Nonprofit organizations, state and local governmental entities, and churches may be able to save money on future catered events. Effective April, 22, 2016, organizations can use their exemption certificate, Form ST-12 and self-issued Form ST-13A to purchase prepared foods and catering services. This can result in a savings state sales tax when catered events are held in Virginia. Virginia allows sales and use exemption for 501(c)(3) and 501(c)(4) organizations.
Eligible nonprofit entities and state and local governments must satisfy the Department’s new use and consumption test. This is not applicable to churches if they are using self-issued ST-13A which is a limited exemption certificate. For churches to qualify for the exemption, they must follow requirements set forth in VA Code § 58.609.10(16).
Nonprofit and state and local government entities must demonstrate the following to satisfy the statutory “use or consumption” test:
- Provision for applicable prepared meals or catering/services must further the mission, service or purpose of the governmental or nonprofit entity; and
- The charge for meals or catering/services are billed to and paid by the entity claiming exemption. It must be paid from the entity’s account, rather than in cash or from an individual’s account; and
- To whom, when and how the meals or food are served and consumed is determined by the entity claiming the exemption.
Churches are not required to meet the “use or consumption” test, but are eligible if the prepared foods and catering services are in religious worship services by the congregation or within the church public buildings used in carrying out related ministries. While church school activities are excluded, food distribution and other prepared foods and catering are included in the exemption.
Virginia is not issuing new certificates until certifications renew, however you can request an updated certificate. Localities in Virginia also have a prepared food tax. This new ruling is for state sales tax only and localities will make their own decision. If you would like additional information, please contact PBMares.