Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations
Topic
Taxability of Persons and Transactions
Date Issued
08-18-1997
August 18, 1997
Re: Request for Ruling: Retail Sales and Use Tax
Dear****************
This is in reply to your letter of May 8, 1997, in which you request a ruling regarding the availability of a retail sales and use tax exemption for ***** (the "Taxpayer").
FACTS
The Taxpayer, a nonprofit housing community for older persons, is in the process of renovating and modernizing its elevators. You ask if the Taxpayer qualifies for the exemption from the retail sales and use tax in Code of Virginia § 58.1-609.10(8) and, if so, under what other circumstances the exemption may apply.
RULING
Code of Virginia § 58.1-609.10(8) provides an exemption from the retail sales and use tax for:
-
- tangible personal property for use in the construction of improvements which are to be used solely for affordable rental dwelling units for persons who are of the age of at least 62 years, if at least part of the funds for site development and the construction are provided by an organization exempt from taxation under § 501 (c)(3) of the Internal Revenue Code and if the amount of funds which would otherwise have to be provided by the tax exempt organization is reduced by the amount of the sales and use tax exemption. The rental units shall be considered affordable if the rent charged meets the criteria of the Federal Low Income Housing Tax Credit Program.
Based on the Virginia Housing Development Authority documentation and other information provided with your letter, the Taxpayer satisfies the requirement that the rental units are affordable, as the rent charged meets the criteria of the Federal Low Income Housing Tax Credit Program. It has also been established that the Taxpayer (1) is exempt from income taxation pursuant to § 501 (c)(3) of the Internal Revenue Code, and (2) provides rental units to persons who are at least 62 years of age.
Tangible personal property purchased for use in the Taxpayer's current construction of improvements (renovation and modernizing elevators) will qualify for exemption provided that at least part of the funds for site development and construction are provided by the Taxpayer or another organization exempt from taxation under § 501 (c)(3) of the Internal Revenue Code. In addition, the amount of funds which would otherwise have to be provided by the tax exempt organization (the Taxpayer or other § 501 (c)(3) organization) must be reduced by the amount of the sales and use tax exemption. These standards are applicable to purchases by the Taxpayer or by a contractor performing real property construction improvement projects for the Taxpayer.
If the Taxpayer (or the contractor) has already paid tax on items qualifying for the exemption, it may request a refund of the tax paid by presenting a copy of this letter to its supplier. The supplier should refund the tax paid on exempt items and claim a credit for the amount of the refund on its sales and use tax return filed for the month.
I hope this answers your questions regarding the application of the exemption. If you have any additional questions, you may contact *********of the department's Office of Tax Policy at***********.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12541F
Rulings of the Tax Commissioner