January 10, 2025
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****:
This will respond to the letter submitted on behalf of ***** (the “Taxpayer”) in which it seeks a ruling on the application of the Virginia retail sales and use tax on its equestrian and stabling services.
FACTS
The Taxpayer, a non-profit organization that provides educational programs and camping for youth and offers horse stabling facilities and conference space for retreats and other events to support its mission. The Taxpayer requests a ruling to determine if the rental of their equestrian facilities is exempt from sales and use tax when rented to horsemen and for horse-related activities.
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.
RULING
Virginia Code § 58.1-602 defines accommodations as:
[A] ny room or rooms, lodgings, or accommodations in any hotel, motel, inn, tourist camp, tourist cabin, camping grounds, club, short-term rental, or any other place in which rooms, lodging, space, or accommodations are regularly furnished to transients for a consideration. “Accommodations” does not include rooms or space offered by a person in the business of providing conference rooms, meeting space, or event space if the person does not also offer rooms available for overnight sleeping.
Virginia Code § 58.1-603 4 imposes sales tax on the “gross proceeds derived from the sale or charges for rooms, lodgings or accommodations furnished to transients set out in the definition of “retail sale” in Virginia Code § 58.1-602.” The term “transient” does not include a purchaser of camping memberships, time-shares, condominiums, or other similar contracts or interests that permit the use of, or constitute an interest in, real estate however created or sold and whether registered with the Commonwealth or not. Further, a purchaser of a right or license which entitles the purchaser to use the amenities and facilities of a specific real estate project on an ongoing basis throughout its term shall not be deemed a transient, provided that the term or time period involved is for seven years or more.
In addition, Virginia Code § 58.1-603 imposes the retail sales tax on the sale or rental of tangible personal property in Virginia. The tax is imposed on the gross proceeds derived from a lease or rental of tangible personal property. “Gross proceeds” includes the total amount charged for tangible personal property. See Virginia Code § 58.1-602. The Department’s policy has been that, when a dealer charges one lump sum amount for both taxable and nontaxable items in a transaction, the tax is applied to the entire transaction. See P.D. 94-142 (4/29/1994), P.D. 95-223 (8/29/1995), P.D. 09-2 (2/4/2009), and P.D. 20-177 (10/6/2020). Conversely, the Department has ruled that fees charged for the use of real property, for which an overnight stay was not provided, were not taxable provided that no tangible personal property was included in the total amount charged. See P.D. 87-69 (2/27/1987), P.D. 98-85, P.D. 02-38 (4/1/2002), and P.D. 12-82 (5/11/2012).
Title 23 of the Virginia Administrative Code (VAC) 10-210-4040 A provides that charges for services generally are exempt from the retail sales and use tax. However, services provided in connection with sales of tangible personal property are taxable.
In this instance, the Taxpayer's charges to its customers for the stabling of horses is not subject to the sales and use tax. With regard to the provision of such services, Title 23 VAC 10-210-4040 E provides that “a service provider is the taxable user and consumer of all tangible personal property purchased for use in providing exempt services.” As a service provider, the Taxpayer is required to pay the sales tax to its suppliers of tangible personal property, e.g., nonprescription drugs, feed, and other supplies used in providing its equestrian stabling services, whether separately stated or not. See also P.D. 17-43 (4/3/2017).
The Code of Virginia sections and regulations cited are available online at law.lis.virginia.gov. The public documents cited are available at tax.virginia.gov in the Laws, Rules, & Decisions section of the Department’s website. If there are any questions regarding this determination, please contact ***** in the Department’s Office of Tax Policy and Legislative Affairs, Tax Adjudication and Resolution Division, at *****, or via email at *****.
Sincerely,
James J. Alex
Tax Commissioner
Commonwealth of Virginia
AR\4705.F