Effective October 1, 2008, the Virginia Department of Taxation has changed its policy for nonprofit organizations, exempt under IRC §501(c), that sell prepared food or meals, or sell tickets to events that include prepared food or meals, provided they meet the following requirements:
– the organization must not be required to register as a dealer under Va. Code §58.1-612 based on its other activities;
– the organization must pay sales tax to its vendors on the sales price paid by the organization for the food or the catering or food preparation services provided;
– the organization may not hold such events on more than 12 occasions per year;
– the organization must use any profits from the sales of food or event tickets solely to support the organization or for donation to another IRC §501(c) organization; and
– the organization must maintain records for three years after each event to verify these requirements.
Provided these requirements are met, the new policy will exempt these organizations from collecting sales tax on the aforementioned sales . The policy will be applied prospectively and will not affect taxability before October 1, 2008. (Tax Bulletin 08-11, Virginia Department of Taxation, October 20, 2008)