Current through Register Vol. 41, No. 3, September 23, 2024
A. Definitions.
The following words and terms when used in this section shall
have the following meanings unless the context clearly indicates
otherwise:
"Carrying out the work of the church and its related
ministries" means engaging in activities that communicate or spread the
religious teachings and practices of a church.
"Church" means a nonprofit religious organization, regardless
of faith, that would be considered a church under the standards promulgated by
the Internal Revenue Service for federal income tax purposes (i) that has been
specifically recognized by the Internal Revenue Service as being exempt from
taxation under § 501(c)(3) of the Internal Revenue Code or (ii) whose real
property is exempt from local real property taxation under § 58.1-3606 of
the Code of Virginia. The term "church" includes any departments, regular
schools of religious education, and other activities of a church that are not
separate legal or business entities, including kindergartens, elementary and
secondary schools, preschools, nurseries, and day care centers. The term
"church" does not include broadcasting television organizations, such as
evangelical television and radio ministries, missionaries, political action
committees (PACs), affiliated entities separately incorporated from a nonprofit
religious organization, and camps and conference centers. However, a limited
exemption is available to camps and conference centers as set forth in
subsection F of this section.
"Church department" means any administrative division of a
church used in carrying out the work and related ministries of the church. This
term includes, but is not limited to, boards; committees; councils; men's,
women's or youth ministries; and outreach ministries of the church.
"Public church building" means a building, the primary
purpose of which is to house the regularly scheduled worship services of the
church and those adjacent offices and buildings at a single location in which
activities are conducted to carry out the work of the church and its related
ministries.
"Regular school of religious education" means any program
instituted by a church to provide regularly scheduled classes on the teaching
of the church and includes, but is not limited to, Sunday school, catechism,
Hebrew school, vacation Bible school, and Bible study classes.
"Religious worship service" means regularly scheduled church
services and includes, but is not limited to, weddings, bar mitzvahs, bat
mitzvahs, baptisms, christenings, funerals, and special services conducted
during religious holidays, when conducted at the public church building.
B. Overview. This section
addresses the sales and use tax exemption provided to churches pursuant to
§ 58.1-609.10 of the Code of Virginia using Form ST-13A, Certificate of
Exemption. In general, a church is entitled to an exemption from the sales and
use tax on certain purchases of tangible personal property for use in:
1. Religious worship services by a
congregation or church membership while meeting together in a single
location;
2. Libraries, offices,
meeting or counseling rooms, kitchens, or other rooms in the public church
buildings used in carrying out the work of the church and its related
ministries, including kindergarten, elementary and secondary schools,
preschools, nurseries, and day care centers;
3. Recording and reproducing church services;
and
4. Caring for or maintaining
property owned by the church.
Churches also have the option of using the general nonprofit
entity sales tax exemption provided for under § 58.1-609.11 of the Code of
Virginia. In order to obtain the general nonprofit entity exemption, the church
must apply to the Department of Taxation and receive a Retail Sales and Use Tax
Certificate of Exemption. This section is applicable only to the self-issued
exemption for churches pursuant to subdivision 16 of § 58.1-609.10 of the
Code of Virginia using Form ST-13, Certificate of Exemption. It does not apply
to the general nonprofit entity sales tax exemption provided for under §
58.1-609.11 of the Code of Virginia.
C. Exercising the exemption. In order to
qualify for exemption, tangible personal property must be purchased by,
invoiced to, and paid for directly by the church. If a minister, church member,
or other church worker purchases tangible personal property on behalf of the
church using his personal funds, the purchase is taxable even if reimbursed to
the person by the church. A personal check is payment made by an individual and
not by the church. Cash payment provides no proof that the church makes direct
payment to the dealer of the merchandise. If a supplier fails to collect the
tax on any taxable purchase, the church must report and pay the use tax on Form
ST-7, Consumer's Use Tax Return.
When purchasing an item qualifying for exemption, a church
must furnish to the supplier a properly completed Form ST-13A, Certificate of
Exemption. This self-issued certificate of exemption is limited to tangible
personal property specified in § 58.1-609.10 of the Code of
Virginia.
D. Exempt
purchases.
