Tax Type
Retail Sales and Use Tax
Description
Television programming by satellite to hotels
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
07-02-1986
July 2, 1986
Re: Request for Ruling/Sales and Use Tax
Dear ********************
This will reply to your letter of February 28, 1986, in which you submit a request for a ruling on the application of the sales and use tax to the operations of *****************.
FACTS
*************** (Taxpayer) proposes to engage in the transmission of television programming by satellite to hotels located in Virginia. Subscriber hotels receive the taxpayer's programming through a special satellite antenna dish. The taxpayer's programming comes in two forms, a basic service provided by hotels at no additional charge to their customers and an optional service for the viewing of movies or other special programming provided to customers for a fee. The fees for the optional service are collected from customers by each subscriber hotel on behalf of the taxpayer.
RULING
The taxpayer's provision of television programming by satellite to hotels represents the provision of a nontaxable service. Therefore, charges to hotels for basic service are not subject to the sales tax. However, any property used in Virginia by the taxpayer in providing its service, such as satellite dishes and any other transmitting or receiving equipment, will be subject to the sales and use tax
Nor are the optional programming charges made to hotel customers subject to the sales tax in this case, provided that the charges are separately stated and title to the receipts vests with the taxpayer (and not the hotel) at all times. In such an event, the receipts are not a part of the overall compensation the hotel receives from the rental of rooms; rather, the hotel is merely the collection agent of the taxpayer.
I hope that this will answer your questions on the application of the sales and use tax to your business. If you have any further questions, please feel free to contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner