Army USA Flag Shoulder Patch

Qualifying nonprofits serving armed forces veterans no longer have to pay the state’s 6 percent sales and use tax on purchases of certain tangible personal property.

Tax strategies

Virginia Sales Tax Exemption Extended to Veterans’ Service Organizations

  • Kathleen Thies
  • 4/3/2017

Virginia’s sales and use tax exemption has been expanded to include organizations that serve military veterans in the state. That exemption now includes:

  • Organizations exempt from federal income tax under IRC 501(c)(19) and
  • Organizations with annual gross receipts below $5,000 that are organized for one of the purposes set forth in 501(c)(19)

Exemption limitations

The exemption is limited to purchases of tangible personal property and does not include taxable services such as hotel accommodations. It excludes tangible personal property used primarily for social and recreational activities or to provide insurance benefits to members or their dependents.

Apply for an exemption certificate

Several criteria must be met to take advantage of the updated tax law. But organizations can take the first step by applying for a tax exempt certificate through the Virginia Department of Taxation. The certificate is effective beginning on or after July 1, 2016.

Prior law

Under the prior law, the exemption was limited to three types of nonprofits: 

  1. Entities exempt under IRC 501(c)(3)
  2. Entities that are exempt under IRC 501(c)(4) and organized for a charitable purpose
  3. Entities that have annual gross receipts of less than $5,000 and are organized either for one of the purposes set forth in IRC 501(c)(3) or for charitable purposes in IRC 501(c)(4)

How we can help

CliftonAllenLarson's state and local tax team can dissect your purchases and provide your organization with comprehensive sales and use tax assistance. Contact our state and local tax group with your questions.