Tax Type
Retail Sales and Use Tax
Description
Contested audit issues; Hotel items
Topic
Appropriateness of Audit Methodology
Date Issued
12-06-2002
December 6, 2002
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear *****:
This is in reply to your letter in which you seek correction of the department's retail sales and use tax audit assessment issued to ***** (the "Taxpayer") for the period April 1997 through March 2000. I note that the assessment has been paid in full. I apologize for the delay in the department's response.
FACTS
The Taxpayer operates a hotel. The contested issue is the Taxpayer's purchase of ingredients used to bake cookies that are provided free of charge to guests with the rental of a room at the hotel. The Taxpayer contends that the cost is included as a part of the total rental charge for the room, and that the ingredients used to make the cookies may be purchased exempt of the tax for resale. Accordingly, the Taxpayer seeks a refund of the tax and interest previously paid.
Additionally, there are several issues that were not included in the audit for which the Taxpayer maintains that sales or use taxes have been erroneously paid. The Taxpayer is seeking a refund of the taxes associated with these issues.
DETERMINATION
Cookies/Amenities
Public Documents 98-117 (01/10/98) and 98-206 (12/16/98), copies enclosed, provide that purchases of amenities such as coffee, tea, soap, mints, chocolates or other similar items for a guest's use are taxable. There is no basis to revise this long-standing policy. First, regardless that guests may consume these items, there is no separate charge on the guest's bill. Further, the price of the accommodation is not dependent on the guest's decision to use or not use these items. These items are provided as an integral part of the accommodations and are purchased for the Taxpayer's own use or consumption. Therefore, the items at issue may not be purchased exempt for resale. Accordingly, the department's assessment is correct and there is no basis to allow for a refund.
Refund Issues Not Included in Audit
I understand that these transactions were not reviewed by the audit staff during the current audit. Accordingly, the audit staff will contact you as soon as practicable to schedule a review of the additional issues listed in your letter.
If you should have any questions regarding this letter, please contact ***** of the department's Office of Policy and Administration, Appeals and Rulings, at *****@tax.state.va.us or at *****.
-
-
-
-
-
-
-
- Sincerely,
-
-
-
-
-
-
-
-
-
-
-
-
-
- Kenneth W. Thorson
Tax Commissioner
- Kenneth W. Thorson
-
-
-
-
-
-
AR/35850Q
Rulings of the Tax Commissioner