Tax Type
Retail Sales and Use Tax
Description
Bed and Breakfast Inns; Food purchases and sales
Topic
Taxability of Persons and Transactions
Date Issued
11-30-1987
November 30, 1987
Re: §58.1-1821 Application/ Sales and Use Tax
Dear *****************
This has reference to your letter of June 8, 1987 seeking the correction of an assessment issued in the above referenced case, and my response thereto, dated October 14, 1987. This also has reference to your most recent letter, dated October 22, 1987. Before addressing the concerns raised in your most recent letter, the second paragraph of page two of my October 14 letter needs clarification in relation to the purchase of food by the bed and breakfast inn for consumption by its guests.
While furniture, linens, carpeting, drapes and similar items are taxable at the time of purchase, you may purchase pursuant to resale certificate of exemption, (Form ST-10), copy enclosed, any food purchased for subsequent resale to guests.
In addition, while sympathetic to the concerns raised in your October 22 letter, I continue to see no basis in the sales and use tax law for distinguishing between a small bed and breakfast operation such as yours, and larger bed and breakfast establishments or other hotel and motel establishments which may provide accommodations on a more continuous basis. Further, it is reasonable to assume that even small bed and breakfast establishments compete with large hotel and motel operators for a share of the total transient accommodations market. See also, Virginia Sales and Use Tax Regulation 630-10-48 concerning Hotels, motels, tourist camps, etc., enclosed.
Furthermore, while your business is required to be registered with the department for purposes of collecting and reporting the tax, it may be determined that your business will qualify for quarterly filing. The department will notify you after twelve months from the month of registration should you qualify.
Lastly, the assessment issued in this case did not include any penalties, since it represented the first audit of the taxpayer. However, interest on all assessments is mandatory under Virginia Code §58.1-1812 and accrues at the rate set forth in Virginia Code §58.1-15.
I hope that the foregoing has responded to your concerns, but let me know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner