Tax Type
Retail Sales and Use Tax
Description
Meals and lodging paid by nonprofit secondary school
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
11-26-1990
November 26, 1990
Re: Request for Ruling: Sales and Use Tax
Dear ****
This will reply to your letter in which you request a ruling on whether ***** (the Taxpayer) may properly use exemption certificates in the purchase of meals and lodging for the participant teams in the *****.
FACTS
The Taxpayer is a nonprofit secondary school exempt from income tax under §501(C)(3) of the Internal Revenue Code. The Taxpayer conducts an invitational basketball tournament in December of every year to raise funds, the net proceeds going to the school to fund various athletic programs. The Taxpayer invites participating teams from outside of the city and pays for the meals and lodging of the visiting teams while they are participating in the tournament. The Taxpayer requests a ruling on 1) whether an exemption certificate may be used in the payment of meals and lodging furnished to the visiting teams, and 2) if the exemption is allowed, may the Taxpayer seek a refund on tax paid in the past.
RULING
Va. Code §58.1-608(4)(h) provides an exemption for "tangible personal property purchased for use, consumption, or sale at retail by...a secondary school conducted not for profit...or other group associated with...[a] secondary school conducted not for profit for use in fund-raising activities, the net proceeds of which...are contributed directly to the school..." However, in the purchase of meals and lodging for the basketball teams, the true user and consumer of the meal or lodging is deemed to be the individuals receiving the meals and lodging, and not the nonprofit organization. Therefore, the Taxpayer is required to pay the tax to the retailer on all purchases of meals and lodging.
The enclosed copy of PD 88-121 (5/27/88), sets forth the general policy on the taxation of meals and lodging. As set forth in the ruling, the only exceptions to the general rule are for federal government employees if payment is made by direct billing, etc., and certain nonprofit educational institutions that have a specific statutory exemption for services.
If you have any further questions regarding this matter, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner