Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, Bingo gaming supplies sold to charitable organizations.
Topic
Taxability of Persons and Transactions
Date Issued
11-24-1997
November 24, 1997
Re: Request for Ruling: Retail Sales and Use Tax
Dear***********
This is in response to your letter of September 19, 1997 seeking a ruling on the applicability of the sales and use tax to sales transactions between ********* (the "Taxpayer") and charitable organizations.
FACTS
The Taxpayer supplies bingo gaming supplies to various organizations including charitable organizations authorized under Virginia law to conduct bingo games. The Taxpayer is registered as a dealer to collect sales tax applicable to transactions with its customers. Questions as to the proper treatment of purchases by charitable organizations have arisen and the Taxpayer has requested guidance as to the sales tax exemptions available to charitable organizations which purchase bingo supplies.
DETERMINATION
Generally
There is no general exemption from the retail sales and use tax for nonprofit organizations as the enclosed copy of Title 23 of the Virginia Administrative Code (VAC) 10-210-1070 explains. 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. Accordingly, a nonprofit organization must meet all of the criteria specified in the statutory provisions of the exemption in order to qualify for the exemption.
Absent a specific statutory exemption, a nonprofit organization must pay the sales and use tax an purchases used or consumed in its operations. Accordingly, nonprofit organizations which are not specifically exempted from the tax by statute must pay tax on purchases of bingo supplies. In addition, nonprofit organizations which have been granted an exemption by the General Assembly are only exempt with respect to purchases for use or consumption within the scope of activities for which the organization was granted an exemption.
Proof of Exemption - Documentation Provided to Suppliers
When a nonprofit organization is exempt from paying the tax on the purchase of tangible personal property or services, it should furnish to its supplier a properly completed exemption certificate, either Form ST-13 or ST 13A. If such nonprofit organization is not making taxable sales as a registered dealer or is not is not required, to register for consumer use tax, it will usually not have a Virginia Retail Sales and Use Tax registration number. In this instance, there is no requirement to place a registration number on the exemption certificate when making purchases. Instead, "Not Applicable" should be placed on the Certificate of Exemption in the registration number blank on the certificate.
If the nonprofit organization has received a ruling letter from the department stating that it is exempt by statute, then this letter may be furnished to suppliers instead of the exemption certificate in order to verify that the purchases may be made exempt from the tax.
If you have any questions regarding this letter, please contact ***in my Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/13079D
Rulings of the Tax Commissioner