Tax Type
Retail Sales and Use Tax
Description
Church purchase of construction materials
Topic
Property Subject to Tax
Taxability of Persons and Transactions
Date Issued
03-19-1990
March 19, 1990
Re: Request for Ruling/ Sales and Use Tax
Dear ****
This will reply to your February 13, 1990 letter seeking information on the application of the sales and use tax to the purchase of construction materials by the ******************(taxpayer).
Facts
The taxpayer is a church which is preparing to build a new worship center. As the taxpayer's contractor would incur substantial sales tax expense on purchases of construction materials for the project, the taxpayer seeks to purchase the construction materials exempt of the tax and furnish the materials to its contractor to avoid the sales tax and reduce the cost of the project.
Ruling
§58.1-608(8)(b) of the Virginia Code, copy enclosed, sets forth the sales and use tax exemption for nonprofit churches. §630-10-22.1 of the Virginia Retail Sales and Use Tax Regulations, copy enclosed, clarifies the statutory language and provides an exemplary listing of taxable and exempt purchases for nonprofit churches. While the exemption is broad in its application, it does not apply to all tangible personal property purchased by churches. In general, the tax does not apply to any tangible personal property used inside the public church buildings for carrying out the work of the church, with the exception of building materials and recording or reproduction equipment. §D of aforementioned regulation specifically provides that construction and building materials are taxable when purchased by churches.
Additionally, under Virginia Retail Sales and Use Tax Regulation §630-10-27(A) and Virginia Code §58.1-610(B), copies enclosed, the taxpayer's contractor would be required to remit the use tax on any tangible personal property purchased exclusive of the tax and furnished to the contractor by the taxpayer.
Therefore, based on all of the foregoing, neither the taxpayer nor its contractor may purchase exempt of the tax the construction and building materials for use in constructing the taxpayer's new worship center.
I trust this has answered your questions; however, please contact the department if you have additional questions or if we may be of any further assistance.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner