Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, private schools, and churches; T-shirts sales to churches not exempt
Topic
Taxability of Persons and Transactions
Date Issued
04-24-1997
April 24, 1997
Re: Request for Ruling: Retail Sales and Use Tax
Dear***************
This is in reply to your letters in which you request information regarding the application of the sales and use tax to sales to churches by *********(the "Taxpayer").
FACTS
During the performance of an audit by the department, the Taxpayer was instructed to apply the tax to t-shirts sold to churches. The Taxpayer questions the application of the tax and believes such sales qualify for exemption under Code of Virginia § 58.1-609.8(2).
RULING
Code of Virginia § 58.1-609.8(2), copy enclosed, 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 worship 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 and its related ministries, including kindergarten, elementary and secondary schools. The exemption for such churches shall also include baptistries; bulletins, programs, newspapers and newsletters which do not contain paid advertising and are used in carrying out the work of the church; gifts including food for distribution outside the public church building; and food, disposable serving items, cleaning supplies and teaching materials used in the operation of camps or conference centers by the church or an organization composed of churches that are exempt under this subdivision and which are used in carrying out the work of the church or churches."
History of the Exemption
The original exemption as enacted in 1979 was limited to tangible personal property used by a nonprofit church in its religious worship services or in a regular school of religious education. The exemption has been expanded to apply to tangible personal property for use in the public church buildings and certain enumerated items for use outside the public church buildings and in the operation of camps and conference centers. The most recent legislative change in 1995 expanded the exemption to include purchases of food by churches for distribution as gifts.
The department, in 1985, published Virginia Regulation 630-10-22.1 and provided a listing of exempt and taxable purchases by nonprofit churches. The regulation is now included in Title 23 of the Virginia Administrative Code (VAC) 10-210--310, copy enclosed. Since publication of the regulation, the application of the exemption has expanded to include baptistries affixed to realty, gifts for distribution outside the public church buildings, and purchases of bulletins, programs, newspapers, and newsletters printed outside the public church buildings.
Application of the Exemption
Currently, the exemption is broad in its application to tangible personal property purchased for use in carrying out the work of the church and its related ministries; however, it does not apply to all tangible personal property purchased by churches. The department has issued several rulings regarding the application of the exemption, a sampling of which is enclosed for your review.
On the other hand, the Tax Commissioner in P.D. 95-54 (3/27/95), denied exemption for repair parts, accessories, oil and similar items purchased by the church for its fleet of motor vehicles used exclusively for church related activities. This is consistent with Title 23 VAC 10-210-310 which applies the tax to such items.
In this case, the Taxpayer's sale of t-shirts is analogous to athletic shirts held taxable in P.D. 96-141 (6/19/96). The Tax Commissioner determined that despite the fact that the shirts were worn by members of the church congregation and paid for out of church funds, such shirts were not used in carrying out the work of the church. Consistent with P.D. 96-141, t-shirts purchased by churches in this case for use by its members and staff in camps, bible study classes, and other ministry functions do not fall within the scope of the exemption. The Taxpayer must collect the tax from churches on such sales.
I hope the foregoing has responded to your inquiry. If you have additional questions or need further assistance, you may contact ********* Tax Assistant Commissioner, Office of Tax Policy, at*******.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12116J
Rulings of the Tax Commissioner