Tax Type
Retail Sales and Use Tax
Description
Nonprofit raising capital for investment in low income housing
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 July 25, 1990 in which you request a ruling whether your organization qualifies for exemption from the sales and use tax.
FACTS
****** (the "Taxpayer"), a nonprofit organization exempt from income taxation under §501(c)(3) of the Internal Revenue Code, is a private, non-profit corporation created to raise corporate capital for investment in low-income housing throughout Virginia. You seek an exemption to allow the Taxpayer to purchase items exempt from the Virginia retail sales and use tax.
RULING
There is no general exemption from the Virginia retail sales and use tax for nonprofit organizations. (See VR 630-10-74, copy enclosed.) The only exemptions from the tax are set out in Virginia Code §58.1-608. While I am mindful of the worthwhile purpose that the Taxpayer serves, absent a statutory exemption that would allow the Taxpayer to make purchases exempt from the tax, the department has no authority to grant such an exemption.
However, while no exemption from the tax exists, Virginia Code §58.1-608.1 (copy enclosed), authorizes refunds 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 on a nondiscriminatory basis to persons who are unable to afford to buy a home through conventional means.
Furthermore, the 1990 General Assembly expanded this section effective July 1, 1990, to also allow refunds to other nonprofit organizations for sales taxes paid on building materials used to repair or rehabilitate homes owned and occupied by low-income persons. No refund is available under this provision for the purchase of building materials for use in the construction of new low-income housing.
Based on the Articles of Incorporation submitted, I cannot conclude that the Taxpayer is organized primarily to acquire land and purchase materials to build or rehabilitate low-cost homes. However, to the extent that the Taxpayer purchases building materials used to repair or rehabilitate homes owned and occupied by low-income persons, the Taxpayer may apply for a refund of sales taxes paid for such building materials.
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