Tax Type
Retail Sales and Use Tax
Description
Nonprofit geological research organization; Exemption criteria
Topic
Exemptions
Date Issued
05-22-1986
May 22, 1986
Re: Ruling Request: Sales and Use Tax
Dear *****************
This will reply to your letter of January 6, 1986 in which you submit a request for a ruling on the applicability of the Virginia Retail Sales and Use Tax to the purchase of tangible personal property for use by **************** (Institute).
FACTS
Institute is a nonprofit research organization exempt from federal income tax under IRC §501(c)(3). It is a consortium of 48 universities partially funded by the U. S. National Science and working with the U. S. Geologic Survey to improve the world-wide seismic network. You contend that Institute qualifies under the definition of "other institutions of learning" found under Virginia Code §58.1-608.23
RULING
While Institute is an organization exempt from federal and state income taxation under IRC §501(c)(3), it does not automatically enjoy an exemption from the Virginia Retail Sales and Use Tax. Since Virginia courts have traditionally held that exemptions are strictly construed, an exemption is not allowable unless specifically provided for in the law.
In order to qualify under the definition of "other institution of learning", the Virginia Retail Sales and Use Tax Regulations (§ 630-10-96) require that an organization must be similar to a college; that is, it must:
-
- 1. Employ a professionally-trained facility
2. Enroll and graduate students on the basis of academic achievement
3. Prescribe courses of study
4. Provide instruction at regular intervals over a reasonable period of time
- 1. Employ a professionally-trained facility
While Institute's member universities may each meet these criteria separately, Institute does not meet these criteria. Therefore, based upon the facts presented, Institute does not qualify for the exemption granted under Virginia Code §58.1-608.23.
It is possible that Institute may qualify to make some of its purchases under the exemption granted for the purchase of tangible personal property used directly and exclusively in basic research or research and development in the experimental or laboratory sense (Virginia Code §58.1-608.19). To qualify for this exemption, purchases must be used "directly and exclusively" in research and the research must be in the "experimental or laboratory sense." To the extent that any of Institute's purchases qualify under this exemption, such purchases may be made exempt from the tax by using an exemption certificate (ST-11).
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner