Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, private schools, and churches; Cancer treatment, detection, and prevention
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 your letter of September 5, 1997, in which you submit additional information to supplement your request for ruling regarding the availability of a retail sales and use tax exemption for *********** (the "Center").
FACTS
The Center is a joint venture corporation exempt from federal income taxation under § 501 (c)(3) of the Internal Revenue Code. It operates exclusively to eliminate cancer by preventing cancer, saving lives from cancer and diminishing suffering from cancer through research, education, and service.
The main component of the Center is treatment of cancer through radiation therapy. The Center houses a radiation therapy delivery system which is capable of treating 85-90% of the radiation sensitive cancers typically diagnosed in its geographic area. The services provided by the Center supplement those provided by two hospitals.
In addition to treatment, the Center's board has a philosophy of community well. The Center sponsors free early detection screenings and free educational programs to benefit the broader community.
You ask if the Center qualifies for exemption under Code of Virginia § 58.1-609.8(23).
RULING
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- Code of Virginia § 58.1-609.8(23) 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 which is organized exclusively for the purpose of eliminating cancer as a major health problem by preventing cancer, saving lives from cancer, and diminishing suffering from cancer through research, education and service.
The Virginia courts have consistently required strict construction of exemption statutes, i.e., where there is any doubt as to the application of an exemption, the doubt is resolved against the one claiming the exemption.
Based on the information provided, and under the doctrine of strict construction, the Center does not qualify for the exemption cited above, as it is not organized exclusively for the purposes stated in the statute. As noted in my letter of August 28, 1997, if the Center is organized for any purpose in addition to those stated in the exemption statute, it will not qualify for the exemption as the law requires an organization to be organized exclusively for the stated purposes. In this case, the Center is organized "to acquire, own and operate an outpatient medical facility for the provision of radiation therapy services to cancer patients." This differs from the purposes stated in the statute. While the Center operates to eliminate cancer, it is not organized exclusively for the purposes set forth in the exemption statute.
While I am mindful of the worthwhile purpose the Center 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 Center 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 Center must report and pay use tax on a Consumer's Use Tax Return. Form ST-7.
If you have any questions regarding this ruling, you may contact ******of the department's Office of Tax Policy at*****************.
Sincerely,
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner