Tax Type
Retail Sales and Use Tax
Description
Boy Scouts; Nonprofit
Topic
Exemptions
Date Issued
10-29-1990
October 29, 1990
Re: Request for Ruling/Sales and Use Tax
Dear *************
This is in reply to your letter of April 27, 1990, in which you request a ruling whether your organization qualifies for exemption from the sales and use tax.
FACTS
****** (the Corporation), is a nonprofit organization exempt from taxation under Section 501(c)(3) of the Internal Revenue Code. The Corporation is nonsectarian in nature and is chartered by Congress. The Corporation's purpose is to provide behavioral guidance to and promote the health, social, educational, vocational and character development of boys ages 7 to 17. The primary mission of the Corporation is to assure and enhance the quality of life for boys as participating members of an urban society and to realize their potential for growth and development.
RULING
Virginia law does not provide a general exemption from the sales and use tax for nonprofit organizations. The only exemptions from the tax are set out in Virginia Code §58.1-608.
Virginia Code §58.1-608(8)(n) provides a sales and use tax exemption for the following:
-
- Tangible personal property purchased for use or consumption, or to be sold at retail, by any nonsectarian youth organization exempt from taxation under §501(c)(3) of the Internal Revenue Code which is organized for the purpose of the character development and citizenship training of its members using the methods now in common use by Girl Scout or Boy Scout organizations in Virginia. (Emphasis Added.)
Under principles established by the courts, taxation is the rule and exemption is the exception. Therefore, exemptions from the sales and use tax are strictly construed. See VR §630-10-35.2, copy enclosed. Based on the rule of strict construction used in interpreting sales and use tax exemptions, not all nonsectarian youth organizations qualify for the above exemption.
To qualify for the exemption, the youth organization must be organized not-for-profit, organized for the character development and citizenship training of its members, and must use the methods now in common use by the Girl Scout or Boy Scout organizations in Virginia. Some of the methods in use by the Boy Scouts and Girl Scouts are uniforms for participating members, a merit badge system, and the program is designed to take place outdoors. If the organization does not meet all of these criteria, it will not qualify for the exemption.
Based upon our review of the information you have provided and applying the rule of strict construction for exemption from taxation, the Corporation does not meet all of the necessary criteria for exemption under Virginia Code 58.1-608(8)(n). While I recognize the worthwhile purpose which the Corporation serves, absent a statutory exemption that would allow the Corporation to make purchases exempt from the tax, the department has no authority to grant an exemption to the Corporation.
Therefore, the Corporation is required to pay the tax to the retailer on all purchases of tangible personal property if the retailer is registered to collect the tax. If the retailer is not registered to collect the tax, the Corporation must report and pay the use tax on a Consumer Use Tax Return, Form ST-7.
If you should have any further questions, please feel free to contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner