Tax Type
Retail Sales and Use Tax
Description
Application of sales and use taxes; Nexus of retailer/dealer
Topic
Taxability of Persons and Transactions
Date Issued
09-15-1997
September 15, 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 behalf of your client (the "Taxpayer") regarding church catalog sales. I apologize for the delay in responding to your letter.
FACTS
The Taxpayer is a nationally recognized church organization exempt from taxation pursuant to § 501 (c)(3) of the Internal Revenue Code. The Taxpayer publishes, distributes, and sells Sunday school curriculums as well as a variety of other religious readings and materials. While some of the items offered for sale are printed by the Taxpayer, it also sells materials prepared by others.
The Taxpayer has no physical locations in Virginia. Its contact within Virginia consists of theological and administrative visits by church leaders, mailing of catalogs into Virginia, and periodic visits by field ministers in support of Virginia congregations. Each field minister is an employee of the Taxpayer, and his or her duties include, among other things, encouraging the use of the Taxpayer's Sunday school curriculum and religious materials. Effective January 1, 1997, the field ministers' responsibilities include selling and taking orders for the curriculum and other materials. Prior to that date, orders were placed directly with the Taxpayer's headquarters, via phone, fax, or U.S. mail.
You ask if the Taxpayer's activities constitute nexus for purposes of sales tax collection on sales to nonexempt entities.
RULING
Under Code of Virginia § 58.1-612 (copy enclosed), the sales tax is collectible from all persons who are dealers. That same section defines the term "dealer" and includes every person who "sells at retail, or who offers for sale at retail, or who has in his possession for sale at retail, or for use, consumption, or distribution, or for storage to be used or consumed in this Commonwealth, tangible personal property." The Taxpayer clearly qualifies as a "dealer" under this definition, as it sells at retail tangible personal property.
Code of Virginia § 58.1-612 also sets forth the nexus requirements which give the Commonwealth the authority to require a business to register for the collection and remittance of the Virginia sales tax. The statute provides, in pertinent part, that a dealer shall be deemed to have sufficient activity within this state to require registration if he "[s]olicits business in this Commonwealth by employees, independent contractors, agents or other representatives."
Based on the information presented, the Taxpayer's field ministers solicit business in Virginia. They contact pastors, Christian education ministers, and others responsible for purchasing curriculum and ministry training materials. They also sell and take orders for these items. Because the Taxpayer solicits business in Virginia through its employees, it satisfies the nexus requirements under Code of Virginia § 58.1-612 and is required to register and collect the tax on its sales to Virginia residents or organizations.
In your letter, you indicate that a majority of the Taxpayer's sales are made to churches, whose purchases are exempt from the retail sales and use tax under Code of Virginia § 58.1-609.8(2). I would note that the Taxpayer should receive and retain a completed certificate of exemption Form ST-13A (copy enclosed) from each church in order to make sales exempt of the tax.
If you have any questions regarding this ruling, you may contact of ********* Office of Tax Policy at****.
Sincerely,
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner