Tax Type
Retail Sales and Use Tax
Description
Nonprofit operating youth camp
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
11-05-1990
November 5, 1990
Re: Ruling Request/Sales and Use Tax
Dear*****************
This will reply to your letter of November 21, 1989 in which you requested a ruling whether the Taxpayer) qualifies for exemption from the sales and use tax.
FACTS
The Taxpayer, a nonprofit organization, operates a camp for deserving youths of the state of Virginia and all fees are paid for by*********** (Lodges) from around the state. Children attending the camp are referred to the Lodges by Social Service Agencies of the state. The purpose of the camp is to provide character development and citizenship training to those attending.
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 Va. Code §58.1-608.
Va. Code §58.1-608(8)(n) provides a sales and use tax exemption for the following:
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- 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 Virginia Regulation (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 may 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 as follows:
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- ¤ Providing uniforms for participating members,
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- ¤ Employing a patrol method of organization which allows interaction among the members;
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- ¤ A merit badge system which establishes objectives for further development of members and a program which they may advance at their own pace;
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- ¤ A program which is designed to take place outdoors in order to learn ecology and practice conservation of nature's resources;
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- ¤ A child/adult relationship in which the adult provides a role model the child may emulate;
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- ¤ The Good Turn Concept in which members learn to help others and participate in community service projects; and
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- ¤ Leadership development in which members learn leadership roles in themselves and to accept leadership roles in others.
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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 Taxpayer does not meet all of the necessary criteria for exemption under Va. Code §58.1-608(8)(n). While I am mindful of the worthwhile purpose which 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.
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