Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, private schools, and churches; HIV/AIDS patient services
Topic
Taxability of Persons and Transactions
Date Issued
09-16-1997
September 16, 1997
Re: Request for Ruling: Retail Sales and Use Tax
Dear********
This is in reply to the letter faxed to the department on August 14, 1997 by***** regarding an exemption from the Virginia retail sales and use tax for ***** (the "Taxpayer").
FACTS
The Taxpayer is a nonprofit organization exempt from federal income taxation under § 501 (c)(3) of the Internal Revenue Code. The Taxpayer provides a variety of health care and support services to persons diagnosed with HIV/AIDS in Virginia, the District of Columbia, and Maryland. The Taxpayer operates a facility in Northern Virginia and requests exemption from the Virginia retail sales and use tax.
DETERMINATION
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 58.1-609.10 and § 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.
Under current law, there are a number of medical related exemptions in Code of Virginia § 58.1-609.7, copy enclosed. Based on a review of the Taxpayer's Articles of Incorporation and the Annual Report, the Taxpayer's activities do not fall within the scope of the existing exemptions. Therefore, the Taxpayer does not qualify for exemption from the Virginia sales tax under the doctrine of strict construction.
While I am mindful of the worthwhile purpose the Taxpayer serves, based on the information provided, it is clear that the Taxpayer does not satisfy the necessary criteria for exemption under Code of Virginia § 58.1-609.7. 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 additional questions regarding this matter, you may contact******** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12847J
Rulings of the Tax Commissioner