Tax Type
Retail Sales and Use Tax
Description
Nonprofit organization; Exemption criteria
Topic
Exemptions
Date Issued
08-15-1991
August 15, 1991
Re: Request for Ruling: Sales and Use Tax
Corporate Income Tax
Dear*************************
This will reply to your letter of July 31, 1991 in which you seek reconsideration of the department's prior determination dated December 13, 1990 (P.D. 90-222) regarding the*********(the "Taxpayer's") eligibility for exemption from Virginia income tax and retail sales and use tax.
Since the Taxpayer has, subsequent to the December 13, 1990 determination, obtained an exemption from federal income tax under IRC §501(c), it is eligible for exemption from Virginia income taxation. However, as noted in my prior letter, it must file a Virginia return and pay Virginia income tax on any unrelated business taxable income as defined in IRC §512.
You maintain that the Taxpayer qualifies for sales tax exemption under Va. Code §58.1-608(A)(4)(b). As explained in my earlier letter, in order to qualify for this exemption, an organization must be nonprofit and:
-
- employ a professionally-trained faculty;
enroll and graduate students on the basis of academic achievement;
prescribe courses of study; and
provide instruction at regular intervals over a reasonable period of time.
- employ a professionally-trained faculty;
This exemption has been strictly construed since its enactment and to qualify for it, an organization must meet all of the above criteria. A review of the information provided reveals that while the Taxpayer may enroll and assist students in graduating from high school, it does not graduate students on the basis of academic achievement and thus does not qualify for the exemption.
In addition, the Taxpayer does not appear to meet all of the criteria for the day care exemption as set forth in my prior ruling.
Thus, 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, ST-7.
If you have any questions regarding this matter, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Related Documents
Rulings of the Tax Commissioner