Tax Type
Retail Sales and Use Tax
Description
Fund raising materials purchased for resale by organizations associated with nonprofit elementary and secondary schools
Topic
Exemptions
Date Issued
12-29-1986
December 29, 1986
Re: Ruling Request/ Sales and Use Tax
Dear ***************
This will reply to your letter of October 22, 1986 seeking information on the correct application of the Virginia retail sales and use tax to transactions engaged in by ********************.
FACTS
According to your letter, you ask whether in making purchases of tangible personal property for fund raising purposes which do not qualify for the exemption found in §58.1-608(63) of the Virginia Code, a ********* organization may continue to pay the tax on such items to its suppliers or whether it must now register as a dealer for purposes of collecting and reporting the tax in making sales of such items.
RULING
As noted in your letter, the 1986 regular session of the Virginia General Assembly enacted a new exemption from the sales and use tax for certain purchases made by*********and similar organizations associated with nonprofit elementary and secondary schools. (See, §58.1-608(63) of the Virginia Code). According to this new exemption, effective July 1, 1986, the tax does not apply to tangible personal property purchased by a ************** or other school organization, (including student clubs and organizations), for fund raising purposes, if all of the following conditions are met:
1. The organization is affiliated with a nonprofit elementary or secondary school,
2. the property purchased is used in fund raising activities on behalf of the school, and
3. the net proceeds from the fund raising activities are either contributed directly to the school or used to purchase certified school equipment.
Therefore, whenever a**** or other nonprofit elementary or secondary school group purchases materials for use in fund raising activities the net proceeds of which will be used to purchase certified school equipment or be donated directly to the school, such purchases will qualify for exemption from the tax, provided a properly completed certificate of exemption, (Form ST-13, copy enclosed), is presented to suppliers at the time of such purchases.
In addition to the exemption granted above, §58.1-608(63) of the Code provides an exemption for purchases by such school affiliated organizations of certified school equipment for contribution directly to the school. However, to qualify for this exemption, such school groups must provide their suppliers with the certificate of exemption mentioned above, (Form ST-13), and written certification from the school, (signed by the school principal or assistant principal), that it will accept a donation of the equipment.
Any purchases made by such organizations which are not in strict compliance with the above mentioned requirements will not qualify for exemption from the tax. For example, purchases by such organizations for fund raising purposes the net proceeds of which will be retained by such organizations, will not qualify for exemption from the tax.
Therefore, such organizations will be required to pay the tax to their suppliers whenever making such nonexempt purchases, and will not be required to register with the department for the purpose of collecting and reporting the tax in making any sales of such items.
Due to the above referenced 1986 legislative change, the department is now in the process of revising §630-10-96 of the Retail Sales and Use Tax Regulations, concerning Schools and colleges, certain educational institutions and other institutions of learning. We have added your name to our mailing list for all future mailings regarding this revision and would greatly appreciate any comments you might have concerning the department's proposal when you receive it. Please also find enclosed a copy of a ruling recently issued by the department on issues closely related to the ones raised in this case.
I hope all of the foregoing has been of assistance to you but please let me know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner