Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, private schools, and churches; Nonprofit hospitals; Resales
Topic
Taxability of Persons and Transactions
Date Issued
04-09-1998
April 9, 1998
Dear********
This is in reply to your letter of October 5, 1997, in which you request a ruling on the application of tax to certain sales transactions by ***** (the ``Taxpayer'). I apologize for the delay in our response.
FACTS
The Taxpayer purchases various items (mugs, key chains, shirts, etc.) with its corporate logo applied. The items are purchased under a resale certificate of exemption and placed in a resale inventory. Items are sold to various affiliates, including nonprofit hospitals, which give the items to employees as gifts. Items are also sold to affiliate gift shops for resale to patients or visitors. Currently, the affiliates are remitting the use tax on all purchases. The Taxpayer asks if nonprofit hospitals may purchase the items exempt of the tax.
RULING
Code of Virginia Sec. 58.1-623, provides that:
As a result, the Taxpayer may continue to purchase under a resale certificate of exemption those items which will be resold to its affiliates for a consideration. Items sold to gift shops for purposes of resale will be exempt of the tax dependent upon the receipt of a properly completed exemption certificate. Lastly, sales to nonprofit hospitals are sales for their use and consumption and would not be subject to the tax. All remaining sales would incur the application of the tax, unless specifically exempted under the Code of Virginia or supporting regulations.
This ruling is predicated on the basis that the Taxpayer and its affiliates are separate corporate entities. If, however, the Taxpayer and its affiliates comprise one corporate entity, the Taxpayer would be deemed the taxable user or consumer, and the purchase of the items would be subject to the tax, except for those particular items purchased for resale.
I trust that the foregoing has responded to your concerns. If you should have any additional questions regarding this matter, please contact *****, of the department's Office of Tax Policy at *****.
Dear********
This is in reply to your letter of October 5, 1997, in which you request a ruling on the application of tax to certain sales transactions by ***** (the ``Taxpayer'). I apologize for the delay in our response.
FACTS
The Taxpayer purchases various items (mugs, key chains, shirts, etc.) with its corporate logo applied. The items are purchased under a resale certificate of exemption and placed in a resale inventory. Items are sold to various affiliates, including nonprofit hospitals, which give the items to employees as gifts. Items are also sold to affiliate gift shops for resale to patients or visitors. Currently, the affiliates are remitting the use tax on all purchases. The Taxpayer asks if nonprofit hospitals may purchase the items exempt of the tax.
RULING
Code of Virginia Sec. 58.1-623, provides that:
-
- All sales or leases are subject to the tax until the contrary is established. The burden of proving that a sale . . . of tangible personal property is not taxable is upon the dealer unless he takes from the taxpayer a certificate to the effect that the property is exempt . . . .
- All sales or leases are subject to the tax until the contrary is established. The burden of proving that a sale . . . of tangible personal property is not taxable is upon the dealer unless he takes from the taxpayer a certificate to the effect that the property is exempt . . . .
As a result, the Taxpayer may continue to purchase under a resale certificate of exemption those items which will be resold to its affiliates for a consideration. Items sold to gift shops for purposes of resale will be exempt of the tax dependent upon the receipt of a properly completed exemption certificate. Lastly, sales to nonprofit hospitals are sales for their use and consumption and would not be subject to the tax. All remaining sales would incur the application of the tax, unless specifically exempted under the Code of Virginia or supporting regulations.
This ruling is predicated on the basis that the Taxpayer and its affiliates are separate corporate entities. If, however, the Taxpayer and its affiliates comprise one corporate entity, the Taxpayer would be deemed the taxable user or consumer, and the purchase of the items would be subject to the tax, except for those particular items purchased for resale.
I trust that the foregoing has responded to your concerns. If you should have any additional questions regarding this matter, please contact *****, of the department's Office of Tax Policy at *****.
Rulings of the Tax Commissioner