Tax Type
Retail Sales and Use Tax
Description
Institutions of learning
Topic
Exemptions
Property Subject to Tax
Date Issued
08-13-1991
August 13, 1991
Re: §58.1-1821 Application: Retail Sales and Use Tax
Dear****************
This will reply to your letter in which you seek correction of a sales and use tax assessment on behalf of your client, ****************("the Taxpayer").
FACTS
The Taxpayer is a nonprofit organization whose primary mission is to preserve and improve the historical **********estate and museum. An audit of the Taxpayer for the period July 1, 1987 through March 31, 1991 produced an assessment for the Taxpayer's failure to remit the sales and use tax on various purchases of tangible personal property, including memorabilia and historical artifacts relating to******************.
The Taxpayer contests the assessment, contending that its purchases are exempt from sales and use tax under Va. Code §§58.1-608(A)(4)(b) -- Institution of Learning, 58.1-608(A)(9)(a) -- State Historical Society, 58.1-608(A)(9)(c) -- Public Park and Museum, and 58.1-608(A)(9)(h) -- Cultural organizations.
DETERMINATION
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 Va. Code §58.1-608. Absent a statutory exemption that would allow the Taxpayer to make purchases exempt from the tax, the department has no authority to grant such an exemption. Moreover, the department's policy in this area is dictated by the rule of strict construction established by the Virginia courts. In interpreting statutory sales and use tax exemptions, the Virginia Supreme Court has consistently held that "exemption from taxation is the exception, and where there is any doubt, the doubt is resolved against the one claiming exemption." Golden Skillet Corp. v. Commonwealth, 214 Va. 276, 199 S.E.2nd 511 (1973).
Based on these principles, I will set forth below the application of the tax under the various exemptions claimed by the Taxpayer.
Institution of Learning
Va. Code §58.1-608(A)(4)(b) provides a sales and use tax exemption for:
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- "[t]angible personal property for use or consumption by a college or other institution of learning...provided that such college, (or) institution of learning...is not conducted for profit."
However, in interpreting the exemption statute, Virginia Regulation (VR) 630-10-96 provides that to qualify for this exemption, an "other institution of learning" must be similar to a college, in that, it must "(a) employ a professionally trained faculty; (b) enroll and graduate students on the basis of academic achievement; (c) prescribe courses of study; and (d) provide instruction at regular intervals over a reasonable period of time." (Emphasis added). These criteria were specifically upheld by the federal courts in United States v. Virginia, 500 F. Supp. 729 (E.D. Va. 1980) and by the Virginia Supreme Court in Progressive Community Club v. Commonwealth, 215 Va. 732, 213 S.E.2d 759 (1975).
Based on the information submitted by the Taxpayer, I cannot conclude that the Taxpayer's operations meet the above criteria for exemption. While the Taxpayer's programs have educational value, the Taxpayer is not substantially similar to a college. For example, although the Taxpayer offers an archeology course to students attending a local university, the course is apparently self-contained and the students granted academic credit for the course and conferred their degrees by the university rather than the Taxpayer. Accordingly, I find that the exemption provided by the above statute is inapplicable to the Taxpayer.
State Historical Society
Va. Code §58.1-608(A)(9)(a) provides an exemption for:
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- [h]istorical documents, maps, rare books and manuscripts acquired by a nonprofit state historical society which maintains a research library open to the public for research and educational purposes without charge."
However, VR 630-10-74(A)(6) provides that, "[o]nly historical societies devoted to the study of the history of this state as a whole are entitled to exemption. The exemption is not applicable to local, regional, or national historical societies."
The Taxpayer targets the life and times of ***********for study. As such, the scope of the Taxpayer's mission is narrower than that of the "state historical society" contemplated by the above statute. Accordingly, under the rule of strict construction, I must determine that this exemption would also be inapplicable.
Public Park and Museum
With respect to the exemption provided by Va. Code §58.1-608(A)(9)(c), the Taxpayer's principal activity is not "conducted on real property owned by any city in the Commonwealth." As such, the Taxpayer does not meet the specific statutory criteria for exemption under this statute.
Cultural Organizations
The exemption provided by Va. Code §58.1-608(A)(9)(h) was enacted by the 1989 session of the Virginia General Assembly and intended to apply only to an organization providing educational activities for children similar to those offered by certain children's museums. The Taxpayer's educational programs are not similar to those contemplated by the exemption. As such, this exemption would not apply to the Taxpayer.
Based on all of the foregoing and a careful examination of the information submitted by the Taxpayer, I do not find basis for correction of the assessment. Updated notices of assessment will be issued to the Taxpayer as soon as practicable.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner