Tax Type
Retail Sales and Use Tax
Description
Nonprofit providing nursery school and pre-school kindergarten
Topic
Exemptions
Date Issued
02-06-1986
February 6, 1986
Re: Ruling Request: Sales and Use Tax
Dear********************
This is in reply to your letter of December 3, 1985 in which you request an exemption from the Virginia Retail Sales and Use Tax for ********************.
FACTS
************* classified as a nonprofit 501(c)(3) organization by the Internal Revenue Service, provides classes for 2 year olds, 3 year olds, 3/4 year olds, 4 year olds and young 5 year olds. This last group is in a class which can serve as either an additional pre-school year before entering public kindergarten or as a kindergarten year depending on the development of the child. Currently, six (6) students out of a total enrollment of sixty (60) students, are in this "pre K/K" class.
Based upon the following statement in Section 630-10-96 of the current edition of the Virginia Retail Sales and Use Tax Regulations, you request a tax exemption for Pre-School:
-
- The tax does not apply to purchases by day care centers and other pre-grade school establishments other than kindergartens.
- The tax does not apply to purchases by day care centers and other pre-grade school establishments other than kindergartens.
RULING
First, I would like to apologize for the confusion caused by a printing error in the current edition of the Virginia Retail Sales and Use Tax Regulations (published January 1, 1985). The word "not" erroneously appears in the statement upon which you rely. It should read:
-
- The tax does apply to the purchases by day care centers and other pre-grade school establishments other than kindergartens. (emphasis added.)
This has been the long-standing position of the department, based upon the decision of the Virginia Supreme Court in the case Commonwealth of Virginia v. The Progressive Community Clubs of Washington County, Virginia, Incorporated. The court ruled that, "...it is not the intent of the General Assembly...for the exemption...to apply to organizations operating preschool centers and nurseries. We hold that the proper level of education at which to commence the exemption is that accepted as the first level in the public school system...."
In Virginia, kindergarten is the first level in the public school system; therefore, nurseries, day care centers, and other preschool institutions do not qualify for exemption. However, an organization conducted not profit which offers nursery and kindergarten programs would qualify for the institution of learning exemption when the majority of the students are enrolled in the kindergarten program and the organization meets the requirements for an institution of learning as set forth in Section 630-10-96 of the Regulations. When the majority of the students are enrolled in the nursery programs, the exemption would not apply.
Based upon the facts presented, Pre-School currently does not qualify for the exemption from the tax.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner