Tax Type
Corporation Income Tax
Retail Sales and Use Tax
Description
Nonprofit contractor funded under the Job Training Partnership Act
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
06-14-1984
June 14, 1984
Re: Ruling Request: Sales and Use Tax; Corporate Income Tax
Dear *************
This will reply to your letters of February 3 and February 23, 1984 in which you request a ruling on the application of state income and sales and use taxes to ***** a Virginia corporation (the "Company").
FACTS
The Company's Articles of Incorporation provide that it is organized for the purpose of managing, coordinating, administering and accomplishing the employment, manpower and training goals and objectives of the Comprehensive Employment and Training Act, and such other similar programs, and to effect the Congressional statement of purpose as found in 29 U.S.C. 801." The Internal Revenue Service has determined that the Company is exempt from federal income tax under I.R.C.§501(c)(3) and the Company states that all of its funding is from the Job Training Partnership Act by means of the U.S. Department of Labor. The Company has been granted a contract under and receives all of its funding under Titles IIA and IIB of the Job Training Partnership Act.
DETERMINATION
Income Tax
Section 58-151.03(c) of the Code of Virginia exempts from state income tax public service corporations "which pay a State franchise tax or license tax upon gross receipts" and corporations "not organized or conducted for pecuniary profit which by reason of their purposes or activities are exempt from income tax under the laws of the United States." The company has substantiated its exempt status by furnishing the Department with a copy of the federal exemption letter and the Company is accordingly exempt from Virginia income tax.
Sales and Use Tax
All sales of tangible personal property in Virginia are subject to sales tax. A complementary use tax is imposed on the use or consumption of tangible personal property in Virginia. Taxation is the rule and exemptions are strictly construed. (Virginia Retail Sales and Use Tax Regulations §1-35.2). There is no general exemption from sales and use tax available for nonprofit organizations. the exemption afforded by Va. Code § 58-441.6(p) does not apply to the Company because, although it receives all its funding from the U.S. Government, the Company is not a government entity or a political subdivision. Accordingly, no sales and use tax exemption is available for the Company, a nonprofit contractor receiving funding under Titles IIA and IIB of the Job Training Partnership Act.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner