Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, private schools, and churches; Meals and accommodations provided by a retreat center
Topic
Taxability of Persons and Transactions
Date Issued
02-04-1997
February 4, 1997
Re: Request for Ruling: Retail Sales and Use Tax
Dear************************
This is in response to your letter of November 26, 1996 regarding the application of the retail sales and use tax to services provided by********************** (the "Taxpayer").
FACTS
The Taxpayer operates as a Christian retreat center in Virginia which provides meals and accommodations. The Taxpayer provides its services to private parties (e.g., family reunions), churches, and nonprofit public and private schools and colleges.
You request a ruling on whether the Taxpayer should collect the tax from its church and school customers.
RULING
Purchases by Schools
Code of Virginia § 58.1-609.4(2) provides an exemption from the tax for "tangible personal property for use or consumption by a [nonprofit] college or other institution of learning...." This exemption, however, does not apply to purchases of accommodations. Nor does the exemption apply to the purchase of meals by the school (other than food provided to students as part of a meal plan under room, board and tuition).
In regard to meals, the department has consistently held that the food is not consumed by the school, but rather by the individuals to whom it is served. Further, the exemption is limited to tangible personal property. Accommodations, including banquet facilities and meeting rooms, represent taxable services and are taxable.
I have enclosed a sampling of prior determinations which address this issue. In addition, the department's policy was confirmed by the Virginia Attorney General in a 1970 opinion which addresses the application of the tax to catered meals and accommodations purchased by the state with public funds and consumed by guests attending a conference hosted by the state. This opinion was affirmed by an informal opinion of the Attorney General dated January 11, 1993 concerning banquet facilities purchased by a state university.
Purchases by Churches
Code of Virginia § 58.1-609.8(2) provides churches a broad exemption for purchases of tangible personal property. This exemption, however, does not apply to all purchases. Generally, the exemption extends to tangible personal property for use in (1) religious worship services by a congregation while meeting together in a single location, and (2) libraries, offices meeting rooms or other rooms in the public church buildings used in carrying out the wok of the church.
Purchases of accommodations and meals are taxable. The only exception is food (along with disposable serving items and cleaning supplies) used in the operation of camps or conference centers by a nonprofit church or an organization composed of nonprofit churches which is used in carrying out the work of the church.
In a ruling dated July 25, 1989, the department determined that the Taxpayer, which is an organization composed of nonprofit churches, can purchase these items exempt of the tax for its own use or consumption at the retreat facility. Purchases of food by churches which are not affiliated with the Taxpayer remain taxable. The Taxpayer may purchase such food exempt for resale, but the subsequent sale of that food to church customers is taxable. Further, there is no authority to grant any church an exemption from the tax for lodgings or accommodations.
I hope that this information is helpful. Please contact ******* in my Office of Tax Policy at ********if you have additional questions.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11921I
Rulings of the Tax Commissioner