Tax Type
Retail Sales and Use Tax
Description
Transient Accommodations; Bed and Breakfast Operation
Topic
Taxability of Persons and Transactions
Date Issued
09-19-1991
September 19, 1991
Re: §58.1-1821 Application: Retail Sales & Use Tax
Dear********************
This will reply to your letter of July 13, 1991 in which you contest a recent sales and use tax assessment for the***************(the "Taxpayer").
FACTS
The Taxpayer, the operator of a bed and breakfast, was audited for the period June 1985 through May 1991 and found to have failed to collect sales tax on its room rentals. The Taxpayer contends that when he opened his business in 1982 he was classified by the local commissioner of revenue as a "personal service" business and informed that such businesses are not required to collect sales tax. The Taxpayer maintains that he was not informed until early in 1991 that he should be collecting and remitting the retail sales tax to the department.
For the above reasons the Taxpayer contests the recent assessment.
DETERMINATION
Va. Code §58.1-603 requires the imposition of the sales tax on "the gross proceeds derived from the sale or charges for rooms, lodgings or accommodations furnished to transients as set out in the definition of "retail sale" in §58.1-602." "Retail sale" is defined in Va. Code §58.1-602 as including:
-
- the sale or charges for any room or rooms, lodgings, or accommodations furnished to transients for less than ninety 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.
The application of the tax to lodgings is also clearly set forth in Virginia Regulation (VR) 630-10-48.
Charges for accommodations in a bed and breakfast, regardless of the number of rooms it has, are subject to the tax in the same manner as charges for hotel or motel accommodations, since they both represent charges for lodging, space or accommodations regularly furnished to transients for a consideration. Thus, since the department's regulations with respect to this issue are clear, and in spite of incorrect information supplied by the Commissioner of Revenue, the Taxpayer should have been collecting and remitting the tax. Accordingly, the assessment was correct and is due and payable.
However, based on the circumstances outlined in your letter, I may be willing to consider an offer in compromise as allowed in Va. Code §58.1-105. Please note that no compromise will be allowed from January 1991 forward since the Taxpayer was notified in January of its sales tax collection responsibilities. Should you wish to propose an offer in compromise, please contact the department's Tax Policy Division, P. O. Box 6-L, Richmond, Virginia 23282 within thirty days of the date of this letter.
In addition, if you have not registered for or begun collecting the sales tax, you should do so immediately.
If you have any questions regarding this matter, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner