86-78 | Virginia Tax

Tax Type

Retail Sales and Use Tax

Description

Nonprofit organization offering educational courses and seminars

Topic

Exemptions

Taxability of Persons and Transactions

Date Issued

04-23-1986

April 23, 1986

Re: Request for Ruling/Sales and Use Tax

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

This will reply to your letter of December 13, 1985 requesting a ruling on the correct application of Virginia's sales and use tax to the ******************.

FACTS

************* (taxpayer) a nonprofit organization, exempt from federal income taxation under §501(c)(3) of the Internal Revenue Code, organized exclusively for educational purposes. Through its periodic offering of courses and seminars, taxpayer provides mid-career training for all levels o******** personnel Taxpayer's courses and seminars are generally targeted to improving the skills and competencies of such personnel in particular aspects of *****************.

Through its large pool of ********** and other professional instructors, taxpayer offers its courses and seminars throughout the year. Such course offerings range in length from one or two day intensive seminars to two month long courses with fifteen sessions of two and one half hours per session.

Upon successful completion of from fifteen to twenty-one credit hours of course work, course and seminar participants become eligible to receive diplomas in various functional areas such as Fundamentals of *********** Retail *********** Operations/ Data Processing and Commercial.

§58.1-608(23) of the Virginia Code provides an exemption from the sales and use tax to:

- tangible personal property for use or consumption by a collage or other institution of learning... provided such collage [or] institution of learning... is not conducted for profit.

§630-10-96(A)(1) of the Virginia Retail Sales and Use Tax Regulations states further that for an organization to qualify as an "institution of learning" for purposes of the sales and use tax exemption, the organization must:

- a. employ a professionally trained faculty,
  
  b. enroll and graduate students on the basis of academic achievement,
  
  c. prescribe courses of study, and
  
  d. provide instruction at regular intervals over a reasonable period of time.

These criteria are based on the departments long standing interpretation that the exemption granted in §58.1-608(23) requires that an "other institution of learning" be similar in nature to a collage, an interpretation upheld by the Virginia Supreme Court in the case of Department of Taxation v Progressive Community Club of Washington County Va., Inc 215 Va. 732, 213 S.E.2d 759 (1975).

For the following reasons, I find basis for concluding that taxpayer qualifies as an exempt "institution of learning" within the meaning of the sales and use tax law and regulations.

Taxpayer employs approximately 70 professionally trained faculty members to conduct its courses. While the majority of such faculty are *********** professionals, taxpayer also employs numerous faculty with professional backgrounds in law, government regulation, financial planning, accounting and business.

Taxpayer enrolls and graduates its students on the basis of academic achievement. In order to achieve a diploma a student must complete between 15 and 21 credit hours of course work with a grade point average of 2.0 or better on a 4.0 scale. In addition, students are prohibited from taking certain upper level courses until they have successfully completed more basic, introductory courses. Taxpayer prescribes courses of study by offering numerous diploma programs which lead to progressively more advanced levels of coursework in areas such as Fundamentals of Retail Applied ********* and Commercial *****************. For example, as alluded to above, in order for a student to qualify to earn an Applied *************** Diploma, he must first have achieved a Fundamentals of ************* Diploma.

Taxpayer also provides instruction at regular intervals over a reasonable period of time. For example, taxpayer provides instruction during fall, spring and summer semesters for courses which range in length from 15 sessions (of 2.5 hours per session) for a three credit course to 5 sessions (of 2.5 hours per session) for a one credit course. In addition, if student misses more than three session of a three credit hour courses or more than one session of a one credit hour course, he may be disqualified from achieving a passing grade in the course.

Lastly, taxpayer's detailed annual catalog of courses as will as its continuous output of brochures and flyers updating students on special course offerings, course availability and requirements, further attest to its status as an exempt institution of learning within the meaning of Virginia's sales and use tax law.

In accordance with all of the above taxpayer may purchase tangible personal property for use as an institution of learning, exempt of Virginia's sales and use tax by issuing the appropriate certificate of exemption (Form ST-13, copy enclosed) to its Virginia suppliers at the time of such purchases.

Sincerely,

W. H. Forst
Tax Commissioner

Rulings of the Tax Commissioner