutes for which the Taxpayer could qualify would be Code of Virginia § 58.1-609.9(8), copy enclosed, which provides an exemption for a nonprofit cultural organization on purchases of tangible personal property for purposes of educating "children about the arts, humanities and nature on a regular basis through museum exhibits, classes and performances."
I understand that a member of my staff has discussed the applicability of the foregoing exemption with a member of your organization. In that discussion, it was disclosed that while Taxpayer is developing its administrative offices, it has not yet begun to operate its museum. The Taxpayer is still in the development phase of its operations and contemplates an opening in about one year. Based on this information, I am unable to grant exemption from the sales and use tax at this time. If, within the next year, the Taxpayer is closer to beginning its operations, and believes that its operational purposes are within the guidelines established in the statutory wording, l would encourage the Taxpayer to resubmit its request for exemption at that time.
If you should have any additional questions regarding this matter, please contact ********* of the department's Office of Tax Policy at *********.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12201Q
Rulings of the Tax Commissioner