Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, Meals
Topic
Taxability of Persons and Transactions
Date Issued
05-23-1997
May 23, 1997
Re: Request for Ruling: Retail Sales and Use Tax
Dear*****************
This is in reply to your letter in which you request information regarding the application of the sales and use tax to purchases of meals by ********************** (the "Taxpayer").
FACTS
The Taxpayer is a nonprofit noncommercial educational telecommunications entity that qualifies for the sales and use tax exemption provided under Code of Virginia § 58.1-609.4(2). The Taxpayer has recently been informed that purchases of food from caterers do not qualify under the exemption and the Taxpayer must pay the tax on such purchases. The Taxpayer questions this interpretation of the application of the exemption and requests a ruling concerning the issue.
RULING
Code of Virginia § 58.1-609.4(2), in part, provides an exemption from the sales and use tax for tangible personal property for use or consumption by, sold by, or donated to a noncommercial educational telecommunications entity...not conducted for profit."
Title 23 of the Virginia Administrative Code (VAC) 10-210-4040 provides that meals are considered taxable services rather than tangible personal property. In order to make an exempt purchase of meals, an organization's exemption must contain specific language which exempts the purchase of services. An example of such an exemption is provided in Code of Virginia § 58.1-609.4(4).
In this case Code of Virginia § 58.1-609.4(2) does not contain specific language that exempts the purchase of services. The Taxpayer, therefore, must pay the tax on its purchases of meals and food services. I appreciate the fact that purchases of catered meals for staff members prevents production delays and is considered a normal business activity in the industry. However, purchases of such meals do not fall within the stated language of the exemption.
The department has consistently applied the policy set forth to other organizations entitled to exemptions whereby the language of the statute does not extend the exemption to purchases of services. See Public Document (P.D.) 96-153 (6/24/96) and attachments.
I hope the foregoing has responded to your inquiry. I am enclosing a copy of the department's updated regulations and P.D. 96-153 for your information. Should you need assistance in the future, please do not hesitate to contact ***** at*************.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12528J
Rulings of the Tax Commissioner