1. Purchases for use in religious
worship services and in public church buildings in carrying out the work of the
church and its related ministries. The following tangible personal property may
be purchased exempt from the tax when purchased by the church for use in
religious worship services by a congregation or church membership while meeting
together in a single location and for use in public church buildings in
carrying out the work of the church and its related ministries. The list is
exemplary and not all inclusive.
a. Acolyte
robes;
b. Administrative supplies
(letterheads, envelopes, office supplies, etc.);
c. Altar cushions and cloths;
d. Baptism, marriage, and membership
certificates;
e. Baptismal
font;
f. Baptistries;
g. Bibles and Bible stands;
h. Bulletins, programs, newspapers, and
newsletters that do not contain paid advertising (including paper and ink used
to print these);
i. Candles and
candelabra;
j. Choir
robes;
k. Communion supplies and
tables;
l. Curtains and
flags;
m. Flowers and plants, live
or artificial, and accessories thereto;
n. Fuel oil;
o. Funeral pall;
p. Gifts, including food, for distribution
outside the public church building;
q. Hymnals and hymnal racks;
r. Kitchen equipment that is not incorporated
into realty;
s. Musical instruments
(e.g., organ, piano, hand bells, drums, brass instruments, woodwind
instruments, etc.);
t. Name tags
for ushers and guests, and attendance records;
u. Offering envelopes;
v. Office machinery and equipment;
w. Pews, cushions, chairs, and other seating
systems;
x. Portable heaters, and
fans and window air conditioners used at the location of the worship
service;
y. Prayer books;
z. Pulpit, lectern, pulpit lamp;
aa. Rosaries, crosses, crucifixes;
bb. Rugs and carpeting not affixed to the
realty;
cc. Sheet music;
dd. Systems to assist persons who are
hearing-impaired
ee.
Tallithim;
ff. Torahs;
gg. Vestments for ecclesiastical
celebrants;
hh. Wafers, bread,
wine, grape juice used in communion service; and
ii. Yarmulkes.
2. Purchases for recording and reproducing
church services. Equipment, tools, supplies, or other tangible personal
property used in any form of recording or reproducing of church services can be
purchased exempt of the retail sales and use tax. Recording and reproduction
items shall include, but are not limited to, the following:
a. Amplifiers, microphones, speakers, and
wires;
b. Audiovisual recording
devices;
c. Tools and testing
equipment;
d. Tape or disk
duplicating devices;
e. Audiovisual
cameras;
f. Television broadcasting
cameras;
g. Radio and television
transmitting devices; and
h.
Photographic cameras, film, developing supplies.
3. Property used in caring for or maintaining
property owned by the church.
a. Tangible
personal property that is purchased for use in caring for or maintaining
property owned by the church is exempt from the retail sales and use tax. Such
property shall include, but not be limited to, the following:
(1) Mowing equipment including but not
limited to, lawn mowers, baggers, weed-eaters, edgers, and replacement parts
(lawn mower blades, tires, wheels, lights, spark plugs, filters, other
mechanical components, etc.);
(2)
Ladders;
(3) Vacuums;
(4) Mops;
(5) Buckets;
(6) Janitorial supplies;
(7) Pressure washers;
(8) Rakes;
(9) Brooms;
(10) Cleaning equipment and
supplies;
(11) Light
bulbs
(12) Leaf blowers;
(13) Tools (hammers, drills, saws,
screwdrivers, knives, paint brushes, nails, screws, etc.);
(14) Property used in maintenance of church
grounds including, but not limited to, grass seed, trees, shrubs, and
fertilizer; and
(15) Repair parts,
accessories, oil, and similar items for use in motor vehicles owned by the
church, even if such motor vehicles are not used exclusively for church-related
activities.
b. Certain
building materials. Building materials that are installed in the public church
buildings that are used in carrying out the work of the church and its related
ministries may be purchased by the church exempt of the retail sales and use
tax, provided such equipment is installed by the church and the church does not
contract with a person or entity to have such property installed. Building
materials shall include, but not be limited to, the following:
(1) Wood products (lumber, plywood, moldings,
etc.);
(2) Drywall;
(3) Flooring (hardwood floors, laminate,
vinyl, tile, carpet, etc.);
(4)
Paint;
(5) Kitchen and bathroom
sinks;
(6) Toilets;
(7) Electrical materials (wires, receptacles,
light switches, etc.);
(8)
Telephone wires;
(9) Cable
television wires;
(10) Roofing
materials (shingles or other types of roofing, gutters, roofing nails,
etc.);
(11) Siding (aluminum, wood,
vinyl, stone, brick, stucco, etc.);
(12) Masonry materials (cinderblocks, bricks
or stones, concrete mix, etc.);
(13) Insulation;
(14) Windows;
(15) Doors, door handles, and door
locks;
(16) Plumbing materials
(pipes, septic systems, garbage disposals, etc.); and
(17) Cabinets, counters, and
countertops.
E. Taxable purchases.
1. Generally. Tangible personal property
purchased by a church is generally taxable when it is (i) not used in religious
worship services by a congregation or church membership while meeting in a
single location; (ii) not used in sanctuaries, libraries, offices, meeting or
counseling rooms, or other rooms in the public church buildings used in
carrying out the work of the church and its related ministries; or (iii) used
by separate legal or business entities that may be associated with the
church.
