86-221 | Virginia Tax

Tax Type

Retail Sales and Use Tax

Description

Local cable channel--Public access

Topic

Taxability of Persons and Transactions

Date Issued

11-03-1986

November 3, 1986

Re: Request for Ruling/Sales and Use Tax

Dear ************************

This will reply to your letter of November 21, 1985, in which you request a ruling on the application of the sales and use tax to ************************.

FACTS

************** (Taxpayer) is a nonprofit organization exempt from federal and state income tax under § 501 (c)(3) of the Internal Revenue Code that engages in the operation of the public access channel of a local cable television system. The taxpayer operates the channel under the provisions of 47 U.S. Code §531, which permits franchising authorities, in this case a county, to require as part of a cable operator's franchise that a channel be set aside for "public, educational, or governmental use." Under the taxpayer's articles of incorporation, it is charged with providing training in the fundamentals of television programming, with the production and encouragement of production by others of programming for the public access channel. and to stimulate and promote the use of the channel, among other tasks. The taxpayer does not accept advertising and airs educational, cultural, and other public interest programming.

The taxpayer requests a ruling on the applicability to its operations of the exemption described in § 630-10-74 of the Virginia Retail Sales and Use Tax Regulations for tangible personal property used by nonprofit, noncommercial educational telecommunications entities.

RULING

§ 58.1-608.23 of the Code of Virginia sets forth the exemption described in § 630-10-74 of the Virginia Retail Sales and Use Tax Regulations:

- tangible personal property (i) for use or consumption by, (ii) sold by, or (iii) donated to a noncommercial educational telecommunications entity, said exemption to apply to each transaction in the chain of commerce from manufacture to final disposition, provided such...telecommunications entity...is not conducted for profit.

Under the above statute, a taxpayer must meet several tests in order to gain exemption. In addition to being a telecommunications entity as is the taxpayer here, the organization must not be operated for profit and its programming must be noncommercial. As the taxpayer here has been deemed a nonprofit organization for purposes of §501 (c)(3) of the Internal Revenue Code and does not accept commercial advertising, these two criteria are also met. Lastly, the taxpayer's programming must serve an educational purpose. Inasmuch as the taxpayer operates a cable channel designated for public, educational, or governmental use, I also find this criteria to be met. Accordingly, the taxpayer is entitled to the above sales and use tax exemption for nonprofit, noncommercial educational telecommunications entities.

Sincerely,

W. H. Forst
Tax Commissioner

Rulings of the Tax Commissioner