Does a non-profit running blind-operated vending stands on a military base still have to collect Virginia's disposable plastic bag tax?

Plain-English summary

A Virginia non-profit corporation contracts with the state's Department for the Blind and Vision Impaired (DBVI) to help manage vending facilities under the federal Business Enterprise Program -- part of the Randolph-Sheppard Act, which gives qualified blind individuals the opportunity to operate businesses on federal property. This non-profit runs facilities at Fort Belvoir, a U.S. Army post in Fairfax County, Virginia, and asked whether it needs to collect Virginia's Disposable Plastic Bag Tax there.

Fairfax County adopted the plastic bag tax (5 cents per bag at grocery stores, convenience stores, and drugstores) effective January 1, 2022, under a state law that lets counties and cities opt into this local tax. Federal law generally lets states impose sales-type taxes within federal areas like military bases, so being on Army property doesn't by itself create an exemption. The non-profit pointed to a specific Virginia statute that exempts blind-operated vending stands on U.S. military property from the state retail sales tax and local meals tax -- but that same statute explicitly says it does not excuse those vending operations from "other taxes" unrelated to running the stand. The Department found the plastic bag tax fits squarely within that "other taxes" carve-out, since nothing in the bag tax law itself creates an exemption for this program. So the bottom line: if the non-profit's Fort Belvoir operation is a grocery store, convenience store, or drugstore, it must collect and remit the bag tax there just like any other qualifying retailer -- but if a particular facility isn't one of those three store types, it isn't subject to the bag tax at all, regardless of the blind-vendor program.

What this means for you

Non-profits and blind-vendor program operators running retail facilities on federal property

Being tax-exempt for state sales tax and local meals tax purposes under the Randolph-Sheppard/DBVI framework doesn't extend to every Virginia tax. If your facility is a grocery store, convenience store, or drugstore in a locality that has adopted the disposable plastic bag tax, you're expected to collect and remit it just like any other qualifying retailer.

Retailers operating on federal military installations generally

Don't assume federal property is automatically outside the reach of Virginia or local taxes. Federal law lets states tax within federal areas, and localities' bag-tax ordinances apply on a military post the same as they would at a location just outside the gate, absent a specific exemption.

Businesses relying on a specific tax exemption statute

Read exemption statutes narrowly and check for carve-back language. Here, the relevant statute exempted sales/meals tax but explicitly preserved "other taxes... unrelated to the operation" of the vending business -- a reminder that a broad-sounding tax-exempt status for one type of retail tax doesn't automatically cover every other tax that might apply to the same sale.

Common questions

Q: Does operating on a military base exempt a retailer from Virginia's local disposable plastic bag tax?
A: No. Federal law permits states to levy this kind of tax within federal areas, and there's no blanket exemption for businesses located on a military installation.

Q: Are blind-operated vending stands under the Randolph-Sheppard program exempt from all Virginia taxes?
A: No. Virginia law exempts them specifically from the state retail sales tax and local meals tax when located on U.S. military or naval property with a post exchange or tax-exempt concession -- but the same law preserves "other taxes" unrelated to operating the stand, which the Department found includes the plastic bag tax.

Q: Does the bag tax apply to every type of store?
A: Only to grocery stores, convenience stores, and drugstores in a locality that has adopted the tax (Fairfax County did so effective January 1, 2022). A vending stand or other business enterprise that isn't one of those three store types isn't subject to the bag tax at all.

Q: Does this ruling apply to other blind-vendor facilities elsewhere in Virginia?
A: This ruling is based on the specific facts presented (a facility at Fort Belvoir in Fairfax County); the analysis would extend to similar facilities in other localities that have adopted the bag tax, but any change in facts could lead to a different result.

Citations and references

• Va. Code § 58.1-1745 (local option Disposable Plastic Bag Tax)
• Va. Code § 58.1-1746 (no specific bag-tax exemption)
• Va. Code § 51.5-98 B, C (blind-vendor sales/meals tax exemption; other taxes still apply)
• 4 U.S.C. § 105 (state taxation within federal areas)
• Randolph-Sheppard Act, 20 U.S.C. § 107 et seq.
• P.D. 21-9; P.D. 21-117; P.D. 22-163 (related prior rulings)

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 23-78

Original ruling text

July 6, 2023

Re: Retail Sates & Use Tax: Request for Ruling

Dear *:

This letter is in reply to your request for a ruling on behalf of * (the “Taxpayer”), regarding the application of the Virginia Disposable Plastic Bag Tax to the Taxpayer’s sales at federal military installations located in Virginia. I apologize for the delay in responding to your request.

FACTS

The Taxpayer is a non-profit corporation located in Virginia under contract with the Department for the Blind and Vision Impaired (the “DBVI”) to provide assistance in the daily management of vending facilities under the Business Enterprise Program, pursuant to the Randolph-Sheppard Act, 20 U S C § 107 et seq . This Act provides qualified blind persons the opportunity to operate businesses on federal property. The Taxpayer operates facilities at Fort Belvoir, Virginia, a U.S. Army post located within Fairfax County, Virginia. The Taxpayer requests a ruling as to whether its operations at Fort Belvoir must collect and remit the Virginia Disposable Plastic Bag Tax.

RULING

Virginia Code § 58.1-1 745 permits any county or city in Virginia to adopt an ordinance imposing a tax in the amount of five cents for each disposable plastic bag provided, whether free of charge or not, to a consumer of tangible personal property by retailers in grocery stores, convenience stores, or drugstores. Fairfax County, Virginia, adopted the Virginia Disposable Plastic Bag Tax under Virginia Code § 58.1-1745, effective January 1, 2022.

Generally, Title 4 U.S.C. § 1D5 permits a state to levy sales and use tax within a federal area. Virginia Code § 58.1-1745 states the Virginia Disposable Plastic Bag Tax shall be collected by retailers in grocery stores, convenience stores, and drugstores from the consumer along with the purchase price and all other fees and taxes.

Virginia Code § 58.1-1746 does not provide a specific exemption for the Taxpayer from the Virginia Disposable Plastic Bag Tax. Virginia Code § 51.5-98 B exempts vending stands and other business enterprises operated by blind or vision impaired persons under the jurisdiction of the DBVI from the Virginia retail sales tax and local meals tax if the stand or business is located on U.S. military or naval property with a post exchange or tax exempt concession. Virginia Code § 51.5-98 C states “[n]othing in this section shall be construed to relieve any blind person operating vending stands or other business enterprises under the jurisdiction of the Department [DBVI] from the imposition of (i) local income taxes, (N) state income taxes or (iii) other taxes imposed that are unrelated to the operation of such vending stands or other business enterprises.” The Virginia Disposable Plastic Bag Tax meets the description of the “other taxes” stated in Virginia Code § 51.5-98 C.

In accordance with Virginia Code § 58.1-1745 and 51.5-98 C, the Taxpayer must collect and remit the Virginia Disposable Plastic Bag Tax if operating a grocery store, convenience store, or drugstore on the U.S Army post Fort Belvoir, Virginia. Any vending stand or other business enterprise operated by a blind or vision impaired person under the jurisdiction of the DBVI that is not a grocery store, convenience store, or drugstore on Fort Belvoir, Virginia is not required to collect and remit the Virginia Disposable Plastic Bag Tax.

This ruling is based on the facts presented as summarized above. Any change in facts or the introduction of new facts may lead to a different result.

The of Code of Virginia sections cited are available on-line at www.tax.virginia.gov in the Laws, Rules & Decisions section of the Department’s web site. If you have any questions regarding this determination, you may contact * in the Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/4074.W

Related Documents

21-9

21-117

22-163