Tax Type
Retail Sales and Use Tax
Description
Meals sold by a church
Topic
Taxability of Persons and Transactions
Date Issued
02-27-1987
February 27, 1987
Re: Ruling Request / Church Exemption
Sales and Use Tax
Dear **************
This is in reply to your letter of December 17, 1985 in which you request a ruling regarding the applicability of the Virginia Retail Sales and Use Tax to the purchase of food by**********(Church). I want to apologize for the delay in responding to your ruling request and I hope that this delay has not caused you any inconvenience.
FACTS
The Church, as an extension of its ministry, serves meals in the church building during the week. These meals are open to the public and the amount charged is to cover the cost of the food. Meals are served every weekday at lunch, Wednesday nights, Thursday nights and at other times. The Church seeks an exemption from the Virginia Retail Sales and Use Tax on the purchase of the food served at these meals.
RULING
There is no general exemption from the Virginia Retail Sales and Use Tax granted to churches or other nonprofit organizations. Any exemption from the tax is restricted to the statutory exemptions specified in the Code of Virginia. Virginia Code §58.1-608.38 provides an exemption for:
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- Tangible personal property ... 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 ... (ii) in the libraries, offices, meeting or counseling rooms or other rooms in the public church building used in carrying out the work of the church and its related ministries ...."
Based upon the above exemption, the Church can purchase the food served at the-meals exempt from the tax. However in this case, while the purchase of the food is exempt from the tax, the sale of this food to the public is not. Generally, churches and other nonprofit organizations, that are making retail sales of tangible personal property, are required to register as dealers and collect and remit the tax.
Because the only charges the Church makes for the meals is one to offset the food cost and realizes no profit from the sale of the meals that are served and because of the administrative problems associated with the dealer requirements, the department will waive the dealer requirements for the Church under the authority granted by Virginia Code §58.1-614. This waiver of the requirement to register and to collect and remit the tax on the sales price of the meals is conditional upon the Church paying the applicable tax on its purchases of food. As long as the Church pays the applicable tax on the purchase price of the food the dealer requirements will be waived.
In the event that the Church realizes a profit from the sale of the meals that it serves, this exemption from the requirements of a dealer will be withdrawn. The Church would then be required to register as a dealer and collect and remit the tax on the sales price of the food that it serves. However, as a dealer, the Church would be entitled to purchase the food under the resale exemption granted to dealers.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner