90-66 | Virginia Tax

Tax Type

Retail Sales and Use Tax

Description

Nonprofit religious organization providing food and gospel; Exemption criteria

Topic

Exemptions

Property Subject to Tax

Date Issued

04-12-1990

April 12, 1990

Re: Request for Ruling: Sales and Use Tax

Dear ****

This will reply to your letter of December 27, 1989 in which you request a ruling whether **** (the Taxpayer) qualifies for the sales and use tax exemption.

FACTS

The Taxpayer is a nonprofit organization exempt from income tax under §501(c)(3) of the Internal Revenue Code. The Taxpayer's primary purpose is to provide food and the gospel to those of physical and spiritual need. The Taxpayer operates a mobile food bank which disburses food from various church parking lots to soup kitchens, homeless shelters and food pantries of various churches. The food disbursed by the Taxpayer is donated by farmers throughout the country and shipped via commercial truck lines. The Taxpayer is seeking an exemption from the sales and use tax for purchases of tangible personal property used in their food distribution function and also for newsletters and literature distributed to the general public.

RULING

There is no general exemption from the Virginia Retail Sales and Use Tax for nonprofit organizations (see enclosed copy of Virginia Retail Sales and Use Tax Regulation §630-10-74) or for religious organizations other than individual church congregations. The only exemptions from the tax are set out in §58.1-608 of the Code of Virginia. Virginia Code §58.1-608(8)(i) provides a sales and use tax exemption for the following:

- Tangible personal property for use or consumption by, sold by or donated to a food bank or organization exempt from taxation pursuant to §501(c)(3) of the Internal Revenue Code and organized exclusively for the distribution of foods to infants, the ill, or the needy, said exemptions to apply to each transaction in the chain of commerce from manufacture to final disposition, provided that such food bank or organization is not conducted for profit. Emphasis added.

Based of the purpose of your organization as outlined in the documentation you have provided, I find that the Taxpayer is not organized exclusively for the distribution of food and therefore does not enjoy the exemption cited above. While I am mindful of the worthwhile purpose that the Taxpayer serves, absent a specific statutory exemption that would allow the Taxpayer to make purchases exempt from the tax, the department has no authority to grant such an exemption.

In addition, the Taxpayer does not qualify for the church exemption provided in §58.1-608(8)(b) as this exemption is limited to individual church congregations as opposed to religious organizations in general.

Therefore, the Taxpayer is required to pay the tax on all purchases of tangible personal property to the retailer at the time of purchase. 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 you should have any further questions, please feel free to contact the department.

Sincerely,

W. H. Forst
Tax Commissioner

Rulings of the Tax Commissioner