Tax Type
Retail Sales and Use Tax
Description
Nonprofit organization assisting public library; Exemption criteria
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
03-05-1990
March 5, 1990
Re: Ruling Request/Sales and Use Tax
Dear *****************
This will reply to your letter of December 5, 1989 seeking an exemption from the sales and use tax for **** (the "Taxpayer").
FACTS
The Taxpayer is a nonprofit group which uses funds donated by local citizens to enhance the physical and service requirements of their local public library. All of the Taxpayer's members are unpaid volunteers. The Taxpayer seeks this exemption so that it may provide better programs, especially programs for children.
RULING
There is no general exemption from the Virginia retail sales and use tax for nonprofit organizations. The only exemptions from the tax are set out in Virginia Code §58.1-608.
Since July 1, 1989, Virginia Code §58.1-608(4)(k) has provided an exemption from the sales and use tax for tangible personal property purchased by, "an organization exempt from taxation under §501 (c)(3) of the Internal Revenue Code and organized primarily for the purpose of operating a public library." (Emphasis added)
While the Taxpayer in this case provides financial support to help its local public library to operate, it does not itself operate the library, as is required for this exemption.
Based on the rule of strict construction of exemption statutes followed by the Virginia Supreme Court (see, Winchester TV Cable Co . v. State Tax Commissioner, 216 Va. 286, 217 S.E. 2d 885 (1975), and notwithstanding the worthwhile purposes that the Taxpayer serves, I find no basis in the sales and use tax law for the exemption requested.
Accordingly, the Taxpayer must pay the tax on all purchases of tangible personal property from dealers who are registered to collect the tax. If the dealers are not registered to collect the tax, the Taxpayer must report and pay the use tax on such purchases using a Consumer Use Tax Return Form ST-7, copy enclosed.
I hope that this has responded to your question, but let the department know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner