Tax Type
Retail Sales and Use Tax
Description
School photograph sales
Topic
Exemptions
Date Issued
04-09-1987
April 9, 1987
Re: Request for Ruling/Sales and Use Tax
Dear ****************
This will reply to your letter of December 19, 1986, in which you request a ruling on the application of the sales and use tax to various school picture packages offered by your corporation.
Your corporation offers three school picture packages to elementary and secondary schools. Under all three packages, the school will receive a portion of the proceeds from the sale of photographs. However, in some instances the sale of the photographs will be handled by the school and in other instances will be handled by your corporation. You wish to determine the application of the sales and use tax to each program under §58.1-608.63 of the Code of Virginia, which provides an exemption from the sales and use tax for the following items:
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- Tangible personal property purchased for use, consumption, or sale at retail by a Parent Teacher Association or other group associated with an elementary or secondary school conducted not for profit for use in fund-raising activities, the net proceeds (gross receipts less direct expenses) of which are contributed directly to the school or used to purchase certified school equipment; and certified school equipment purchased by such groups for contribution directly to the school.
- Tangible personal property purchased for use, consumption, or sale at retail by a Parent Teacher Association or other group associated with an elementary or secondary school conducted not for profit for use in fund-raising activities, the net proceeds (gross receipts less direct expenses) of which are contributed directly to the school or used to purchase certified school equipment; and certified school equipment purchased by such groups for contribution directly to the school.
Similarly, fund raising sales by organizations other than the school will be exempt only if the organization is affiliated with the nonprofit elementary or secondary school and the net proceeds from the sales are contributed directly to the school or used to purchase certified school equipment. Thus, the exemption will not apply if the organization conducting the sale is not affiliated with the school, nor will the exemption apply if an organization does not contribute the net proceeds to the school or use the net proceeds to purchase certified school equipment.
However, Senate Bill 587, which has been passed by the General Assembly during its 1987 session and signed into law by the Governor, will provide a somewhat broader exemption applicable only to nonprofit elementary and secondary schools (and not to affiliated organizations). This bill will provide an exemption for the purchase and sale of class rings, school photographs, and other fund-raising items for which a nonprofit elementary or secondary school receives a commission or the net proceeds after the payment of vendors and other direct expenses. Thus, so long as the school receives a commission from a sale, the sale will be nontaxable.
This expanded exemption will become law on July 1, 1987, but will be retroactive to July 1, 1986. With this new law, the three school picture packages described in your letter would not be subject to the tax as the school in each case receives a commission from your firm. Therefore, schools that have already paid the tax will be able on and after July 1, 1987 to request refunds for tax paid on purchases of photographs from your firm made on and after July 1, 1986.
The department will be promulgating a detailed regulation on this subject; if you have any comments or suggestions for inclusion in the regulation, we would be most appreciative.
I trust that this information will answer your questions on the application of the tax to your corporation's school picture program, but please do not hesitate to contact the department if further questions arise.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner