Tax Type
Retail Sales and Use Tax
Description
Nonprofit organizations, private schools, and churches; Organization operating retail stores.
Topic
Taxability of Persons and Transactions
Date Issued
04-24-1998
April 24, 1998
Dear*************:
In your letter of April 3, 1998, you request a ruling on the application of the retail sales and use tax for merchandise purchased and sold by the ***** (the Taxpayer).
FACTS
According to the Taxpayer, it is a non-profit organization created to provide benefits and/or assistance to its members. The Taxpayer operates stores in the District of Columbia, Maryland and Virginia and sells merchandise without charging and collecting the sales tax. The proceeds from these sales are used to provide meals to officers while on duty, retirement plaques and badges, retirement parties, and flowers and fruit baskets to ill or deceased members and their families.
RULING
In Virginia, there is no general exemption from the retail sales and use tax for nonprofit organizations. The only nonprofit organizations exempt from the tax on their purchases are those specifically set forth in Code of Virginia Secs. 58.1-608.1 and 58.1609.1 through 58.1-609.13, copy enclosed. Also, the only nonprofit organizations which have been granted exemption on their sales are set forth in the above cited statutes.
As set out in Title 23 of the Virginia Administrative Code (VAC) 10-210-1070 (copy enclosed), the vast majority of nonprofit organizations which are exempt from federal and state income taxes are not exempt from the Virginia retail sales and use tax because they do not qualify for a sales and use tax exemption set out in the Code of Virginia. Although the Taxpayer serves many worthwhile purposes, absent a statutory exemption that would allow the Taxpayer to make purchases for its use or consumption and retail sales exempt of the tax, the department has no authority to grant such an exemption.
Accordingly, the Taxpayer is required to pay the tax on purchases of tangible personal property which it uses, consumes or stores in Virginia, including items given away. If the vendor is registered to collect the sales tax and makes a separate charge for the sales tax, the tax should be paid to the vendor on such purchases. If the vendor is not registered to collect the sales tax, or fails to collect the sales tax on a taxable sale, the Taxpayer is required to report and remit the use tax on the cost price of the tangible personal property or taxable services (i.e., meals and lodgings).
However, tangible personal property purchased for resale purposes only may be purchased exempt of the tax using a resale exemption certificate, Form ST-10 (copy enclosed). Also, see 23 VAC 10-210-1072(A), copy enclosed.
As the Taxpayer makes retail sales of tangible personal property, it is required to register with the department to charge and collect the sales tax on its Virginia retail sales. Since the Taxpayer is not presently registered, a registration application (Form R-1) is enclosed for the Taxpayer to complete and return to the department.
If you have any questions about this ruling, please contact ***** of my tax policy staff at *****.
Dear*************:
In your letter of April 3, 1998, you request a ruling on the application of the retail sales and use tax for merchandise purchased and sold by the ***** (the Taxpayer).
FACTS
According to the Taxpayer, it is a non-profit organization created to provide benefits and/or assistance to its members. The Taxpayer operates stores in the District of Columbia, Maryland and Virginia and sells merchandise without charging and collecting the sales tax. The proceeds from these sales are used to provide meals to officers while on duty, retirement plaques and badges, retirement parties, and flowers and fruit baskets to ill or deceased members and their families.
RULING
In Virginia, there is no general exemption from the retail sales and use tax for nonprofit organizations. The only nonprofit organizations exempt from the tax on their purchases are those specifically set forth in Code of Virginia Secs. 58.1-608.1 and 58.1609.1 through 58.1-609.13, copy enclosed. Also, the only nonprofit organizations which have been granted exemption on their sales are set forth in the above cited statutes.
As set out in Title 23 of the Virginia Administrative Code (VAC) 10-210-1070 (copy enclosed), the vast majority of nonprofit organizations which are exempt from federal and state income taxes are not exempt from the Virginia retail sales and use tax because they do not qualify for a sales and use tax exemption set out in the Code of Virginia. Although the Taxpayer serves many worthwhile purposes, absent a statutory exemption that would allow the Taxpayer to make purchases for its use or consumption and retail sales exempt of the tax, the department has no authority to grant such an exemption.
Accordingly, the Taxpayer is required to pay the tax on purchases of tangible personal property which it uses, consumes or stores in Virginia, including items given away. If the vendor is registered to collect the sales tax and makes a separate charge for the sales tax, the tax should be paid to the vendor on such purchases. If the vendor is not registered to collect the sales tax, or fails to collect the sales tax on a taxable sale, the Taxpayer is required to report and remit the use tax on the cost price of the tangible personal property or taxable services (i.e., meals and lodgings).
However, tangible personal property purchased for resale purposes only may be purchased exempt of the tax using a resale exemption certificate, Form ST-10 (copy enclosed). Also, see 23 VAC 10-210-1072(A), copy enclosed.
As the Taxpayer makes retail sales of tangible personal property, it is required to register with the department to charge and collect the sales tax on its Virginia retail sales. Since the Taxpayer is not presently registered, a registration application (Form R-1) is enclosed for the Taxpayer to complete and return to the department.
If you have any questions about this ruling, please contact ***** of my tax policy staff at *****.
Rulings of the Tax Commissioner