Tax Type
Corporation Income Tax
Description
Tax exempt organization; Federal status
Topic
Exemptions
Date Issued
11-07-2000
November 7, 2000
Re: Request for Ruling: Corporation Income Tax
Dear ****
This will reply to your letter in which you request a ruling concerning exemption from Virginia income taxation of * * * (the "Taxpayer").
FACTS
The Taxpayer is a corporation exempt from federal income tax under Internal Revenue Code ("IRC") § 501(c)(3) and, as such, requests a ruling as to the extent to which its income is exempt from Virginia income tax.
RULING
Code of Virginia § 58.1-401 and Title 23 of the Virginia Administrative Code 10-120-90 exempt from the state income tax nonprofit corporations which are exempt from federal income tax under IRC § 501(c)(3).
Based on the determination by the Internal Revenue Service ("IRS") that the taxpayer qualifies for exemption from federal income tax under IRC § 501(c)(3), and the Virginia statute and regulation cited, the Taxpayer qualifies for exemption from Virginia income tax. However, if the Taxpayer has "unrelated business taxable income" as defined in IRC § 512, it must file a Virginia return and pay Virginia income tax on such income.
Qualification for tax exempt status in Virginia is dependent upon continued status as a tax exempt organization by the IRS. Loss of federal status would void the analogous Virginia status. Although the Taxpayer is exempt from the Virginia corporation tax on income it may receive, it is not exempt from the requirement that it withhold Virginia individual income tax from the wages of its employees, if it has any.
If you have any questions regarding this ruling, you may contact * * * at * * *.
Danny M. Payne
Tax Commissioner
Re: Request for Ruling: Corporation Income Tax
Dear ****
This will reply to your letter in which you request a ruling concerning exemption from Virginia income taxation of * * * (the "Taxpayer").
FACTS
The Taxpayer is a corporation exempt from federal income tax under Internal Revenue Code ("IRC") § 501(c)(3) and, as such, requests a ruling as to the extent to which its income is exempt from Virginia income tax.
RULING
Code of Virginia § 58.1-401 and Title 23 of the Virginia Administrative Code 10-120-90 exempt from the state income tax nonprofit corporations which are exempt from federal income tax under IRC § 501(c)(3).
Based on the determination by the Internal Revenue Service ("IRS") that the taxpayer qualifies for exemption from federal income tax under IRC § 501(c)(3), and the Virginia statute and regulation cited, the Taxpayer qualifies for exemption from Virginia income tax. However, if the Taxpayer has "unrelated business taxable income" as defined in IRC § 512, it must file a Virginia return and pay Virginia income tax on such income.
Qualification for tax exempt status in Virginia is dependent upon continued status as a tax exempt organization by the IRS. Loss of federal status would void the analogous Virginia status. Although the Taxpayer is exempt from the Virginia corporation tax on income it may receive, it is not exempt from the requirement that it withhold Virginia individual income tax from the wages of its employees, if it has any.
If you have any questions regarding this ruling, you may contact * * * at * * *.
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner