Tax Type
Retail Sales and Use Tax
Description
Church Conference Center and Gift Shop; Meals and lodging
Topic
Taxability of Persons and Transactions
Date Issued
01-04-1988
January 4, 1988
Re: Request for Ruling/Sales and Use Tax
Dear******************
This is in response to your letter dated August 20, 1987 in which you request a ruling on the applicability of the new law expanding the existing sales and use tax exemption for nonprofit churches.
FACTS
******(Taxpayer) is a nonprofit organization which is only used for church related activities. The taxpayer is operated by the Virginia************** which is comprised of the Virginia churches belonging to the *********************************.The taxpayer currently collects sales tax from participants for meals and lodging. The taxpayer also collects sales tax on items sold in the gift shop and ice cream parlor. In light of the recent expansion of the exemption on sales tax for nonprofit churches under Virginia Code §58.1-608(38), you request a ruling on the applicability of the sales and use tax to these types of transactions.
RULING
§58.1-6O8(38) of the Code of Virginia provides limited exemption from the sales and use tax for nonprofit churches that are exempt from income taxation under §501(c)(3) of the Internal Revenue Code or local real estate taxes under §58.l(3606) of the Code of Virginia.
The exemption was expanded this year to provide an additional exemption for:
-
- ...food, disposable serving items, cleaning supplies and teaching materials used in the operation of camps or conference centers by the church or an organization composed of churches that are exempt under this subdivision and which are used in carrying out the work of the church or churches.
- ...food, disposable serving items, cleaning supplies and teaching materials used in the operation of camps or conference centers by the church or an organization composed of churches that are exempt under this subdivision and which are used in carrying out the work of the church or churches.
Based on the expanded law, the conference center can purchase the food served at the meals exempt from the tax, provided such items are used or consumed in carrying out the work of the church(es) and are not being utilized during non-church related functions. Non-church related functions might include, but are not limited to, the renting of the facility for conferences, retreats, etc. by businesses or business groups, governmental organizations, civic groups, and other groups not affiliated with the association.
The provision, however, does not include any exemption for lodging. Therefore, there is no statutory authority to grant the taxpayer, an exemption from the tax for lodging.
Generally, nonprofit organizations that regularly engage in making retail sales of tangible personal property are required to register as dealers and collect and remit the tax (Virginia Regulation §630-10-74). Therefore, the taxpayer is still liable for the remittance of sales tax on retail sales made in the gift shop and ice cream parlor. It should be noted that tangible personal property purchased for resale may be bought from vendors exempt from the tax under a Certificate of Exemption, Form ST-10.
I am enclosing a copy of Virginia Code §58.1-608(38) and a copy of the impact statement on the expanded exemption for your perusal.
I do hope all of the foregoing information has been helpful to you. Should you need additional assistance, please do not hesitate to contact us.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner