11­15­9(6) (1986). This exemption was claimed by presenting to the vendor of the tangible personal property or taxable service a properly executed exemption certificate. Additionally, under prior law, casual and occasional sales of tangible personal property or services not conducted in a repeated manner or in the ordinary course of repetitive and successive transactions by an organization qualified under Section 501(c)(3) of the Internal Revenue Code of 1986 were exempt per se from the consumers sales and use taxes. W. Va. Code § 11-15-9(17) (1986). That is to say, no exemption certificates were required to claim this exemption. Senate Bill Nos. 536 and 760 did not substantially amend the language of these exemption provisions, which are now codified in W.

Va. Code § 11-15-9(f) and (q) (1987). Therefore, the scope of these exemptions was neither enlarged nor restricted and now read as follows: § 11-15-9. Exemptions. The following sales and services shall be exempt: * * * (f) Sales of property or services to corporations or organizations qualified under section 501(c)(3) of the Internal Revenue Code of 1986, as amended, or under section 501(c)(4) of the Internal Revenue Code of 1986, as amended, who make casual and occasional sales not conducted in a repeated manner or in the ordinary course of repetitive and successive transactions of like character: Provided, That the exemption herein granted shall apply only to services, equipment, supplies and materials directly used or consumed in the activities for which such organizations qualify as tax exempt organizations under the Internal Revenue Code by these organizations and shall not apply to purchases of gasoline or special fuel. * * * (q) Casual and occasional sales of property or services not conducted in a repeated manner or in the ordinary course of repetitive and successive transactions of like character by corporations or organizations qualified under section 501(c)(3) of the Internal Revenue Code of 1986, as amended, or under section 501(c)(4) of the Internal Revenue Code of 1986, as amended. * * * * Senate Bill Nos. 536 and 760 radically changed, however, how these two exemptions are claimed, and the changes were effective July 1, 1987. As to purchases by a 501(c)(3) organization for which exemption is allowed by W. Va. Code § 11-15-9(f), this exemption is now claimed by first paying the tax to the vendor and then applying for refund or credit with the Tax Commissioner as provided in W. Va. Code § 11-15-9b (1987). W. Va. Code § 11-15-9b, as amended by Senate Bill 760, provides the sole method for claiming exemption from consumers sales tax under W. Va. Code § 11-15-9(e) bona fide charitable organizations, (f), (g), (k), (l), (q), (v) and (z), unless the purchaser is authorized to issue a West Virginia direct pay permit number and the purchaser in fact gives that number to the vendor. W. Va. Code § 11-15-9b reads in pertinent part as follows: § 11-15-9b. Method for claiming exemptions, refunds of tax, credit against other taxes. (a) Any person having a right or claim to any exemption set forth in section nine of this article except those exemptions set forth in subsections (a), (b), (c), (d), (h), (i), (j), (m), (n), (o), (p), (r), (s), (t), (u), (w), (x) and (y) of said section nine or the exemption of sales of property or services to churches under subsection (e) of said section nine shall pay to the vendor the tax imposed by this article and may exercise or assert such exemptions only in accordance with subsection (b) or subsection (c) of this section. (Emphasis added.) (b) Any person who has paid the tax imposed by this article and who may lawfully claim exemption from the tax under a subsection of section nine of this article not enumerated in subsection (a) of this section may exercise or assert such claim by filing a claim for refund of consumers sales and service tax overpayments on such form and in such manner as the tax commissioner may require and in accordance with the requirements of this section. The tax commissioner shall cause a refund to be made within thirty days of receipt of a lawful and accurate claim. (Emphasis added.) * * * * Similar rules apply when purchases of taxable services or tangible personal property (included leases thereof) are made from an out-of-state vendor who is required or authorized to collect West Virginia use tax. These rules are found in W. Va. Code §

11­15A­3b (1987), a copy of which is enclosed. There are only three exceptions to the requirements of W. Va. Code § 11-15-9b(b) and 11-15A-3b(b). They are: (1) Where the sale of the property or service is exempt per se from the consumers sales and use taxes. See, 110 C.S.R. 15, § 9.2 (1987), (2) Where the sale of the property or service is exempt only if an exemption certificate may be issued and such exemption certificate is in fact given to the vendor, e.g. purchases for resale. See, 110 C.S.R. 15, § 9.3 (1987). (3) Where the organization, having obtained a direct pay permit number from the Tax Commissioner as provided in W. Va. Code § 11-15-9d and 11-15A-3d, purchases (or leases) tangible personal property or taxable services from a vendor to which it gives its direct pay permit number. See, 110 C.S.R. 15, §

