Bulletin Number
VTB 82-10
Tax Type
Retail Sales and Use Tax
Description
1982 Legislative Changes.
Topic
Exemptions
Date Issued
06-28-1982
DATE: June 28, 1982
SUBJECT: Sales and Use Tax Legislation passed by the 1982
General Assembly of Virginia
The purpose of this bulletin is to set forth sales and use tax legislation passed by the 1982 General Assembly of Virginia. The bills passed that are to be discussed in this bulletin are Senate Bills 176, 198, 202, 3739 and House Bills 161, 177, 923, and 936. Each bill is effective July 1, 1982, and is discussed separately below. Appropriate exemption certificates will be available upon request.
SENATE BILL 176
This bill exempts from the sales and use tax purchases of equipment, devices, and chemical reagents used to test and monitor blood or urine by a diabetic.
This bill also provides a sales tax exemption for sales of machinery and supplies used directly in the production of publications issued regularly or at least on a quarterly basis regardless of whether such publication is sold by subscription or distributed free of charge. The exemption is restricted to industrial operations. Under current law, machinery, equipment and supplies are exempt for persons producing newspaper or magazines at least quarterly for sale or resale. Current law does not exempt machinery, equipment and supplies for persons producing publications for distribution free of charge regardless of the frequency of publication, because no sale is taking place. This bill extends the exemption on machinery equipment, and supplies to persons producing publications issued at least on a quarterly basis that are to be distributed free of charge.
SENATE BILL 198
This bill allows all prisoners confined to state correctional facilities a sales tax exemption on the sale of artistic products personally made by the prisoners. In addition to this sales tax exemption, outlined in this bill, the bill provides specific legislative authority allowing prisoners to sell their artistic products. Therefore, any prisoners confined to state correctional facilities may sell any artistic products, personally made by them, without collection of the sales and use tax.
SENATE BILL 202
This bill provides an exemption for health maintenance organizations (HMO's) and organizations providing services to retarded citizens.
Under current law, licensed nonprofit hospitals are exempt from the sales and use tax on purchases of tangible personal property. Since health maintenance organizations, as licensed under Chapter 26 of Title 38.1 of the Code of Virginia, are not classified as hospitals, this bill will extend the exemption on the purchase of tangible personal property to these organizations.
This bill also extends an exemption to tangible personal property purchased by organizations that provide educating training, and services to retarded citizens. The tangible personal property which qualifies for this exemption must be used exclusively in providing these services. In order for organizations to be eligible for this exemption, they must be exempt from federal tax under Internal Revenue Code § 501(c)(3), and receive 50% or more of their total funding from government sources.
SENATE BILL 373
Senate Bill 373 continues the current sales tax treatment, scheduled to end July 1, 1982, of vending machine sales for dealers all of whose machines are under contract to nonprofit organizations and for other dealers when the State Tax Commissioner determines that certain impracticalities exist.
The 1980 General Assembly passed legislation to be effective July 1, 1982, changing the manner in which all vending machine dealers report and pay tax on items sold through vending machines o The change, to take effect on July 1, 1982 absent this bill, would have required all vending machine operators to report and pay tax on wholesale purchases at the rate of 5% (4% state tax and 1% local tax)
Currently, the law allows an exclusion from gross receipts for all items sold through vending machines for $.10 or less and the remaining gross receipts are taxed on the basis of a percentage, which is determined by dividing taxable gross receipts by 1.04, the result of which is multiplied by the 4% state and local combined tax rate to arrive at the tax liability, This bill will continue to allow this exclusion and the 4% combined rate for vending machine operators all of whose machines are under contract with nonprofit organizations and tax the remaining gross receipts on the basis of a percentage.
In addition, the bill will continue to allow the Commissioner to authorize any dealer to remit the 4% combined state and local tax rate based on a percentage of gross receipts when the Commissioner determines that the manner in which such dealer sells tangible personal property makes it impractical either to separately state the tax or to collect the tax based on wholesale purchases.
HOUSE BILL 161
This bill provides an exemption from the sales and use tax. for certain nonprofit museums of fine art. In order for these museums to qualify for this exemption, they must meet certain qualifications, as described below. Currently, all nonprofit museums are subject to the sales and use tax with the exception of those museums which are agencies of the state or agencies of other political subdivisions. This bill restricts the exemption from sales and use tax to museums which are located on property owned by cities located in Virginia, and received at least one half of their operating budget from the cities in which they are located. However, similar museums located in counties of Virginia will remain subject to the tax. It should be pointed out that in regard to the funding of exempt museums, this bill states one half of the operating budget and not one-half of the total budget must be received from city funds.
HOUSE BILL 177
House Bill 177 provides exemptions concerning certain nonprofit nutritional programs for the elderly as well as for the Virginia Humane Society and other like groups.
The first provision set forth in this bill exempts tangible personal property sold or leased for use in nonprofit nutritional programs for the elderly qualifying order 42 U.S.C. §§ 3030(e) through 3030(g) and administered by the Virginia Office of Aging. Meals sold to elderly persons under such programs would also be exempt from sales tax. By way of contrast, under current law, sales of meals to the elderly by organizations running nonprofit nutritional programs are subject to the sales tax, and the only exemption for such organizations is for purchases of tangible personal property for resale.
The second exemption covered in this bill applies to purchase, use or sale of tangible personal property by the Virginia Humane Society or any other nonprofit group which is organized for preventing cruelty to or promoting humane care of animals. The exemption is limited to property purchased, used or sold in operating the organization or constructing or maintaining animal shelters. The exemption for materials used in constructing the shelter applies only when construction materials are purchased and used by such organizations; it would not extend to contractors who purchase such material for use in shelter construction or maintenance or to whom such materials are furnished.
HOUSE BILL 923
This bill provides a sales and use tax exemption for tangible personal property used in that part of a business of an agricultural cooperative association which is solely and exclusively the storing and marketing of agricultural products of farmers.
HOUSE BILL 986
This bill repeals the 2% increase in the rate of the motor vehicle fuel sales tax which was scheduled to take effect on July 1, 1982.
The 2% motor vehicle fuel sales tax which is currently levied within the Northern Virginia Transportation District (comprised of the cities of Alexandria, Fairfax, and Falls Church, and the counties of Arlington and Fairfax) was scheduled to increase to 4% on July 1, 1982. However, as result of an amendment by the 1982 General Assembly, the additional 2% levy which was to have become effective on July 19 1982, has been repealed. Consequently, the sales tax rate on motor fuel in the Northern Virginia Transportation District will remain 2%. Filing procedures for this tax will not change.
If you have any questions regarding this bulletin, please feel free to contact the department (2220 West Broad Street, Richmond, Virginia, phone 257-8037).
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