W. Va. Code R. § 110-15D-4

Current through Register Vol. XLI, No. 50, December 13, 2024

Section 110-15D-4 - Applicability of Consumers Sales Tax

4.1. General Rule. -- The consumers sales and service tax is imposed upon the sale of tangible personal property or selected services. All sales are presumed to be taxable unless the sale is either excepted or exempt from the tax.

4.2. Exemption for Taxable Services Provided by Certain Community-Based Nonprofit Service Organizations. -- Sales of taxable services by a community-based nonprofit corporation or organization that meets the requirements specified in subsection 4.3 of this rule are exempt from consumers sales tax, unless the gross income derived from the sale is taxable under Section 511 of the Internal Revenue Code of 1986, as amended.

4.2.1. This exemption does not apply to sales of tangible personal property.

4.2.2. This exemption does not apply when the gross income derived from selling the service is taxable under Section 511 of the Internal Revenue Code.

4.2.3. This exemption does not apply to the sale of taxable services by a non-qualifying corporation or organization even though the sale occurs or takes place through the sponsorship of or at the facilities of the qualifying corporation or organization. To illustrate, the charges imposed by a business which provides scuba diving lessons to its students at a YMCA are taxable even though the YMCA receives a portion of the charges paid by the participants. In contrast, if the YMCA contracts with a third party to provide scuba diving lessons at the YMCA's pool but the students contract with the YMCA for the lessons rather than with the third party, the charges paid by the students will be exempt.

4.2.4. This exemption does not apply to a 501(c)(3) hospital or nursing home.

4.3. Requirements for Exemption. -- The exemption provided in W. Va. Code '11-15-11 does not apply unless the community-based service organization satisfies all of the requirements specified in this subsection 4.3.

4.3.1. The corporation or organization must be exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.

4.3.1.1. The corporation or organization must have a determination letter from the Internal Revenue Service finding that it is exempt from federal income tax under Section 501(c)(3), and that letter must be in effect for the current taxable year.

4.3.2. The corporation or organization must be organized and operated primarily for charitable or education purposes and its activities and programs must contribute importantly to (1) promoting the general welfare of youth, families and the aged, (2) improving health and fitness, and (3) providing recreational opportunities to the public.

4.3.2.1. The charitable or educational purposes for which the corporation or organization is organized must be stated in the corporation's or organization's articles of incorporation or by-laws.

4.3.2.2. A corporation or organization is not operated primarily for charitable or education purposes unless the normal usage of its facilities and programs are predominantly for charitable or educational purposes, as those terms are defined in this rule. See Section 3 of this rule.

4.3.3. The corporation or organization must offer memberships or participation in its programs and activities to the general public, and the charges, fees or dues for membership or participation must allow its programs and activities to be accessible by a reasonable cross-section of the community.

4.3.3.1. The programs and activities of the corporation or organization must be available to the general public, regardless of ability to pay for participation.

4.3.3.2. The memberships, programs and activities must be obtainable regardless of race, creed, color or national origin.

4.3.4. The corporation or organization must offer financial assistance, on a regular and on-going basis, to individuals unable to afford the corporation's or organization's membership dues, or its fees or charges, imposed for participation in any of its programs or activities.

4.3.4.1. The corporation or organization must have official guidelines or rules on eligibility for financial assistance.

4.3.4.2. While the corporation or organization may require sufficient information to satisfy it that financial assistance is needed, the standards for determining the awarding of financial assistance may not be such that only those individuals who are destitute qualify for such assistance.

4.3.4.3. Financial assistance to qualifying individuals may take the form of reduced dues, fees or charges, or the provision of free taxable services.

4.4. Method of Claiming Exemption. -- A community-based nonprofit service organization or corporation that qualifies for this exemption is not required to obtain an exemption certificate or any other proof of exemption from persons participating in the organization's tax exempt activities.

4.5. Organization Required to Keep Accurate Records. -- A community-based nonprofit service organization is required to keep accurate books and records to support the accuracy of gross receipts it claims are exempt from consumers sales tax and the basis for the exemption(s) claimed.

4.6. Effective Date of Exemption. -- Exemption '11-15-11 takes effect June 5, 1992.

W. Va. Code R. § 110-15D-4