9.3 (1987). As to casual and occasional sales of tangible personal property or taxable services by a qualified 501(c)(3) organization, which sales are exempt from consumers sales tax under W. Va. Code § 11-15-9(q), the qualified organization must now collect the consumers sales tax from the purchaser unless the sale is (1) exempt per se from tax, see 110 C.S.R. 15, § 9.2 (1987); or (2) to a purchaser who is eligible to issue, and does in fact give to the seller a properly executed exemption certificate; or (3) to a purchaser who gives to the seller its direct pay permit number. The purchaser who pays the consumers sales tax to a 501(c)(3) organization may then file a claim for refund or credit with the Tax Commissioner, as provided in W. Va. Code § 11-15-9b (b)-(i) (1987). Please note, however, that if the sale qualifies as an isolated transaction exempt from consumers sales tax under W. Va. Code § 11-15-9(h), the sale is exempt per se from the tax. 110 C.S.R. 15, § 2.2 (1987). The term "casual and occasional sale" is defined in 110 C.S.R. 15, § 2.2 (1987), which reads: "Casual and occasional sales are not conducted in a repeated manner or in the ordinary course of repetitive and successive transactions of like character" is intended to restrict to a minimum the number of revenue-generating events held by organizations qualified under either Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, or Section 501(c)(4) of the Internal Revenue Code of 1986, as amended, which shall be exempt from the imposition of the consumers sales and service tax. The terms "casual" and "occasional" are to be construed synonymously, and when used in reference to the sales and service tax and in conjunction with the phrase "not conducted in a repeated manner or in the ordinary course of repetitive and successive transactions of like character," the phrase will have the effect of limiting the applicable exemption to similar types of sales which occur infrequently. Sales of the same or similar products or services which occurs more than four times in a twelve-month interval are not "casual or occasional sales." An example of a casual or occasional sale is the Annual Girl Scout Cookie Sale. The term "isolated transaction" is defined in 110 C.S.R. 15, § 2.10 (1987), which reads: "Isolated transaction" means a transaction or event in which tangible personal property is sold, transferred, offered for sale or delivered by the owner thereof or by his representative. In order to qualify as an isolated transaction, the seller may not be in the business of selling the type of tangible personal property which is the subject of the transaction. The isolated transaction may be in the form of a single transaction, or a series of individual transactions which would be an event. An example of a single transaction would be the sale of a boat or an individual's furnishings. An example of a series of transactions comprising an event would be a yard sale. Whether as separate transactions or as events, or as a combination of the two, a person may hold no more than four isolated transactions in any twelve month period. Additionally, an event may not be longer than 48 hours in duration. While X organization may make no charge for its service projects, the organization needs to be aware that if its fund raising activities, when considered in the aggregate on an annual basis, are conducted in a repetitive and repeated manner so frequently that the fund raisers no longer fall within the scope of being "casual and occasional sales of tangible personal property or services," as defined in 110 C.S.R. 15, § 2.10, supra, the organization will cease to qualify for the exemptions provided in W. Va. Code § 11-15-9(f) and (q), until such time as the frequency of such sales once again becomes "casual and occasional." During the period of disqualification, the 501(c)(3) organization may continue to claim applicable per se exemptions and exemptions for which an exemption certificate may be issued. See, 110 C.S.R. 15, § 9.2 and 9.3. Lastly, concern was expressed in your letter that the phrase "directly used or consumed," as used in W. Va. Code § 11-15-9(h), will be defined as provided in W. Va. Code § 11-15-2(n)(1) and (2). Initially, we note that the phrase "directly used or consumed," in W. Va. Code § 11-15-9(h), has been part of the consumers sales tax law since July 1, 1974, when W. Va. Code § 11-15-9(6) was first enacted; and that the context in which the phrase is used there is not the same. The definition of "directly used or consumed" in W. Va. Code § 11-15-2(n)(1) and (2) applies only to purchases (or leases) "directly used or consumed" in the activities of contracting, manufacturing, transportation, transmission, communication or the production of natural resources. As stated earlier, the scope of the exemption allowed by W. Va. Code §

11­15­9 to 501(c)(3) organizations was not changed by Senate Bill Nos. 536 and 760. II The above discussion does not address the exemptions available to a bona fide charitable organization which sells neither tangible personal property or services, nor to an organization that is qualified under I.R.C. § 501(c)(4) and makes only casual and occasional sales. The applicable exemptions are: 1. Bona fide charitable organizations which make no charge for the services they render and sell neither tangible personal property or services to raise funds for use in the rendering of their services are exempt from consumers sales and use taxes under W. Va. Code § 11-15-9(e). This exemption applies only to services, equipment, supplies and materials directly used or consumed by these organizations except that purchases of gasoline or special fuel are taxable. It is a refundable exemption, meaning that consumers sales tax must be paid to the vendor at the time of the sale, purchase or lease. A claim for refund asserting this exemption may then be filed with the Tax Commissioner, see W. Va. Code § 11-19-9b (method of claiming exemptions, refunds of tax, credits against other taxes) unless the transaction is exempt per se from tax or the organization gives its West Virginia direct pay permit number to the vendor at the time of purchase. 2. Organizations qualified under I.R.C. § 501(c)(4), who make only occasional and casual sales of tangible personal property or services, are exempt from consumers sales and use taxes under W. Va. Code § 11-15-9(f) in the same manner as the 501(c)(3) organization discussed in this advisory. Michael E. Caryl State Tax Commissioner Issued: August 14, 1987MEC:dss