Retail Sales and Use Tax Exemptions for Nonprofit Organizations
Retail Sales and Use Tax - Exemption Requirements:
To qualify for an exemption, a nonprofit organization must meet all of the following requirements: (Reference: Virginia Code 58.1-609.11)
The organization must be exempt from federal income taxation under Sections 501(c) (3) or 501(c) (4). If the organization has annual gross receipts less than $5,000, and is organized for one of the purposes set in Internal Revenue Code 501(c) (3) or 501(c) (4), a mission statement must be submitted. For more information, visit the IRS website at www.irs.gov/eo or you may contact them at (877) 829-5500.
- The annual administrative costs of the organization, including salaries and fundraising must not exceed 40 percent of its annual gross revenue.
- An organization with gross annual revenue of at least $750,000 in the previous year must provide a financial review performed by an independent Certified Public Accountant (CPA). NOTE: The Department may require an organization with gross annual revenue of at least $1million in the previous year to provide a financial audit performed by an independent CPA in lieu of a financial review.
- The organization must provide an estimate of the total amount of tangible personal property purchased in Virginia for the preceding year and the current year. Do not include purchases of any tangible personal property that will be furnished to a contractor performing construction, installation, repair or any other service with respect to real property.
- If the organization is required to file a federal Form 990, 990EZ, 990PF, or 990N with the IRS, a copy must be provided to the Department. If the organization is not required to file, the names and address of two members of the organization's Board of Directors must be provided and the location of the financial records. NOTE: All financial records must be available for inspection.
Requirements for Nonprofit Churches:
Nonprofit churches have two options to request a retail sales and use tax exemption, they may use the self-issued exemption certificate, Form ST-13A or apply to the Department for a tax-exempt number.
Option 1: Form ST-13A
Code of Virginia Section 58.1-609.10(16) allows nonprofit churches to use the self issued exemption certificate Form ST-13A. Title 23 of the Virginia
Administrative Code (VAC) 10-210-310 provides an exemplary listing of taxable and exempt purchases for nonprofit churches qualifying for this option.
Option 2: Tax-Exempt Number
Code of Virginia Section 58.1-609.11 provides a broader exemption to nonprofit organizations and churches seeking a sales and use tax exemption. All exemption requirements under Code of Virginia 58.1-609.11 must be met to qualify. Churches electing this option must submit a detailed financial statement for the prior year's accounting period.
Apply Online for a Retail Sales and Use Tax Exemption at Nonprofit Online:
Nonprofit Online is a quick, efficient and secure way for you to apply for and print your sales and use tax certificate online. You can access Nonprofit Online to edit certain registration information as it changes, renew your expired or expiring exemption, as well as reprint lost certificates without having to contact the Department. You may also send secure e-mail messages to TAX through a secure environment.
It is available to anyone requesting a sales and use tax exemption for a nonprofit organization or a nonprofit church. You will be required to create a user-id and password in order to register your organization. To qualify for an exemption, you must meet all of the exemption requirements under Code Section 58.1-609.11.
Go to Nonprofit Online (apply or search for a nonprofit organization)
Unable to Apply Online:
Organizations that are unable to apply online can download Form NP-1 Application and Instructions or contact the Nonprofit Exemption Team at (804) 371-4023 to request an application. Completed applications should be sent to the Department of Taxation, Nonprofit Exemption Unit, Post Office Box 27125, Richmond, Virginia 23261-7125, or Faxed to (804) 786-2645
Did You Know?
If you are a returning user and you are unable to retrieve your user-id and password information, you must sign up as a new user and create a user-id and password. Click on the "Change Access Request" option to associate your new user-id and password with the record. Once you receive an email confirmation that the Change Access Request has been approved, you may login to access your record.
Once you have submitted an application online changes and additions cannot be made. Please contact the Nonprofit Unit at (804) 371-4023 if you have questions.
You may check the status of an application by logging into Nonprofit Online using your user-id and password
You may submit required documents by upload or by mail.
You may search for a nonprofit organization at Nonprofit Online. by entering the name of the organization or the federal identification number.Source: www.tax.virginia.gov