Tax Type
Retail Sales and Use Tax
Description
Church preschool; Exemption criteria
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
02-06-1986
February 6, 1986
Re: Ruling Request: Sales and Use Tax
Dear *****************
This is in reply to your letter of November 18, 1985 in which you request an exemption from the Virginia Retail Sales and Use Tax for *****************.
FACTS
Church and Preschool are both exempt from federal taxation under the exemption granted by I.R.C. §501 (c)(3). Preschool is operated as part of Church's public out reach program. Preschool is operated from 9:00 a.m. to 12:00 noon for 3 year olds and 4 year olds.
You are requesting an exemption from the tax for items purchased and used as part of the worship service for Church and for supplies purchased and used for Preschool.
RULING
Virginia Code §58.1-608.38 exempts from the tax:
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- 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 school.
Under the exemption granted by this Section, the supplies used in the church building by the congregation as part of the worship service are clearly exempt from the tax and may be purchased under an ST-13A Exemption Certificate.
The church school exemption granted for tangible personal property used by a church "...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...", is limited to "...kindergarten, elementary and secondary schools."
The school exemption is further explained in the Virginia Retail Sales and Use Tax Regulations under §630-10-96. Unfortunately, there is a typographical error in the pertinent statement under this section of the regulations. The current edition of the Regulations state:
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- 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.
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- The tax does apply to purchases by day care centers and other pre-grade school establishments other than kindergartens. (Emphasis added.)
- The tax does apply to 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 Club 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 is 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 PD 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 program, the exemption would not apply.
Based upon the facts presented, Preschool currently does not qualify for the exemption from the tax.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner