Virginia Administrative Code › Title 23 - TAXATION › Agency 10 - DEPARTMENT OF TAXATION › Chapter 210 - RETAIL SALES AND USE TAX › Section 23VAC10-210-1071 - Nonprofit organizations; exempt transactions

Current through Register Vol. 40, No. 24, July 15, 2024
A. The exemptions that have been granted by
				the General Assembly typically apply only to the use or consumption of tangible
				personal property by an organization. When an exemption is limited solely to
				the use or consumption of tangible personal property, the organization
				generally will be subject to the tax on purchases of meals and lodging, which
				are considered taxable services. In limited situations, the General Assembly
				has granted broader exemptions to certain organizations so as to exempt taxable
				services, such as meals and lodging, and sales of tangible personal property.
When a nonprofit organization is exempt from paying the tax
				  on the purchase of tangible personal property or services, it should furnish to
				  its supplier a properly completed exemption certificate, either Form ST-13 or
				  ST-13A. If such nonprofit organization is not making taxable sales as a
				  registered dealer or is not required to register for consumer use tax, it will
				  usually not have a Virginia Retail Sales and Use Tax registration number. In
				  this instance, there is no requirement to place a registration number on the
				  exemption certificate when making purchases. Instead, "Not Applicable" should
				  be placed on the Certificate of Exemption where the registration number is
				  required.
If the nonprofit organization does not have an exemption
				  certificate but has received a ruling letter from the department stating that
				  it is exempt by statute, then this letter may be furnished to suppliers instead
				  of the exemption certificate in order to verify that the purchase is exempt
				  from the tax.
B. According
				to 23VAC10-210-4040, meals and
				lodging are considered taxable services rather than tangible personal property.
				In order to make an exempt purchase of meals and lodging, an organization's
				exemption must contain specific language which exempts the purchase of
				services. An example of this language is found in subdivision 4 of §
				58.1-609.4 of the Code of Virginia, which exempts:
Tangible personal property and services purchased by an
				  educational institution doing business in the Commonwealth which (i) admits
				  regularly enrolled high school and college students and (ii) provides a
				  face-to- face educational experience in American government, a program which
				  leads towards the successful completion of United States history, civics, and
				  problems in democracy courses in high school, or which is acceptable for full
				  credit towards an undergraduate or graduate level college degree, provided such
				  institution is conducted not for profit.
Therefore, nonprofit organizations are subject to the sales
				  tax on meals and lodging unless their respective statutes specifically exempt
				  services.
C. If an
				organization is regularly engaged in selling tangible personal property, it is
				not required to collect the tax if the organization's exemption contains
				specific language exempting these sales. An example of this language is found
				in subdivision 14 of § 58.1-609.8 of the Code of Virginia, which exempts:
. . .tangible personal property purchased for use or
				  consumption, or to be sold at retail, by any nonsectarian youth organization
				  exempt from taxation under § 501(c)(3) of the Internal Revenue Code which
				  is organized for the purposes of the character development and citizenship
				  training of its members using the methods now in common use by Girl Scout or
				  Boy Scout organizations in Virginia.
Statutory Authority: §
											58.1-203 of the Code of Virginia.