2. Construction and
building materials furnished to contractors.
a. If building materials, kitchen equipment,
heating and air conditioning equipment, tool sheds, and picnic shelters are
furnished by the church to a contractor for incorporation in real estate, and
the church did not pay the tax on the materials, the contractor, as the user
and consumer of the materials, must pay the use tax directly to the department
based on the fair market value of the materials used, irrespective of whether
or not any right, title, or interest in the materials become vested in the
contractor.
b. A baptistry that
will be incorporated into real estate at the public church building and used in
the religious services of a church is exempt from the tax whether purchased by
the church or the contractor.
3. Examples of other taxable purchases. Other
taxable purchases are described in the following list, which is exemplary and
not all inclusive.
a. Any property used on
church trips, picnics, or similar outings outside a public church building;
or
b. Bulletins, programs,
newspapers, and newsletters that contain paid advertising (including paper and
ink used in printing).
F. Camps and conference centers.
1. Church-related activities.
a. Purchases. The tax does not apply to
purchases of food and beverages, disposable serving items (such as paper
plates, cups, napkins, plastic forks, spoons, and knives), cleaning supplies,
and teaching materials used and consumed in operating camps or conference
centers by a church or an organization composed of churches that are exempt
from the sales and use tax and that are used in carrying out the work of the
church and its related ministries. The purchase may be made exempt of the tax
by the church or the camp or conference center using Form ST-13A, Certificate
of Exemption.
Example 1: A church organization that is composed of a number
of church congregations allows one of its church affiliates to hold a youth
camp at its conference facilities located in Virginia in order to educate the
participants in the church's religious teachings. The church organization
purchases food, disposable serving items, and teaching materials that will be
given to the participants in the youth camp. In addition, cleaning supplies are
purchased for maintaining the facilities. The purchase of food, disposable
serving items, teaching materials, and cleaning supplies provided by the church
organization would be exempt from the tax.
b. Sales.
(1) Rooms, lodgings, and accommodations. When
a church or organization composed of churches operates a camp or conference
center and makes separate charges for room rentals, lodging, and
accommodations, the charges are taxable as provided in
23VAC10-210-730. The church or
organization must register as a dealer, collect the tax on the amount of the
charge, and remit the tax to the department. Tangible personal property used
and consumed in providing rooms, lodging, and accommodations is taxable at the
time of purchase.
(2) Meals. When a
church or organization composed of churches operates a camp or conference
center and sells meals to participants, the sales price of meals are taxable as
provided in
23VAC10-210-930. The church or
organization must register as a dealer, collect the tax on the amount of the
charge, and remit the tax to the department. However, the food provided in the
meals, as well as paper placemats, plastic silverware, and similar items
furnished with the meals and disposed of after the use by only one person, may
be purchased exempt of tax under a resale exemption certificate.
(3) Camp fees. When a church or organization
composed of churches operates a camp and charges the participants a camp fee
that covers expenses incurred to provide meals, lodging, and camp activities,
the camp fee is tax exempt. Further, the church or organization carrying out
the work of the ministry may purchase the items described in subdivision 1 a of
this subsection exempt from the tax.
Example 2: A nonprofit organization composed of nonprofit
churches operates a retreat facility. The churches that comprise this nonprofit
organization may purchase food items for the consumption of participants at the
retreat facility exempt from the tax. Any church associated with the nonprofit
organization may also purchase food exempt for resale, but the subsequent sale
of that food to participants is taxable. A church that is not associated with
the nonprofit organization and that purchases food items for consumption while
using the retreat facility must pay retail sales and use tax.
2. Nonchurch-related
activities. When food, disposable serving items, teaching materials, or
cleaning supplies are purchased by a church or organization of churches for use
in camps and conference centers for nonchurch-related activities, they are
subject to the sales and use tax in the same manner of other providers of meals
and accommodations. Nonchurch-related activities would include, but are not
limited to, the renting of the facility for conferences, retreats, etc., by
businesses, business groups, governmental organizations, and civic
groups.
G. Donations of
tangible personal property to churches. A church is exempt from the use tax on
donations of tangible personal property that it receives from individuals,
businesses, and other organizations. Persons making such donations are liable
for the tax not previously paid on the cost price of the donated items unless
those items are withdrawn from inventory, as provided in subdivision 15 of
§ 58.1-609.10 of the Code of Virginia or otherwise exempt from the
tax.
