Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, private schools, and churches; Cancer patient services
Topic
Taxability of Persons and Transactions
Date Issued
09-10-1997
September 10, 1997
Re: Request for Ruling: Retail Sales and Use Tax
Dear**********
This is in reply to your letter in which you request a ruling on the availability of a retail sales and use tax exemption for **********(the "Taxpayer"). I apologize for the delay in responding to your letter.
FACTS
The Taxpayer was formed to assist individuals in the fight against breast cancer. It provides financial assistance to the patient and secures services directly or through insurance for or on behalf of individuals stricken with breast cancer. The battle against all cancers is also part of the Taxpayer's goal and purpose. The Taxpayer is exempt from federal income taxation pursuant to § 501 (c)(3) of the Internal Revenue Code.
You ask if the Taxpayer qualifies for an exemption from the sales and use tax, particularly the exemption set forth in Code of Virginia § 58.1-609.7(21).
RULING
There is no general exemption from the 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.
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- Code of Virginia § 58.1-609.7(21) exempts from the retail sales and use tax:
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- tangible personal property for use or consumption, or further distribution, or sold by an organization exempt from taxation under § 501 (c)(3) of the Internal Revenue Code and which is organized and operated exclusively for the purpose of eliminating lung disease, including ... lung cancer and pneumonia, through medical research, public education focusing on disease prevention and education, patient education including information on coping with lung disease, smoking and air pollution prevention, and professional education and training.
Based on the information provided, and under the doctrine of strict construction, the Taxpayer does not qualify for the exemption cited above. The Taxpayer is not organized exclusively for the purpose of eliminating lung disease. Furthermore, there is no indication that the Taxpayer conducts medical research and professional education and training, as required by the statute.
Similarly, the Taxpayer does not qualify for the exemption under Code of Virginia § 58.1-609.7(23), enacted for the Cancer Society. That exemption requires an organization be organized exclusively for the purpose of eliminating cancer by preventing cancer, saving lives from cancer, and diminishing suffering from cancer through research, education and service. Because the Taxpayer is not organized to eliminate cancer and does not conduct research, the exemption is not available.
While I am mindful of the worthwhile purpose the Taxpayer serves, absent a statutory exemption that would allow the Taxpayer to make purchases exempt of the tax, the department has no authority to grant such an exemption. Therefore, the Taxpayer is required to pay the tax to its vendors on all purchases of tangible personal property. If a vendor is not registered to collect the tax, the Taxpayer must report and pay use tax on a Consumer's Use Tax Return, Form ST-7.
If you have any questions regarding this matter, you may contact****of the department's Office of Tax Policy at**********.
Sincerely,
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner