Tax Type
Retail Sales and Use Tax
Description
Determination of Exemption
Topic
Exemptions
Date Issued
08-31-1999
August 31, 1999
Re: Request for Ruling: Retail Sales and Use Tax
Dear ****
This is in reply to your letter of June 18, 1999, in which you request a ruling on the availability of a retail sales and use tax exemption for ***** ***** (the ``Taxpayer').
FACTS
The information provided indicates that the Taxpayer is exempt from federal income taxation under Sec. 501 (c)(3) of the Internal Revenue Code. The Taxpayer is organized for the purpose of counseling and otherwise assisting local men and women who wish to start up small businesses, and to assist those already in business who may require additional advice. The organization's advisors are made up of retired business men and women from the local community.
The Taxpayer asks if it qualifies for an exemption from the sales and use tax under the Code of Virginia.
RULING
There is no general exemption from the retail sales and use tax for nonprofit organizations. The only exemptions from the tax are set out in Code of Virginia Secs.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.
Based on the information provided, and under the doctrine of strict construction, the Taxpayer does not qualify for any of the exemptions found in Secs.58.1-609.1 through 58.1-609.13. While I am mindful of the worthwhile purpose the Taxpayer 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 Taxpayer 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 Taxpayer must report and pay use tax on a Consumer's Use Tax Return, Form ST-7.
If you should have any questions regarding this matter, you may contact ***** of the department's Office of Tax Policy at ****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/23618Q
Re: Request for Ruling: Retail Sales and Use Tax
Dear ****
This is in reply to your letter of June 18, 1999, in which you request a ruling on the availability of a retail sales and use tax exemption for ***** ***** (the ``Taxpayer').
FACTS
The information provided indicates that the Taxpayer is exempt from federal income taxation under Sec. 501 (c)(3) of the Internal Revenue Code. The Taxpayer is organized for the purpose of counseling and otherwise assisting local men and women who wish to start up small businesses, and to assist those already in business who may require additional advice. The organization's advisors are made up of retired business men and women from the local community.
The Taxpayer asks if it qualifies for an exemption from the sales and use tax under the Code of Virginia.
RULING
There is no general exemption from the retail sales and use tax for nonprofit organizations. The only exemptions from the tax are set out in Code of Virginia Secs.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.
Based on the information provided, and under the doctrine of strict construction, the Taxpayer does not qualify for any of the exemptions found in Secs.58.1-609.1 through 58.1-609.13. While I am mindful of the worthwhile purpose the Taxpayer 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 Taxpayer 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 Taxpayer must report and pay use tax on a Consumer's Use Tax Return, Form ST-7.
If you should have any questions regarding this matter, you may contact ***** of the department's Office of Tax Policy at ****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/23618Q
Rulings of the Tax Commissioner