H. Affiliated organizations.
1. Generally. Tangible personal property
purchased by affiliated religious associations or corporations, such as
political action committees (PACs) and separately organized broadcasting
ministries, is taxable.
2. Separate
legal and business entities. Kindergartens, primary schools, secondary schools,
preschools, nurseries, day care centers, and similar activities held in the
public church buildings that carry out the work and ministry of the church and
that are not separate legal or business entities are generally exempt from the
tax on the purchases of tangible personal property. Tangible personal property
purchased for an activity that is a separate legal or business entity is
taxable. Although not all inclusive, the following factors considered as a
whole are used to determine that an activity is a separate legal or business
entity from the church that would not qualify for the exemption:
a. The activity is a separate corporation
from the church;
b. The federal
identification number of the activity is different from the church;
c. Payroll and other expenses of the activity
are paid out of separate bank accounts;
d. Activities are located at a different
location from the public church building; and
e. Activities are not subject to the
authority or control of the church.
However, preschools, primary schools, and secondary schools
that are separate legal and business entities from the church may qualify for a
sales and use tax exemption pursuant to § 58.1-609.11 of the Code of
Virginia.
Example 3: As part of its education ministry to inner city
youth, a church operates a child day care center out of its public church
buildings. The center's federal identification number is the same as the
church, pays its expenses out of the church's checking account, and functions
under the authority and control of the church. Tangible personal property
purchased by the center would qualify for the church exemption since the center
is not considered a separate legal or business entity from the church.
Example 4: Facts are the same as Example 3, except that the
center has a separate federal identification number and pays is expenses out of
a separate checking account. Tangible personal property purchased by the center
would continue to be exempt.
Example 5: Facts are the same as Example 3, except that the
center is a separate nonprofit corporation that is still affiliated with the
church, has a separate federal identification number, and pays its expenses out
of a separate checking account. Even though the center is located in the public
church building, tangible personal property purchased by the center is taxable
since the center is a separate legal entity from the church.
Example 6: Facts are the same as Example 3, except that the
center is located five miles from the public church buildings. Tangible
personal property purchased by the center would be taxable since the center is
not located in the public church buildings.
I. Sales.
1. Generally. Churches that make retail sales
of tangible personal property are required to register as dealers, collect the
tax from customers (who may include church members, visitors, or other persons
outside the church membership) and remit the tax to the department.
2. Food. If a church makes sales of food for
which a profit is realized, the church should collect tax from the customers
and remit the tax to the department. In these instances, the church may
purchase the food exempt from the tax using a resale exemption certificate. For
purposes of this subdivision only, if the sales price charged for food is
completely offset by the cost of the food, and the church realizes no profit,
then the church is not required to charge the tax to its customers on the sales
price of the food. Instead, the church must pay the tax to its vendors on the
purchase price of the food purchased. As long as the church pays tax on the
purchase price of the food that it sells at cost, the church is not required to
register as a dealer while conducting this activity or charge tax to
customers.
3. Other sales. If a
church makes sales of cassette tapes, audiovisual tapes, books, photo
directories, and jewelry or makes sales of tangible personal property in yard
sales or bazaars, the church should register as a dealer, collect the tax from
its customers and remit the tax to the department.
4. Occasional sales. Except as provided in
subdivision 2 of this subsection of this regulation, the church must collect
the tax on all sales and remit the amount to the department unless the sales
meet the criteria for occasional sales as provided in subdivision 2 of §
58.1-609.10 of the Code of Virginia and
23VAC10-210-1080. Yard sales and
bazaars qualify as occasional sales under subdivision 2 of § 58.1-609.10
of the Code of Virginia and
23VAC10-210-1080.
Example 7: A church holds yard sales to raise money to
support ministries and other church-related activities. The yard sales are held
in the church facility or on church grounds, and consist of the sales of
tangible personal property donated by church members. Although numerous items
of tangible personal property are sold at each yard sale, each day's yard sale
is considered to be one sale for purposes of the occasional sale rule. As long
as the church does not hold more than three yard sales in a calendar year, the
church is not required to register as a dealer and collect and remit sales
tax.
Example 8: Facts are the same as in Example 7, except that
the church rents a booth or space for one day from a flea market organizer who
is registered as a dealer. The primary business of the flea market is to rent a
booth or space to sell tangible personal property. As the church yard sale
takes place as part of a regular ongoing business (the flea market) that takes
place more than three times a year, the yard sale would not qualify as an
occasional sale. The flea market organizer is held responsible for the
collection of sales tax for any property sold using its facilities and must
collect sales tax from the church based on the sales price of property sold or
allow the church to collect the tax and remit it to the Department of
Taxation.
Statutory Authority
§ 58.1-203 of the Code of Virginia.
