Tax Type
Retail Sales and Use Tax
Description
Nonsectarian youth organization; Exemption strictly construed
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
04-20-1990
April 20, 1990
Re: Request for Ruling/Sales and Use Tax
Dear ****
This will reply to your letter dated February 3, 1990 in which you request a ruling whether your organization qualifies for exemption from the sales and use tax.
FACTS
****************** (the "Taxpayer"), is a nonsectarian youth organization whose objective is to foster in the community the ideals of good sportsmanship, honesty, loyalty, integrity, courage and respect for authority. To achieve this objective, it provides a supervised program of competitive baseball and softball under the rules and policies of **************************.
It seeks exemption from the sales and use tax under Virginia Code §58.1-608(8)(n).
RULING
There is no general exemption from the retail sales and use tax for nonprofit organizations. Virginia Code §58.1-608(8)(n) provides an exemption from the sales and use tax for:
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- [t]angible personal property purchased for use or consumption, or to be sold at retail, by any nonsectarian youth organization exempt from taxation under §501(c)(31 of the Internal Revenue Code which is organized for the purposes of the character development and citizenship training of its members using the methods now in common use by Girl Scout or Boy Scout organizations in Virginia.
Under principles established by the courts, taxation is the rule and exemption is the exception. Therefore, exemptions from the sales and use tax are strictly construed. Based on this rule of strict construction used in interpreting sales and use tax exemptions, not all nonsectarian youth organizations qualify for the above exemption.
To qualify for the exemption, the youth organization must (i) be a nonprofit nonsectarian youth organization, (ii) be organized for the character development and citizenship training of its members, and (iii) use the methods now in common use by Girl Scout or Boy Scout organizations in Virginia.
Based on our review of the information you provided, and applying the rule of narrow construction for exemptions from taxation, the Taxpayer does not meet all of the necessary criteria under the Virginia Code §58.1-608(8)(n). Notwithstanding the worthwhile purpose which the Taxpayer serves, absent a statutory exemption that would allow the Taxpayer to make purchases exempt of the tax, the department has no authority to grant an exemption to the Taxpayer. Therefore, all tangible personal property purchased by the Taxpayer will be subject to the tax.
I regret that I am unable to provide you with a more favorable reply. If you have additional questions or if we may be of any further assistance, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner