Tax Type
Retail Sales and Use Tax
Description
The Virginia Community Diversion Incentive Act
Topic
Exemptions
Date Issued
11-08-1982
November 8, 1982
Re: Request for Ruling: Sales and Use Tax
This is in reference to your letter of June 22, 1982, requesting a ruling on the applicability of the Virginia sales and use tax to the ******************.
Facts
The Virginia Community Diversion Incentive Act (Code of Virginia, Title 53, Chapter 5.4) authorizes the establishment of Community Diversion Programs with direct funding of these programs from the Department of Corrections. The programs are established to provide sentencing alternatives for certain nonviolent offenders, and are to be developed with participation by the local government(s), the judiciary, and private citizens. There are few restrictions as to the manner of expending funds, but the localities must insure that the programs using the funds "comply with applicable State and Federal Regulations". The Program is funded directly by a grant from the Department of Corrections and is administered by the City******. The city initiates all purchases over twenty dollars, and the city's credit is bound in these purchases. The program itself makes cash purchases under twenty dollars used in day to day operations subject to the guidelines of the city for expenses and how the grant money is to be spent.
Determination
Virginia sales and use tax is levied on all tangible personal property for use or consumption in this state. (Virginia Code § 58-441.4, 441.5.) An exclusion is given from this tax for "Tangible personal property for use or consumption by this state, any political subdivision of this state, or the United States...." (§ 58-441.6(p). A review of the ******* indicates that the program operates as an agency of the city thus holding the status of a political subdivision of the state for purposes of § 58-441.6 (p), and is therefore exempt from the Virginia Sales and Use Tax.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner