Tax Type
Retail Sales and Use Tax
Description
Nonprofit producing decent, safe and affordable places to live.
Topic
Exemptions
Property Subject to Tax
Date Issued
08-22-1990
August 22, 1990
Re: Request for Ruling/Sales and Use Tax
Dear ****
This will reply to your letter dated April 27, 1990 seeking an exemption from the sales and use tax for the ***** (the "Taxpayer"). This also has reference to additional information submitted to my Tax Policy Division staff.
FACTS
Under its Articles of Incorporation, the Taxpayer is a nonprofit corporation organized "for the charitable purposes of ensuring that every resident of the City of Richmond, Virginia,...[has] a decent, safe and affordable place to live." In furtherance of this goal, Article IV of the Taxpayer's Bylaws authorizes its Board of Directors to engage in housing production and related activities. According to the Taxpayer's informational brochure, the Taxpayer's goals for action are to: (1) create a climate of opinion in which the provision of adequate housing is a high priority for the metropolitan area; (2) strengthen neighborhoods; (3) support community based organizations working to physically improve housing in the Richmond area; (4) secure and manage funds to assure an adequate supply of affordable, decent housing units; and (5) ensure that decent shelter and housing are available for all who need it.
The Taxpayer is currently in the process of acquiring parcels of land in the Richmond area and certain foreclosure properties for the purpose of rehabilitating them for occupancy by low to moderate income home owners and renters. Thus, the Taxpayer seeks an exemption from the sales tax on its purchases of building materials and supplies which would facilitate the production of new low-income housing and the repair and rehabilitation of existing low-income housing.
RULING
Virginia Code §58.1-608.1 (copy enclosed), authorizes a refund of sales taxes paid on building materials purchased by certain nonprofit organizations. An organization qualifies for this refund if: (1) it is exempt from taxation under §501(c)(3) of the Internal Revenue Code; (2) it 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 or a nondiscriminatory basis to persons who are unable to afford to buy d home through conventional means.
Based on the information submitted, the Taxpayer is not organized primarily to acquire land and purchase materials to build or rehabilitate low-cost homes. Rather, the Taxpayer in this case is primarily engaged in housing advocacy and in coordinating the efforts of many neighborhood and other community based organizations seeking to address the housing crisis.
However, the 1990 General Assembly expanded this section effective July 1, 1990, to allow a refund to nonprofit organizations for sales tax paid on building materials used to repair or rehabilitate homes owned and occupied by low-income persons. No refund is provided under this provision for the purchase of building materials for use in the construction of new low-income housing.
Accordingly, the Taxpayer may claim a refund only for the tax paid on tangible personal property actually used in the repair or rehabilitation of low-income housing. In claiming this refund, the Taxpayer should provide the department with sales tax receipts and a letter certifying that the refund claimed is for items purchased for the above referenced purpose. The Taxpayer should direct any refund request to the department's office Services Division, Taxpayer Assistance Section, P.O. Box 6-L, Richmond, Virginia 23282.
I hope that this has responded to your questions, but let the department know if you need any additional information.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner