Tax Type
Retail Sales and Use Tax
Description
Nonprofit health clinic; Exemption criteria
Topic
Exemptions
Date Issued
11-04-1987
November 4, 1987
Re: Ruling Request/ Sales and Use Tax
Dear ********************
This will reply to your letter of July 28, 1987 seeking an exemption from the sales and use tax for ***************** (taxpayer's) Health Clinic.
FACTS
The taxpayer is a nonprofit, nonstock corporation, exempt from income taxation under §501(c)(3) which provides free medical and dental care to the needy of Richmond, through a health clinic staffed by licensed physicians and dentists, a family nurse practitioner, and volunteers. Accordingly, the taxpayer seeks exemption from the tax for the health clinic under §58.1-608 (23)(a) of the Virginia Code.
RULING
Virginia Code §58.1-608(23)(a) provides an exemption from the sales and use tax for "[t]angible personal property for use or consumption by community health center's exempt from taxation under §501(c)(3) of the Internal Revenue Code and established for the purpose of providing health care services for areas of the Commonwealth containing a medically underserved population as defined by 42 U.S.C. §254c (b)(3)."
As defined by this section of the U.S. Code, the term "medically underserved population" means "the population of an urban or rural area designated by the Secretary [of Health and Human Services] as an area with a shortage of personal health services or a population group designated by the Secretary as having a shortage of such services."
Based on the facts presented, and information provided by the United States Public Health Service which indicates that the health clinic in this case is located in an area of the Commonwealth containing a "medically underserved population", I find basis for concluding that the taxpayer's health clinic qualifies for this exemption.
It should be noted however, that this exemption is limited to those purchases made for use and consumption by the taxpayer's health clinic, and does not extend to any other purchases made by the taxpayer.
I trust that the foregoing has responded to your question, but if you have any further questions, please contact the department's Technical Services Section, office Services Division, at P.O. Box 6-L, Richmond, Virginia 32382.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner