June 25, 2015
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear *****:
This is in response to your letter in which you seek correction of the retail sales and use tax assessment issued to ***** (the "Taxpayer") for the period January 2011 through June 2013. I apologize for the delay in responding to your appeal. It is noted that the bill at issue has been paid in full.
FACTS
The Taxpayer is a real estate company that manages rental properties in Virginia. The Taxpayer was assessed tax on bed making and mid-week housekeeping services that are available to customers who rent property managed by the Taxpayer. The Taxpayer states that its customers choose whether or not to purchase these services. The Taxpayer provides that if the services are purchased, the Taxpayer adds the charge to the customer's invoice. The Taxpayer states that the money collected for the services is sent to the company that provides the services in its entirety. The Taxpayer states that these services are not listed as standard amenities on its website or information provided to its customers. Relying on Public Document (P.D.) 96-295 (10/21/96), the Taxpayer maintains that the assessment of tax on the charges at issue is incorrect.
DETERMINATION
In P.D. 96-295, the taxpayer operated as a hotel and was assessed tax on separately stated services charged to hotel guests for laundering and dry cleaning, golf and tennis lessons, facials, haircuts, manicures, pedicures, massages and various other beauty services. The laundry services were provided by the hotel. The other services were provided by third parties. All of the charges at issue were billed to the hotel. The hotel paid the third party vendors and re-billed its guests for the charges. It was determined that the separate charges for services were not subject to the tax. The services at issue were not deemed part of the accommodations sold to the hotel guests. Accordingly, the services at issue were not sold in connection with the taxpayer's accommodations and were held exempt of the tax, provided such charges were separately stated on the invoices furnished to the hotel guests.
The determination in P.D. 96-295 does not apply in this instance because the charges in that instance were not for services sold in connection with the sale of the accommodations. The services in that instance were utilized by the taxpayer's customers separate from the accommodations purchased. The services in this instance are distinguished from those in P.D. 96-295 because the services addressed in the public document were deemed to be unrelated to the sale of the accommodations. In this instance, the bed making and housekeeping services are clearly related to the sale of accommodations.
Virginia Code § 58.1-602 defines retail sale, in pertinent part, as:
The sale or charges for any room or rooms, lodgings, or accommodations furnished to transients for less than 90 continuous days by any hotel, motel, inn, tourist camp, tourist cabin, camping grounds, club, or any other place in which rooms, lodging, space or accommodations are regularly furnished to transients for a consideration.
Title 23 of the Virginia Administrative Code (VAC) 10-210-730 C states that "Any additional charges made in connection with the rental or other lodging or accommodations are deemed to be part of the charge for the room and are subject to the tax."
In accordance with Va. Code § 58.1-602 and Title 23 VAC 10-210-730, bed making and housekeeping services are services sold in connection with the sale of accommodations. The charges are deemed to be a part of the charge for the accommodations and are thus subject to the tax.
The Code of Virginia section, regulation and public document cited are available online at www.tax.virginia.gov in the Laws, Rules and Decisions section of the Department's web site. If you have any questions about this determination, you may contact ***** in the Department's Office of Tax Policy, Appeals and Rulings, at *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/1-5730644466.P