Tax Type
Corporation Income Tax
Retail Sales and Use Tax
Description
Nonprofit operating living quarters for short-term patients
Topic
Exemptions
Date Issued
06-12-1990
June 12, 1990
Re: Request for Ruling: Nonprofit Corporation Exemption from
Income Tax / Sales and Use Tax
Dear *******
This will reply to your letter dated December 5, 1989 in which you request a ruling seeking an exemption from Virginia corporate income tax and sales and use tax for ***** (the Taxpayer).
FACTS
The Taxpayer is a nonprofit corporation formed for the purposes of operating a complex of group and independent living units for children, adolescents, and indigent geriatrics in need of short or long term care.
DETERMINATION
Corporation Income Tax Exemption
Corporation Income Tax Exemption
Virginia Code §58.1-401 and Virginia Corporation Income Tax Regulation (VR) 630-3-401(F) exempt from the state income tax, nonprofit corporations which are exempt from federal income tax under I.R.C. §501(c)(3).
Based on the determination by the Internal Revenue Service that the Taxpayer qualifies for exemption from federal income tax under I.R.C. §501(c)(3), and the Virginia Code and regulation sections cited above, the Taxpayer qualifies for exemption from Virginia income tax. However, if the Taxpayer has unrelated business taxable income as defined in I.R.C. §512, it must file a Virginia return and pay Virginia income tax on such income.
Qualification for tax exempt status in Virginia is dependent upon continued status as a tax exempt organization by the Internal Revenue Service. Loss of federal status would void the analogous Virginia status.
Sales and Use Tax Exemption
There is no general exemption from Virginia retail sales and use tax for nonprofit organizations. The only exemptions from the tax are set out in Virginia Code §58.1-608 (copy enclosed). The Taxpayer fails to fall under any of the exemptions provided under the aforementioned Code section.
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 exemption. Therefore, the Taxpayer is required to pay the tax on all purchases of tangible personal property.
If you have any further questions, please let the department know.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner