Retail Sales and Use Tax Exemptions for Nonprofit Organizations
New Sales and Use Tax Exemption for Veterans Service Organizations
Effective July 1, 2016, Veterans Service Organizations (VSOs) that are tax exempt under Internal Revenue Code 501(c)(19), as well as organizations with annual gross receipts below $5,000 that serve one of the purposes in IRC 501(c)(19), may apply for a Virginia sales and use tax exemption certificate.
The sales tax exemption will not apply to the following:
- Taxable services, such as hotel accommodations
- Tangible personal property used primarily for providing insurance benefits
- Items used primarily for social and recreational activities
For more information, see Tax Bulletin 16-5.
Important Information about Purchases of Meals and Catering
Effective for purchases made on and after April 22, 2016, nonprofit organizations and nonprofit churches may use their Retail Sales and Use Tax exemption certificates issued pursuant to Va. Code § 58.1-609.11 to make exempt purchases of food and meals, as well as certain “taxable services” provided in connection with the provision of meals.
Virginia Tax will no longer deny these organizations an exemption on purchases of catering and meals on the basis that the entity is purchasing a taxable service. In addition, we will no longer deny the nonprofit exemption on the basis that the qualifying entity has purchased the meals and related services for consumption by individuals. Rather, Virginia Tax will now apply a new test to determine whether the purchases are made for the qualifying entity’s use or consumption. See Tax Bulletin 16-3 for more details.
Retail Sales and Use Tax - Exemption Requirements
To qualify for an exemption, a nonprofit organization must meet all of the following requirements: (Reference: Virginia Code 58.1-609.11)
- The organization must be exempt from federal income taxation under Sections 501(c) (3), 501(c) (4) or 501(c) (19). If the organization has annual gross receipts less than $5,000, and is organized for one of the purposes set in Internal Revenue Code 501(c) (3) or 501(c) (4), it must submit a mission statement. For more information, visit the IRS website at www.irs.gov/eo or you may contact them at 877.829.5500.
- Proof that the organization is in compliance with Virginia's law relating to organizations that solicit contributions in Virginia. For additional questions, contact the Department of Agriculture and Consumer Services (VDACS) at 804.786.1343 or visit their web page (see Virginia Solicitation of Contributions Law for details). You may search here to see if your organization is registered and print documentation.
- The annual administrative costs of the organization, including salaries and fundraising, must not exceed 40% of its annual gross revenue.
- An organization with gross annual revenue of at least $750,000 in the previous year must provide a financial review performed by an independent Certified Public Accountant (CPA). NOTE: Virginia Tax may require an organization with gross annual revenue of at least $1 million in the previous year to provide a financial audit performed by an independent CPA in lieu of a financial review.
- The organization must provide an estimate of the total amount of tangible personal property purchased in Virginia for the preceding year and the current year. Do not include purchases of any tangible personal property that will be furnished to a contractor performing construction, installation, repair or any other service with respect to real property.
- If the organization is required to file a federal Form 990, 990EZ, 990PF, or 990N with the IRS, a copy must be provided to Virginia Tax. If the organization is not required to file, the names and address of two members of the organization's Board of Directors must be provided along with the location of the financial records. NOTE: All financial records must be available for inspection.
Requirements for Nonprofit Churches
Nonprofit churches have two options to request a retail sales and use tax exemption: they may use the self-issued exemption certificate, Form ST-13A, or apply to Virginia Tax for a tax-exempt number.
Option 1: Form ST-13A
Code of Virginia Section 58.1-609.10(16) allows nonprofit churches to use the self issued exemption certificate Form ST-13A. Title 23 of the Virginia Administrative Code (VAC) 10-210-310 provides an exemplary listing of taxable and exempt purchases for nonprofit churches qualifying for this option.
Option 2: Tax-Exempt Number
Code of Virginia Section 58.1-609.11 provides a broader exemption to nonprofit organizations and churches seeking a sales and use tax exemption. All exemption requirements under Code of Virginia 58.1-609.11 must be met to qualify. Churches electing this option must submit a detailed financial statement for the prior year's accounting period.
Apply Online for a Retail Sales and Use Tax Exemption at Nonprofit Online
Nonprofit Online is a quick, efficient, and secure way for you to apply for and print your sales and use tax certificate online. You can access Nonprofit Online to edit certain registration information and renew your expired or expiring exemption, as well as reprint lost certificates without having to contact Virginia Tax. You may also send secure e-mail messages to us through a protected environment.
This service is available to anyone requesting a sales and use tax exemption for a nonprofit organization or a nonprofit church. You will be required to create a user ID and password in order to register your organization. To qualify for an exemption, you must meet all of the exemption requirements under Code Section 58.1-609.11.
To apply or to search for a nonprofit organization, go to Nonprofit Online.
For additional information, go to Nonprofit Online FAQS.
Unable to Apply Online
Organizations that are unable to apply online can download Form NP-1 Application and Instructions or contact the Nonprofit Exemption Team at 804.371.4023 to request an application. Completed applications should be sent to Virginia Tax, Nonprofit Exemption Unit, P. O. Box 27125, Richmond, Virginia 23261-7125, or faxed to 804.786.2645.
Did You Know?
- If you are a returning user and you are unable to retrieve your user ID and password information, you must sign up as a new user and create a new user ID and password. Click on the "Change Access Request" option to associate your new user ID and password with the record. Once you receive an email confirmation that the Change Access Request has been approved, you may login to access your record.
- Once you have submitted an application online changes and additions cannot be made. Please contact the Nonprofit Unit at 804.371.4023 if you have questions.
- You may check the status of an application by logging into Nonprofit Online using your user ID and password.
- You may submit required documents by upload or by mail.
- You may search for a nonprofit organization at Nonprofit Online, by entering the name of the organization or the federal identification number.
Helpful Resources Contact Information
|Virginia Tax Nonprofit Exemption Unit||804.371.4023||http://www.tax.virginia.gov/npo|
|Virginia Department of Consumer Services(VDACS)||804.786.1343||http://www.vdacs.virginia.gov/services-forms.shtml|
|Virginia Department of Motor Vehicles (DMV)||804.497.7100||http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+58.1-2403|
|Virginia State Corporation Commission (SCC)||804.371.9967||http://www.scc.virginia.gov/clk/bussrch.aspx|
Sales Tax Rate Chart
Rates Effective July 1, 2013: Retail Sales and Use Tax
|AREA||SALES TAX RATE|
|Elsewhere throughout Virginia||5.3%|