Tax Type
Retail Sales and Use Tax
Description
Purchases by churches; Administrative or governing body
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
09-11-1990
September 11, 1990
Re: Request for Ruling: Sales and Use Tax
Dear********************
This will reply to your letter of November 29, 1989 in which you request a ruling whether your organization qualifies for an exemption from the sales and use tax under Virginia Code §58.1-608(8)(b).
FACTS
************** (the "Taxpayer") consists of a sisterhood of approximately ninety *************** churches located throughout Virginia, the District of Columbia, and Maryland. The Taxpayer, exempt from income taxation under §501(c)(3) of the Internal Revenue Code, serves as the administrative arm of the churches.
The Taxpayer maintains a public building in ***********Virginia where regularly scheduled worship is conducted at least once a week and sometimes more often in its "worship room". The remaining parts of the building consist of offices, meeting or counseling rooms, and other rooms used in carrying out the work of the Taxpayer. The Taxpayer also operates a church camp in
The Taxpayer is currently being audited by the department and seeks a ruling to determine if it is exempt from the sales and use tax as a church under Virginia Code §58.1-608(8)(b).
RULING
Virginia Code §58.1-608(8)(b) (copy enclosed), provides a limited exemption from the sales and use tax for purchases of tangible personal property by nonprofit churches. However, the exemption applies only to individual church congregations. As set forth in the enclosed ruling letters, denominational governing bodies and related organizations do not qualify for the exemption. Further, the exemption is generally limited only to property used inside public church buildings.
A review of the information provided reveals that while the Taxpayer holds religious services in its "worship room", the services are mainly for employees; the room is also used for special functions and as a meeting room for staff. The Taxpayer exists primarily to support the ministries of the entire sisterhood of churches, both administratively and through outreach programs. The religious worship services are secondary. Thus, based on the foregoing and the information provided, the Taxpayer does not qualify for a blanket exemption as a church under Virginia Code §58.1-608(8)(b).
The Taxpayer is, however, entitled to an exemption on certain purchases it makes on behalf of its individual member churches and for use in its church camp and conference center. The Taxpayer may purchase exempt of the tax for the purpose of reselling or giving items away to its member churches, tangible personal property for use in religious worship services and public church buildings for use in carrying out the work of the member churches. It should be noted that this exemption does not extend to the facilities of the Taxpayer, but only applies to tangible personal property for exempt use by its member churches.
The Taxpayer may also purchase food, disposable serving items, cleaning supplies, and teaching materials used by its church camp or conference center exempt of the tax. The items, however, must be used in carrying out the work of the Taxpayer or its member churches, and does not apply to non-church functions.
Because the Taxpayer has relied on written advice from the department regarding the application of the tax, this ruling will apply to future purchases made by the Taxpayer. During the pending audit, the Taxpayer will only be assessed the tax on those items which would not be exempt under Va. Code §58.1-608(8)(b) if purchased by a nonprofit church. However, future audits and refunds will be governed by the policy set forth in this letter.
If you have any questions regarding the above, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner