89-297 | Virginia Tax

Tax Type

Retail Sales and Use Tax

Description

Nonprofit organization rehabilitating substandard housing; Refunds

Topic

Exemptions

Date Issued

10-31-1989

October 31, 1989

Re: Request for Ruling/ Sales and Use Tax

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

This will reply to your letter of August 23, 1989, requesting a ruling as to whether your organization qualifies under Virginia Code §58.1-608.1 for a refund of sales and use tax paid on certain purchases of building materials.

Facts

*********** ("the Agency"), a nonprofit community action agency exempt from income taxation under §501(c)(3) of the Internal Revenue Code, is organized to uncover and work against the causes of poverty. The Agency is not a political subdivision of the Commonwealth.

The Agency's activities include a home repair/rehabilitation service in which repairs are made to substandard owner-occupied housing to enhance safety and structural integrity. Rehabilitation services include weatherization, and installation of bathrooms, wells and septic systems. The Agency requests permission under §58.1-608.1 of the Code of Virginia to apply for a refund of taxes paid on building materials used in providing such services.

Ruling

Virginia Code §58.1-608.1, enacted by the 1989 Virginia General Assembly, provides:

- Any organization meeting the following conditions and criteria may apply to the Department of Taxation for a refund of any taxes paid on tangible personal property pursuant to §§58.1-605 and 58.1-606 of this title:
  
  1. The organization is exempt from taxation under §501(c)(3) of the Internal Revenue Code;
  2. The organization is organized and operated primarily to acquire land and purchase materials to erect or rehabilitate low-cost homes on such land; and
  3. The homes are sold at cost on a nondiscriminatory basis to persons who otherwise would be unable to afford to buy a home through conventional means. . .

If an organization does not meet all of the criteria set forth in the above statute, it will not qualify for the applicable refund. The Agency does not meet all of these criteria. While it is nonprofit and provides home repair and rehabilitation services, it is not organized primarily to acquire land and purchase materials to erect or rehabilitate low-cost homes on such land, nor does the Agency sell homes. Rather, the Agency emphasizes a wide range of services in the areas of education, health, transportation, and jobs, in addition to housing.

Therefore, notwithstanding the worthwhile purpose which the Agency serves, I do not find basis for allowing it to apply for the refund in question.

Please contact the department if you have additional questions or if we may be of any further assistance.

Sincerely,

W. H. Forst
Tax Commissioner

Rulings of the Tax Commissioner