Tax Type
Retail Sales and Use Tax
Description
Hotel sells to its guests admission tickets to local attractions
Topic
Exemptions
Date Issued
09-16-2004
September 16, 2004
Re: § 58.1821 Application: Retail Sales and Use Tax
Dear *****:
This is in reply to your letter in which you seek correction of the sales and use tax assessment issued to ***** (the "Taxpayer"), for the period January 1999 through December 2001. I apologize for the Department's delay in responding to your letter.
FACTS
The Taxpayer is a hotel management company that operates a reservation center and takes reservations from guests for room accommodations at the various hotels it manages. The Taxpayer also sells to its guests admission tickets to local attractions. Guests have the option of purchasing the tickets upon making a room reservation or after arrival at the hotel. If the tickets are purchased at the time of making the reservation, a charge for the tickets is made to the guest's credit card separate from the charge for the room accommodations. If the tickets are purchased after arrival at the hotel, the guest pays an "over the counter" transaction.
As a result of the Department's audit, the auditor assessed the tax on the ticket sales made to guests upon making a room reservation. The tax was assessed on the sales as charges made in connection with accommodations based on Title 23 of the Virginia Administrative Code (VAC) 10-210-730.
The Taxpayer disputes the tax and contends that the ticket sales are exempt admission charges in accordance with Title 23 VAC 10-210-30. To further support its position, the Taxpayer cites Public Documents (P.D.) 85-167 (9/3/85) and 96-295
(10/21/96).
DETERMINATION
Title 23 VAC 10-210-730(C) provides that any additional charges made in connection with the rental of a room or other lodging or accommodations are deemed to be a part of the charge for the room and are subject to the tax. For example, additional charges for movies, local telephone calls and similar services are subject to the tax.
Title 23 VAC 10-210-30 exempts from the tax sales of tickets, fees, charges, or voluntary contributions for admissions to places of amusement, entertainment, exhibition, display, or athletic contests, and charges made for participation in games or amusement activities.
The ruling in P.D. 85-167 addresses a dinner theater's sale of theater tickets that entitled the patron to either dinner or the play admission or both. The dinner theater separated the cost of the dinner from the cost of the play and remitted the tax on the dinner costs only. The auditor assessed the total charge for the dinner and the play. Citing Title 23 VAC 10-210-30, the Tax Commissioner overturned the assessment because the dinner theater clearly and specifically segregated its charges for dinner from its charges for entertainment in regard to collecting and remitting the sales tax.
The determination in P.D. 96-295 addresses a hotel's provision of an array of services, including tickets for admission to athletic contests to hotel guests. The charges for these services were billed to the hotel that paid the vendors and then rebilled the hotel guests for such charges. The Tax Commissioner determined that the services were not part of the accommodations offered to the guests as contemplated in Title 23 VAC 10-210-730. This was true even though the hotel re-billed the charges to its guests as a separate line item on the hotel's invoice given to the guests.
P.D. 96-295 is on point in this instance. Similar to the hotel in that determination, the Taxpayer in this instance does not hold out to its guests that the charges for the accommodations include the charges for admission tickets. The Taxpayer's guests have a choice of whether to purchase the tickets or not. If the guest chooses to purchase the tickets, then a separate charge for the tickets is made from the charge for the hotel accommodations. In addition, I see no evidence that the accommodations and the tickets are packaged together and sold for a lump sum price.
Based on the above, the Taxpayer's sale of admission tickets is exempt in accordance with the regulation in Title 23 VAC 10-210-30. As such, the tax on the ticket sales will be removed from the audit. The Taxpayer will receive a revised audit report and an updated bill that will include tax and interest attributable to uncontested purchases.
The regulations and public documents cited are available on-line in the Tax Policy Library section of the Department of Taxation's web site, located at www.tax.state.va.us. If you have additional questions, please contact ***** in the Office of Policy and Administration, Appeals and Rulings at *****.
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- Sincerely,
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- Kenneth W. Thorson
Tax Commissioner
- Kenneth W. Thorson
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AR/41666J
Rulings of the Tax Commissioner