Tax Type
Retail Sales and Use Tax
Description
Nonprofit providing education, training and services to retarded citizens
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
12-05-1990
December 5, 1990
Re: Request for Ruling: Sales and Use Tax
Dear ****
This will reply to your letter of August 6, 1990 in which you request a ruling whether your organization qualifies for exemption from the sales and use tax.
FACTS
*****("The Taxpayer") is a nonprofit organization exempt from income taxation under §501(c)(3) of the Internal Revenue Code. The Taxpayer is seeking an exemption from the Virginia retail sales and use tax for purchases made by the organization.
RULING
There is no general exemption from the Virginia retail sales and use tax for nonprofit organizations (see Virginia Regulation §630-10-74). The only exemptions from the tax are set out in Va. Code §58.1-608.
Va. Code §58.1-608(4)(c) provides an exemption to a nonprofit organization which is organized exclusively for the purpose of providing education, training and services to retarded citizens of the Commonwealth, provided over 50% of its total funding is from federal, state, or local governments. However, while the Taxpayer provides training and education to retarded and handicapped persons and receives more than 50% of its funding from federal and state programs, it is not organized exclusively for this purpose. Thus, the Taxpayer fails to qualify for this exemption.
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.
Therefore, the Taxpayer 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 Taxpayer must report and pay the use tax on a Consumer Use Tax Return, Form ST-7.
If I can be of further assistance, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner