Document Number
92-120
Tax Type
Retail Sales and Use Tax
Description
Hotel; Application of sales tax to various transactions
Topic
Property Subject to Tax
Taxability of Persons and Transactions
Date Issued
06-29-1992

June 29, 1992



Re: Request for Ruling: Retail Sales and Use Tax

Dear *****:

This will reply to your letter of August 6, 1991 in which you request a ruling on the applicability of the retail sales and use tax on various transactions on behalf of ***** (the Taxpayer.)

FACTS


The Taxpayer operates a number of hotels in Virginia and seeks a ruling on the applicability of the retail sales and use tax on various transactions in connection with the operation of the hotels. The Taxpayer provides a list and requests a ruling on each of the transactions.

RULING


Va. Code §58.1-603 imposes the sales tax upon "each item or article of tangible personal property...sold at retail...in this state." The term "sale" is defined in Va. Code §58.1-602 as "any transfer of title or possession...of tangible personal property." Additionally, the same code section defines "retail sale" to specifically include the "...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...

Va. Code §58.1-604 imposes the use tax on "each item or article of tangible personal property used or consumed in this state." The term "use" is defined in Va. Code §58.1-602(20) as the "exercise of any right or power over tangible personal property incident to the ownership thereof."

Va. Code §58.1-602 defines "sales price" to mean the total amount for which tangible personal property or services are sold, including any services that are a part of the sale, valued in money, whether paid in money or otherwise, and includes any amount for which credit is given to the purchaser. It will not include any cash discount allowed and taken. (See enclosed copy)

Because of the number of the transactions, I will mark the appropriate box for each transaction on your form and will list any applicable exemption granted by the Virginia Code (V.C.), Virginia Regulation (VR) or Ruling letter or Determination (P.D.) issued by the department on the transaction (copies included), along with any further comments within this ruling letter.

The Taxpayer should carefully review the enclosed statutes, regulations, and public documents for each individual transaction. The tax treatment of a transaction will vary dependent upon the way the transaction is structured, for example, parking is generally an exempt service, however, if the parking is included as an item in the charge for the room, the charge will be taxable as part of the total charge.

* Transient Room Sales VR 630-10-48
* Non Transient Room Sales VR 630-10-48
* Meal (Food & Beverage) Sales VR 630-10-64
* Rooms and Meals to Federal VR 630-10-45
Government P.D. 89-321 (11/20/89)
* Rooms and Meals to State VR 630-10-45
Or Local Government P.D. 88-321 (5/27/88)
* Rooms and Meals To * unless specifically
    • Charitable Institutions exempt.
* Rooms and Meals to Educational V.C. §58.1-608(A) (4) (d)
Institutions P.D. 1/12/82
* Rooms and Meals Given in Barter Tax applicable to total
                            • Of value of the room or
                              Meals (includes any cash
payment plus the value of
any non-cash exchange).
* Bad Debts VR 630-1-11
Rooms Provided to Employee at Exempt if no rental is
No Cost involved and provided to
                            • mandatory presence
                              employee. Tax applies
                              if fringe benefit to
employee.
* Meals Provided To Employee At V.C. §58.1-608(A) (3) (g);
No Cost VR 630-10-64(c)
* Complimentary Meals/Guest P.D. 87-269 (11/24/87)
* Complimentary Food Amenities/Guest P.D. 87-269 (11/24/87)
* Complimentary Beverage Amenities/ P.D. 87-269 (11/24/87)
Guest
* Rooms at Reduced Rate/Tax on Full VR 630-10-24(D) Amount of
                            • tax overcollected must be
                              remitted to state on
                              timely basis.
* Rooms Provided At Reduced Rate Taxed at rate charged.
* Function Room Rentals P.D. 88-41 (3/18/88)
* Movie Rentals P.D. 86-117 (7/2/86). May
                            • be taxed depending on
                              structure of transaction.
* Parking/Garage Fees Taxable if included in
                            • total room charge.
                              Exempt if for parking
                              only.
* Telephone Charges/Separately VR 630-10-48;
Stated On Invoice P.D. 12/28/84
* Night Club Admission/Cover Charge VR 630-10-2.1;
                            • VR 630-10-64
* Night Club Admission/Cover Charge VR 630-10-2.1
Free Drink Provided
* Vending Machine Sales/Owned VR 630-10-110
* Machines
Racquetball, etc., (participatory VR 630-10-65.1;
activity) VR 630-10-23
* Equipment Rental Revenue (Golf VR 630-10-23
carts, racquets)
* Mandatory Gratuities (portion VR 630-10-64;
Retained By Hotel or Portion P.D. 12/27/90
Retained Fully By Employee)
* Trade-in Credit Taken On Invoice VR 630-10-104
For Taxable Good
* Finance/Interest Charges Separately Rental plus interest
State on Taxable Good Invoice total subject to tax.
* Installation/Service Charges V. C. § 58.1-608 (A) (5) (b)
Separately State on Taxable Good
Invoice
* Freight/Delivery Charges Separately V. C. § 58.1-608 (A) (5) (c)
Stated on Taxable Good Invoice
* Leased Goods And Equipment V. C. § 58.1-602
* Linen Supply And Cleaning Service V. C. § 58.1-608 (A) (5) (a);
Exempt if linen owned by
hotel and laundered by
cleaning service; taxable
if linen owned by linen
supply company and
furnished to hotel.
* Tablecloths, Tableware, etc., VR 630-10-64
Purchased for Meal Presentation
* Furniture Purchased for Dining VR 630-10-64
Room; Kitchen Equipment Used For
    • Food Storage Or Preparation
* Disposable Packaging And Paper VR 630-10-64;
Products Consumed With Meal On P.D. 86-82 (4/29/86)
Or Off Premises
* Furniture, Fixtures, Equipment, VR 630-10-48(D)
* Linens, Towels And Amenities For
Use In Guest Room
* Fuel, Gas, Electricity Purchased VR 630-10-43
For Use in Guest Room Or Restaurant
* Maintenance Services Purchased By V.C. § 58.1-608 (A) (5) (a)
Hotel

This list is reflective of the applicable Virginia state sales and use taxes. There may be additional local food and beverage tax or accommodations tax applicable to these transactions. Each hotel will have to contact the local Commissioner of Revenue to ascertain those taxes.

If you have any further questions, please contact the department.
                • Sincerely,

                • W. H. Forst
                  Tax Commissioner




TPD / 5480.i

Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46