Tax Type
Retail Sales and Use Tax
Description
Construction materials used in museum addition; Nonprofit organization
Topic
Exemptions
Property Subject to Tax
Date Issued
08-23-1991
August 23, 1991
Re: Request for Ruling: Retail Sales and Use Tax
Dear*****************
This will reply to your letter of June 24, 1991 in which you request a ruling on behalf of the******* (the Taxpayer) regarding the applicability of the Virginia retail sales and use tax on construction materials used in the addition to the *************** (Museum 1).
FACTS
The Taxpayer is a nonprofit organization exempt from federal income taxation under Internal Revenue Code §501(C)(3) organized to promote public interest in the study, research, interpretation, preservation, and dissemination of Virginia's aviation and aeronautical heritage and to preserve, acquire and display items pertaining to Virginia's aviation and aeronautical heritage. The Taxpayer constructed an aviation and aeronautical museum in 1987 and donated the museum to the (Museum 2) in 1990. When the gift was made, the Taxpayer agreed to build an addition to the Museum 1 and donate the addition to Museum 2. The Taxpayer requests a ruling on the applicability of the sales and use tax on the materials used in construction of the addition.
RULING
Va. Code §58.1-608(A)(1)(e) provides an exemption from the retail sales and use tax for :
- [t]angible personal property for use or consumption by the Commonwealth, any political subdivision of the Commonwealth, or the United States.
In order to qualify for this exemption, construction materials would have to be purchased by the Commonwealth or a political subdivision of the Commonwealth. Even though the completed addition will be donated to the Commonwealth by virtue of Museum 2, the real purchaser of the construction materials is the Taxpayer and its contractors, who do not qualify as exempt governmental entities under the provision. Therefore, all construction materials purchased by the Taxpayer or its contractors in the construction of the addition will be taxable.
Further, there is no general exemption from the retail sales and use tax for nonprofit organizations. The only exemptions from the tax appear in Va. Code §58.1-608, copy enclosed. 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 an exemption.
For your information, I have enclosed copies of Virginia Regulations 630-10-45 and 630-10-27, which discuss the application of the tax to governmental entities and government contractors.
If you have any questions regarding this matter, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner