Tax Type
Retail Sales and Use Tax
Description
Religious commune; Application of exemption to churches
Topic
Exemptions
Property Subject to Tax
Date Issued
07-14-1986
July 14, 1986
Re: §58.1-1821 Application/Sales and Use Tax
Dear ******************
This will reply to your letter of April 4, 1986, in which you submit an application for correction of sales and use tax assessed to your client as the result of a recent audit.
FACTS
Your client is engaged in the operation of a religious commune, which is located on a ********** acre rural site. A number of buildings have been erected on the site, including a sanctuary building in which regular religious worship services are held and an office building. Being constructed on the same site is a shrine*********and an adjacent office building. While serving as a place of worship, the shrine will not house regular religious worship services. The commune has been recognized by the Internal Revenue Service as a nonprofit church under the provisions of § 501(c)(3) of the Internal Revenue Code.
A recent audit of your client produced an assessment for tangible personal property used outside of its sanctuary building, including office supplies used in its office building and furnishings for use in the shrine. You contest such assessment, contending that the sales and use tax exemption for nonprofit churches found at § 58.1-608.38 of the Code of Virginia is not limited exclusively to tangible personal property used or consumed within buildings housing regularly scheduled worship services.
DETERMINATION
§ 58.1-608.38 of the Code of Virginia contains an exemption from the sales and use tax for the following items:
Tangible personal property, except property used in any form of recording and reproducing services, purchased by churches organized not for profit and (i) which are exempt from taxation under §501 (c)(3) of the Internal Revenue Code or (ii) whose real property is exempt from local taxation pursuant to the provisions of §58.1-3606, for use (i) in religious worship services by a congregation or church membership while meeting together in a single location, and (ii) in the libraries, offices, meeting or counseling rooms or other rooms in the public church buildings used in carrying out the work of the church and its related ministries, including kindergarten, elementary and secondary schools.
Under the above statute, an exemption is available only for tangible personal property used in religious worship services by a congregation or church membership while meeting together in a single location and tangible personal property used in the public church buildings used in carrying out the work of the church and is related ministries. We are of course concerned here with the second category, tangible personal property used in the public church buildings.
In its commonly accepted meaning, the term "public church building" means a building, the primary purpose of which is to house regularly scheduled worship services. However, the above statute refers to "public church buildings" in the plural. Accordingly, the exemption is available not only for tangible personal property used in those buildings that house regularly scheduled worship services, but also for those items used in adjacent buildings on the public church site.
Therefore, based on the foregoing, the assessment issued to your client will be revised to delete those items of tangible personal property purchased on or after July 1, 1984 and used in the office building or the shrine to carry out the work of the church and its related ministries. As you are aware, construction and building materials, equipment and tools used in the maintenance of church grounds, and items that become affixed to realty are among the items that do not constitute tangible personal property used in carrying out the work of the church under the provisions of § 630-10-22.1 of the Virginia Retail Sales and Use Tax Regulations. However, administrative supplies and furnishings are deemed to be used in carrying out the work of the church and its related ministries.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner