Virginia expands sales tax exemption, July 2016
- Jun 23, 2016 | Gail Cole
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.
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