Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, private schools, and churches; Museums
Topic
Taxability of Persons and Transactions
Date Issued
06-09-1997
June 9, 1997
Re: Request for Ruling: Retail Sales and Use Tax
Dear*************
This is in reply to your letter of May 17, 1997, in which you request a ruling on the application of the sales and use tax to purchases by *************(the "Taxpayer").
FACTS
The Taxpayer is a nonprofit, nonstock corporation exempt from taxation under § 501 (c)(3) of the Internal Revenue Code. The Taxpayer was created to establish and maintain a museum for the preservation of the history and culture of the ********. The Taxpayer has leased a restored school building to house the museum. The Taxpayer requests an exemption from the sales and use tax for purchases used in the operation of the museum.
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. The Virginia courts have consistently required strict construction of these exemptions, i.e., where there is any doubt as to the application of an exemption, the doubt is resolved against the one claiming the exemption.
According to the Taxpayer's Articles of Incorporation, the scope and operations of the Taxpayer are significantly different than those of the museums that have received specific exemptions under Code of Virginia § 58.1-609.9. As such, the existing museum exemptions are not applicable to the Taxpayer under the doctrine of strict construction.
While I am mindful of the worthwhile purpose the Taxpayer serves, based on the information you have provided, it is clear that the Taxpayer does not satisfy the necessary criteria for exemption under Code of Virginia § 58.1-609.9. The Taxpayer is required to pay the tax on all purchases of tangible personal property. If a retailer is not registered to collect and remit the tax, the Taxpayer must remit the tax on the consumer use tax return, Form ST-7.
Enclosed is a questionnaire for legislative consideration of a sales and use tax exemption request and Tax Bulletin 94-13, which explains the procedure and information required. If you are interested in pursuing exemption legislation during the 1998 General Assembly Session, the questionnaire should be completed and forwarded to the legislator who will sponsor the bill for exemption. The legislator must sign the questionnaire and submit it to the department by November 1, 1997.
If you have any questions regarding this matter, you may contact *********at *********.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12568J
Rulings of the Tax Commissioner