Tax Type
Retail Sales and Use Tax
Description
Nonprofit Organizations
Topic
Exemptions
Date Issued
09-24-1999
September 24, 1999
Re: Request for Ruling: Retail Sales and Use Tax
Dear ****
This is in reply to your letter of June 16, 1999, in which you request a ruling regarding the application of the retail sales and use tax to the provision of meals and audio visual equipment in conjunction with the rental of meeting rooms to public, private and nonprofit businesses and organizations.
FACTS
The Taxpayer operates a conference center renting conference rooms to churches for weekly religious services, and to nonprofit businesses and organizations for fund raisers, awards ceremonies, conferences, and other similar activities. In addition, the Taxpayer provides meals, audio visual equipment, and other services in connection with the conference room rentals. The Taxpayer inquires as to the proper application of the sales and use tax to such transactions.
RULING
Code of Virginia § 58.1-603 imposes the retail sales tax not only on retail sales of tangible personal property, but also on the gross proceeds derived from the sale or charges for rooms, lodgings or accommodations furnished to transients for less than ninety continuous days. Rooms, lodging or accommodations are considered taxable services rather than tangible personal property.
Purchases by Nonprofit Organizations
Generally, the tax will apply to the purchase of meals and lodging by nonprofit organizations. Title 23 of the Virginia Administrative Code (VAC) §§ 10-210-1071 and 10-210-4040, copies enclosed, provide that meals and lodgings are considered taxable services, not tangible personal property. In order to make an exempt purchase of meals and lodging, an organization's statutory exemption must contain specific language which exempts the purchase of services. Presently, there are only four exemptions which specifically exempt taxable services. See Code of Virginia §§ 58.1-609.4(4), 58.1-609.4(12), 58.1-609.8(34), and 58.1-609.8(50).
Organizations qualifying for one of these four exemptions have been issued letters from the department stating that they qualify for such an exemption. Since none of the exemption certificates received by the Taxpayer are applicable to taxable services, they are unacceptable in exempting such sales.
Purchases by Churches
Code of Virginia § 58.1-609.8(2) exempts from the sales and use tax "tangible personal property ... purchased by churches ... for use (i) in religious worship services by a congregation of church membership while meeting together in a single location, and (ii) in the libraries, offices, meeting or counseling rooms or other rooms in the church building used in carrying out the work of the church and its related ministries....' (Emphasis added).
Title 23 VAC 10-210-310 (copy enclosed) interprets the foregoing exemption and provides an exemplary listing of taxable and exempt purchases for nonprofit churches. While the exemption is broad in its application, it does not apply to all tangible personal property purchased by churches. This exemption has been expanded in recent years to include (i) church bulletins, programs, newspapers, and newsletter distributed outside the church; (ii) gifts distributed outside the church; (iii) baptistries; and (iv) food, disposable serving items, cleaning supplies and teaching materials used in the operation of a camp or conference center which are used in carrying out the work of the church.
The rental of conference rooms and the provision of meals by the Taxpayer to churches for weekly religious services, nonprofit businesses and organizations for fund raisers, awards ceremonies, conferences, and other similar activities, are subject to the tax, as such sales are sales of taxable services and not tangible personal property.
I trust that this information has been of some assistance. If you should have any additional questions regarding this matter, please contact ***** of the ***** department's Office of Tax Policy at *****
Sincerely,
Danny M. Payne
Tax Commissioner
Re: Request for Ruling: Retail Sales and Use Tax
Dear ****
This is in reply to your letter of June 16, 1999, in which you request a ruling regarding the application of the retail sales and use tax to the provision of meals and audio visual equipment in conjunction with the rental of meeting rooms to public, private and nonprofit businesses and organizations.
FACTS
The Taxpayer operates a conference center renting conference rooms to churches for weekly religious services, and to nonprofit businesses and organizations for fund raisers, awards ceremonies, conferences, and other similar activities. In addition, the Taxpayer provides meals, audio visual equipment, and other services in connection with the conference room rentals. The Taxpayer inquires as to the proper application of the sales and use tax to such transactions.
RULING
Code of Virginia § 58.1-603 imposes the retail sales tax not only on retail sales of tangible personal property, but also on the gross proceeds derived from the sale or charges for rooms, lodgings or accommodations furnished to transients for less than ninety continuous days. Rooms, lodging or accommodations are considered taxable services rather than tangible personal property.
Purchases by Nonprofit Organizations
Generally, the tax will apply to the purchase of meals and lodging by nonprofit organizations. Title 23 of the Virginia Administrative Code (VAC) §§ 10-210-1071 and 10-210-4040, copies enclosed, provide that meals and lodgings are considered taxable services, not tangible personal property. In order to make an exempt purchase of meals and lodging, an organization's statutory exemption must contain specific language which exempts the purchase of services. Presently, there are only four exemptions which specifically exempt taxable services. See Code of Virginia §§ 58.1-609.4(4), 58.1-609.4(12), 58.1-609.8(34), and 58.1-609.8(50).
Organizations qualifying for one of these four exemptions have been issued letters from the department stating that they qualify for such an exemption. Since none of the exemption certificates received by the Taxpayer are applicable to taxable services, they are unacceptable in exempting such sales.
Purchases by Churches
Code of Virginia § 58.1-609.8(2) exempts from the sales and use tax "tangible personal property ... purchased by churches ... for use (i) in religious worship services by a congregation of church membership while meeting together in a single location, and (ii) in the libraries, offices, meeting or counseling rooms or other rooms in the church building used in carrying out the work of the church and its related ministries....' (Emphasis added).
Title 23 VAC 10-210-310 (copy enclosed) interprets the foregoing exemption and provides an exemplary listing of taxable and exempt purchases for nonprofit churches. While the exemption is broad in its application, it does not apply to all tangible personal property purchased by churches. This exemption has been expanded in recent years to include (i) church bulletins, programs, newspapers, and newsletter distributed outside the church; (ii) gifts distributed outside the church; (iii) baptistries; and (iv) food, disposable serving items, cleaning supplies and teaching materials used in the operation of a camp or conference center which are used in carrying out the work of the church.
The rental of conference rooms and the provision of meals by the Taxpayer to churches for weekly religious services, nonprofit businesses and organizations for fund raisers, awards ceremonies, conferences, and other similar activities, are subject to the tax, as such sales are sales of taxable services and not tangible personal property.
I trust that this information has been of some assistance. If you should have any additional questions regarding this matter, please contact ***** of the ***** department's Office of Tax Policy at *****
Sincerely,
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner