Tax Type
Retail Sales and Use Tax
Description
Church exemption criteria
Topic
Exemptions
Date Issued
07-27-1988
July 27, 1988
Re: Ruling Request/ Sales and Use Tax
Dear******************
This will reply to your letter of June 25, 1986 seeking a ruling on the application of the sales and use tax exemption for nonprofit churches to*************** (taxpayer). I regret any inconvenience which may have been caused by the department's delay in providing you with this response.
Based on all of the information provided, I find basis for concluding that the taxpayer qualifies for exemption from the sales and use tax as a nonprofit church, under Virginia Code §58.1-608(38).
This section provides an. exemption from the sales and use tax for:
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- [t]angible personal property, except property used in any form of recording and reproducing services, 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
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- (i) in religious worship services by a congregation or church membership while meeting together in a single location, and
(ii) in the libraries, offices, meeting or counseling rooms or other rooms in the public church buildings used in carrying out the work of the church and its related ministries, including kindergarten, elementary and secondary schools.
The exemption for such churches shall also include baptistries; bulletins, programs, newspapers and newsletters which do not contain paid advertising and are used in carrying out the work of the church; gifts for distribution outside the public church building; and 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.
- (i) in religious worship services by a congregation or church membership while meeting together in a single location, and
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- [t]angible personal property, except property used in any form of recording and reproducing services, 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
I have also enclosed a copy of the department's 1985 regulation governing the nonprofit church exemption, (VR) 630-10-22.1, and Tax Bulletins 86-8 and 87-4 recently published by the department explaining changes to the nonprofit church exemption enacted by the General Assembly.
As can be seen from the above quoted statutory language and the enclosed materials, while the exemption for nonprofit churches such as the taxpayer is a broad one, it is not complete. Generally, in order to qualify for this exemption, an item must be purchased for use in religious worship services or in public church buildings used in carrying out the work of a nonprofit church and its related ministries.
In its commonly accepted meaning, the term "public church building" means a building, the primary purpose of which is to house regularly scheduled worship services o However, the above mentioned statute refers to "public church buildings" in the plural. Therefore, the exemption is available not only for tangible personal property used in those buildings that house regularly scheduled worship services, but also for those items used in adjacent buildings on the public church site.
Accordingly, items purchased by the taxpayer for use in offices or buildings adjacent to the site where the taxpayer conducts regularly scheduled worship services, in carrying out the work of the church and its related ministries, will also qualify for tax exemption.
Conversely, purchases by the taxpayer of items for use in buildings which are not located at the taxpayer's public church site, such as in its thrift stores, rehabilitation center, social services center, and Boys' Club, remain taxable. In addition, sales of all items by the taxpayer through its thrift stores remain taxable. However, the taxpayer may purchase any items for taxable resale through its thrift stores pursuant to resale certificate of exemption (Form ST-10, copy enclosed).
Additional examples of taxable and exempt purchases are provided in the enclosed regulation and bulletins. If after reviewing this letter and the enclosed materials, you have further questions on the applicability of the exemption to a particular transaction or activity, please let me know.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner