Tax Type
Retail Sales and Use Tax
Description
Occasional sales, including mergers; Festival sales
Topic
Taxability of Persons and Transactions
Date Issued
05-25-1995
May 25, 1995
Re: Request for Ruling: Retail Sales and Use Tax
Dear***************
This will respond to your letter of May 9, 1995 in which you seek clarification of the department's prior ruling to you, P.D. 94-249 (8112/94), regarding the tax status of sales made at the*********.
FACTS
The Festival is a two-day event at which both nonprofit and for-profit organizations are engaged in sales. P.D. 94-249 was based on information provided that only nonprofit organizations were engaged in food sales and only for-profit entities were engaged in sales of arts and crafts and similar items. This year food will be sold by both nonprofit organizations and for-profit organizations.
In P.D. 94-249, the department held that sales by nonprofit organizations such as social clubs, churches, etc. at the Festival were exempt from the tax as "occasional sales" under Code of Virginia §58.1-609.10(2) provided they were one of three or fewer sales made by such organizations during the year. Furthermore, it was determined that sales by volunteer fire departments and rescue squads and the American Red Cross were exempt from the tax as statutorily required by Code of Virginia §§58.1-609.8(1) and 58.1-609.1(4), respectively. Sales by for-profit businesses were deemed to be taxable.
You seek a ruling as to whether the prior ruling still applies.
RULING
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- Code of Virginia §58.1-602 defines an exempt occasional sale as:
a sale of tangible personal property not held or used by a seller in the course of an activity for which he is required to hold a certificate of registration, including the sale or exchange of all or substantially all the assets of any business and the reorganization or liquidation of any business, provided such sale or exchange is not one of a series of sales and exchanges sufficient in number. scope and character to constitute an activity requiring the holding of a certificate of registration. (Emphasis added.)
- Code of Virginia §58.1-602 defines an exempt occasional sale as:
Furthermore, Virginia Regulation (VR) 630-10-74 provides that sales made by nonprofit organizations at fairs, flea markets, festivals and carnivals are not considered exempt occasional sales.
Based on the additional information provided and consistent with the above Code section and regulation, sales by all organizations at the Festival are subject to the tax, unless statutorily provided otherwise (in this case the volunteer fire and rescue squads and the American Red Cross). It is important to note, however, that the organizations may purchase tangible personal property for resale exempt of the tax. For your information, I am including a copy of Code of Virginia §§58.1-609.1 through 58.1609.10 which contain all exemptions from the sales and use tax.
To reduce the administrative burden placed upon the organizations participating in the Festival which are not already registered for collection of the tax, Festival organizers may obtain a single temporary sales tax registration to cover all entities making sales at the event. If such a temporary registration is desired, you should contact the department's**************** . Otherwise, the individual organizations will be required to register for collection of the tax.
Finally, while not applicable to the instant case, but applicable to many festivals, charges for admission which entitle a purchaser to food, drinks, or tangible personal property are taxable.
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- Sincerely,
Danny M. Payne
Tax Commissioner
- Sincerely,
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Rulings of the Tax Commissioner