Tax Type
Retail Sales and Use Tax
Description
Other institution of learning; Graduation process
Topic
Exemptions
Property Subject to Tax
Date Issued
10-31-1991
October 31, 1991
Re: Request for Ruling: Retail Sales & Use Tax
Dear*****************
This will reply to*********** letter of September 12, 1991 seeking reconsideration of the department's prior determination dated August 15, 1991 (P.D. 91-168) regarding the********* (the "Taxpayer's") eligibility for exemption from the retail sales and use tax.
FACTS
The Taxpayer was previously denied sales tax exemption under Va. Code §58.1-608(A)(4)(b) on the grounds that it does not graduate students on the basis of academic achievement. You maintain that while the Taxpayer's graduation process does not consist of the granting of diplomas, its programs effectively result in graduation. The children complete the program and go on to public or private schools. Adults "graduate" upon their successful completion of the High School Equivalency Diploma (GED) tests. Once they successfully complete the GED, the Taxpayer considers them "graduated" and they are not allowed to participate any further.
DETERMINATION
As explained in my earlier letter, the institution of learning exemption in Va. Code §58.1-608(A)(4)(b) has been strictly construed since its enactment. Virginia Regulation (VR) 630-10-96 which interprets this sales tax exemption, provides that "[a]n 'other institution of learning' must be similar to a college."
While the Taxpayer considers its adult students "graduated" upon successful completion of the GED, this process does not constitute graduation as contemplated by the above regulation. Graduation from a college involves the conferring of an academic degree or diploma by the college. In the instant case, although the Taxpayer's students receive a GED, this "diploma" is not conferred by the Taxpayer .
In addition, the Virginia Supreme Court held in Commonwealth of Virginia v. The Progressive Community Club of Washington County, Virginia, Inc., 215 Va. 732, S.E.2d 759 (1975), that the institution of learning exemption begins at the point which is "accepted as the first level in the public school system...." Thus, since kindergarten is the first level in the Virginia public school system, nurseries, day care centers, and other preschool institutions do not qualify for this exemption. Thus, the Taxpayer's preschool is not eligible for this exemption, and, as explained in my August 15, 1991 letter, it does not meet all of the criteria for the day care exemption set forth in Va. Code §58.1-608(A)(4)(i).
Accordingly, I find no basis for revising my prior determination to the Taxpayer.
Sincerely,
W. H. Forst
Tax Commissioner
TPD/5623H
Rulings of the Tax Commissioner