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Virginia expands sales tax exemption, July 2016

  • Jun 23, 2016 | Gail Cole

 Nonprofit veterans organizations to be eligible sales and use tax exemptions beginning July 1, 2016.

Virginia’s existing sales and use tax exemption for nonprofit organizations is expanding, effective July 1, 2016.

The new policy created by enacted House Bill 63 provides exemptions from sales and use tax and local license taxes for qualifying nonprofit veterans’ organizations in most — but not all — circumstances.

Qualifying nonprofit organizations are:

  • Organizations exempt from federal income taxation under I.R.C. § 501(c)(19)
  • Organizations with annual gross receipts below $5,000 that are organized for one of the purposes set forth in I.R.C. § 501(c)(19)

The exemption does not apply to tangible personal property purchased primarily for the following:

  • For social and recreational activities for members
  • For providing insurance benefits to members or their dependents

For example, the exemption does not apply when a qualifying organization purchases food to prepare and resell to veterans and their guests, because the food is for “social and recreational activities for members.” However, the food does qualify as an exempt purchase for resale, provided a resale exemption certificate (Form ST-10) is used.

Another example: the exemption applies when a qualifying organization purchases a computer, fax machine, or other office equipment to be used during general operations. It does not apply to the purchase of software used solely to provide insurance benefits to members.

The exemption does not extend to taxable services, such as hotel rooms.

All qualifying organizations must apply to the Department of Taxation to obtain a nonprofit sales and use tax exemption certificate. Additional information.

Facilitate management of sales and use tax exemptions with sales tax software (SaaS). Learn more.

photo credit: BRITISH COLUMBIA 1971 MUNICIPAL EXEMPT plate via photopin (license)

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.