Tax Type
Retail Sales and Use Tax
Description
Charge for renting room is taxable
Topic
Exemptions
Date Issued
11-30-2004
November 30, 2004
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****:
This is in reply to your letter submitted on behalf of ******** (the "Taxpayer"), in which you request a ruling regarding the application of the retail sales and use tax to charges for the rental of the Taxpayer's meeting facilities and Performance Hall.
FACTS
The Taxpayer rents meeting facilities and its Performance Hall to the general public, non-profit organizations and for profit entities. On some occasions, the Taxpayer provides tangible personal property to its customers in connection with the room rentals. You maintain that the purpose for renting the rooms is to provide suitable accommodations for meetings, receptions and other gatherings, and the personal property at issue is merely ancillary to the rental. You further indicate that the invoices for the rentals indicate separate charges for the room rental and the equipment rental. You maintain that the sales tax should be collected only on the portion of the rental charge attributable to the rental of furniture and equipment and services provided, and not on the portion of the charge for the room itself.
RULING
Virginia Code § 58.1-603 4 imposes the sales tax on the "gross proceeds derived from the sale or charges for rooms, lodgings or accommodations furnished to transients as set out in the definition of ‘retail sale' in § 58.1-602." Virginia Code § 58.1-602 states that a "retail sale" and a "sale at retail" shall include "the sale or charges for any room or rooms, lodgings, or accommodations furnished to transients for less than 90 continuous days by... any . . . place in which rooms, lodging, space, or accommodations are regularly furnished to transients for a consideration. [Emphasis added.] Virginia Code § 58.1-602 defines "gross proceeds" as the charges made or voluntary contributions received from the lease or rental of tangible personal property or for furnishing services.
Based on the information provided, the Taxpayer is engaged in regularly renting rooms to transients. As such, the charges for the rooms represent retail sales in accordance with the definition of "retail sale" provided in Va. Code § 58.1-602 and are subject to the retail sales tax. Accordingly, the Taxpayer is required to collect and remit the sales tax based on the gross proceeds received from the room rentals. The charge for renting the room is taxable, regardless of whether or not the Taxpayer provides items of tangible personal property to its customers in connection with the room rental. In instances where tangible personal property is provided for consideration, the entire rental charge is subject to the sales tax.
Public Document 95-223 (8/29/95), which you cite to support your position, is distinguishable from the Taxpayer's situation. This ruling addresses the allocation of tax on a lease of real property and tangible personal property by a restaurant to facilitate the sale of one location. Unlike the Taxpayer, the restaurant was not engaged in regularly furnishing rooms to transients. Therefore, Public Document 95-223 is not applicable to the Taxpayer's situation.
This response is based on the facts provided as summarized above. Any change in facts or the introduction of new facts may lead to a different result.
The Code of Virginia sections cited are available on-line in the Department's Tax Policy Library, located at www.policylibrary.tax.virginia.gov. If you have any questions about this response, you may contact ***** in the Department's Office of Policy and Administration, Appeals and Rulings, at *****.
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- Sincerely,
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Kenneth W. Thorson
Tax Commissioner
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AR/52368P
Rulings of the Tax Commissioner