89-173 | Virginia Tax

Tax Type

Retail Sales and Use Tax

Description

Fund raising events; Collection of tax

Topic

Collection of Tax

Taxability of Persons and Transactions

Date Issued

05-24-1989

May 24, 1989

Re: Request for Ruling/Retail Sales and Use Tax

Dear*****************

This will reply to your letter dated November 17, 1988, in which you requested a ruling as to whether ************ ("The Club") qualifies for exemption from sales and use tax under Virginia Code §58.1-608(15).

FACTS

The Club sponsors two main events each year, a "photo session" with Santa Claus during the holiday season and a benefit theater party. The proceeds from these events are given to various charities. The Club requests a ruling on the application of the tax to these functions.

RULING

Virginia Code §58.1-608(15), exempts from the sales and use tax occasional sales of tangible personal property. Interpreting Va. Code §58.1-608(15), Virginia Retail Sales and Use Tax Regulations §630-10-75, (copy enclosed), states that:

- The tax does not apply to an occasional sale provided the sale or exchange is not one of a series of sales or exchanges sufficient in number, scope and character to constitute an activity requiring the holding of certificate of registration.
  
  The term "occasional sale" means...[a] sale by a person who is engaged in sales on three or fewer separate occasions within one calendar year....

Applying the regulation cited above, an organization such as the Club would normally not be required to register and collect the tax provided that it conducts three or fewer sales per year. However, registration is necessary when an organization conducts sales along with other businesses and also makes sales on more than 3 occasions. The Club sells the photos over a 30 day period from Thanksgiving until Christmas at two locations (e.g. shopping malls). In effect, the Club holds itself out as a retailer and may be in competition with businesses or other organizations which are required to collect the tax due to their sales activities.

Based on the above, I find no basis in this case for waiving the requirement that the sales tax be collected. However, it should be possible to reduce the administrative burden upon the Club by allowing them to file a temporary or seasonal registration. If such a temporary or seasonal registration is desired, please contact the *********** District Office,**************.

The Club also asks whether it may purchase office supplies and food in connection with its "Thursday Morning Meetings" exempt from the tax. There is no general exemption from Virginia Retail Sales and Use Tax for nonprofit organizations (see enclosed copy of Virginia Retail Sales and Use Tax Regulation §630- 10-74). The only exemptions from the tax are set out in Virginia Code §58.1-608 (copy enclosed).

Therefore, the Club is required to pay the tax to its vendors on all purchases of tangible personal property. If a vendor fails to collect the tax, the Club must report and pay the use tax on a Consumer Use Tax Return, ST- 7.

If I can be of further assistance, please contact the department.

Sincerely,

W. H. Forst
Tax Commissioner

Rulings of the Tax Commissioner