Tax Type
Retail Sales and Use Tax
Description
Facilities leased by hotel
Topic
Taxability of Persons and Transactions
Date Issued
02-27-1987
February 27, 1987
Re: Ruling Request/ Sales and Use Tax
Dear****************
This will reply to your letter of August 27, 1986 seeking information on the correct application of the sales and use tax to various business operations of a subsidiary of **************** (Taxpayer).
FACTS
In connection with its hotel and restaurant business, the taxpayer operates a private club, a humanities center and a summer camp at various locations within Virginia. Members of the taxpayer's club are able to reserve certain facilities, such as the "President's Home", for a fee, for the purpose of entertaining guests, for dinner parties, or for overnight lodging. The taxpayer also allows its humanities center to be used by various public and private organizations, for a fee, to conduct large meetings and seminars, or for company or civic presentations. on occasion the taxpayer also allows its humanities center to be used by a local theatre company, for a fee, for rehearsals and live theatre performances.
Lastly, the taxpayer operates a summer camp for girls, with complete living facilities including swimming pool, tennis courts, boats, etc. During the non-summer months when its camp is not in session, the taxpayer periodically leases its camping facilities on a short term basis to a variety of local school groups and public and private organizations for group outings, band camps, company picnics and similar activities.
The taxpayer requests a ruling whether any or all of the above referenced operations are subject to Virginia's retail sales and use tax.
RULING
Section 58.1-603 of the Virginia Code imposes a sales tax on "the gross proceeds derived from the lease of rental of tangible personal property, where the lease or rental of such property is...part of an established business." In addition, the tax applies to, "the gross proceeds derived from the [transient lease of rental] of rooms, lodgings or other accommodations."
Section 630-10-23 of the Virginia Retail Sales and Use Tax Regulations provides that all "[g]olf, country and other clubs are required to register as dealers and collect and pay the tax on all sales and rentals of tangible personal property." Based on the foregoing, the taxpayer's sales of food and lodging in connection with the operation of its private club are subject to the tax, and the taxpayer must collect and report the tax in making any such sales to its club members and guests. However. the taxpayer may purchase exempt of the tax any items- which it knows at the time of purchase will be resold subject to the tax or used exclusively for taxable rental purposes, pursuant to a resale certificate of exemption. (See, Form ST-10 enclosed)
In addition, fees charged by the taxpayer for the use of its humanities center will not be subject to the tax unless such fees also entitle the users of such facilities to items of tangible personal property such as food and drink.
Furthermore, the taxpayer's charges for the lease or rental of its camping facilities, apart from its operation of its girl's summer camp, are subject to the tax in accordance with §630-10-48 of the regulations which provides that "[t]he tax applies to the sale or charge for any room or rooms, lodgings or accommodations furnished to transients by any hotel, motel, inn, tourist camp, tourist cabin, camping grounds, club, or other similar place." However, this section provides further that the tax does not apply to charges for such accommodations provided to a particular guest "for a period of 90 continuous days or more." In addition, charges for the use of taxpayer's camping facilities on a daily basis which do not also involve the provision of overnight accommodations, and which do not entitle the guest to any item or items of tangible personal property will not be subject to the tax.
It should be noted further that the taxpayer's purchases of any other items of tangible personal property for its own use or consumption in operating any of its facilities are taxable at the time of purchase. For example, the taxpayer's purchases of furniture, silverware, linens, carpeting, lamps, drapes, office equipment and supplies, and building and grounds maintenance equipment and supplies and any other items of tangible personal property, for use in operating any of its facilities are subject to the tax at the time of purchase. (See, §§630-10-48(D) and 630-10-102 of the Regulations)
For the taxpayer's future reference I have enclosed copies of all the regulation sections cited above. I hope that this and the enclosed materials have answered your questions, but please let me know if You have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner