Document Number
06-145
Tax Type
Retail Sales and Use Tax
Description
Taxpayer's sale of unused time-share weeks to the general public not taxed
Topic
Property Subject to Tax
Taxable Transactions
Date Issued
12-08-2006


December 8, 2006



Re: Request for Ruling: Retail Sales and Use Tax

Dear *****:

This is in response to your letter submitted on behalf of your client (the "Taxpayer"), in which you request a ruling on the application of the retail sales and use tax to the sale of unused time-share weeks to the general public.

FACTS


The Taxpayer, a nonresident corporation that provides travel related services, enters into agreements with the owners of time-share resorts that allow the Taxpayer to sell unused time-share accommodations (known as time-share weeks) to the general public. Generally time-share unit purchasers become members of the Taxpayer's exchange company, and receive points that can be used to stay in their assigned unit or in a unit at a different resort. As part of this exchange program, some time-share weeks may be left unused. The Taxpayer allows the general public to purchase the unused time-share weeks shortly before the time would expire.

You represent that the Taxpayer is unrelated to the owners of the time-share resorts and the purchasers of the units, that it does not own any resorts, that it is not an agent of the resorts that participate in its exchange program, and that the resorts do not receive any compensation from these sales. The Taxpayer requests a ruling regarding the application of the retail sales and use tax to the sale of the unused weeks to the general public.

RULING


Virginia Code § 58.1-603 4 imposes the retail 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. Virginia Code § 58.1-602 defines "retail sale" and "sale at retail" as "a sale to any person for any purpose other than for resale in the form of tangible personal property or services taxable under this chapter, and shall include any such transaction as the Tax Commissioner upon investigation finds to be in lieu of a sale." The definition further provides that these terms:
    • shall specifically include . . . the sale or charges for any room or rooms, lodgings, or accommodations furnished to transients for less than 90 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 consideration . . . . [Emphasis added.]

Virginia Code § 58.1-602 provides, in pertinent part, that the term "transient" shall not include "a purchaser of camping memberships, time-shares, condominiums, or other similar contracts or interests that permit the use of, or constitute an interest in, real estate, however created or sold and whether registered with this Commonwealth or not."

Based on the statutory provisions cited, the sale or charges for rooms or accommodations furnished to transients by a hotel, motel or inn represent a retail sale that is subject to the Virginia retail sales and use tax. In this instance, the facts presented indicate that Taxpayer does not own or operate any resorts and does not provide lodging services. The Taxpayer is not a hotel, motel, or inn that is in the business of providing rooms, lodging or accommodations to transients. Additionally, the Taxpayer's customers are not "transients" as defined in Va. Code § 58.1-602 because they purchase from the Taxpayer interests that permit the use of real estate (i.e., a time-share). Based on these facts, the transactions at issue are not retail sales. Accordingly, the tax does not apply to the Taxpayer's sale of unused time-share weeks to the general public.

This response is based on the facts provided as summarized above. Any change in facts or the introduction of new facts may lead to a different result.

The Code of Virginia sections cited, along with other reference documents, are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. If you have any questions about this response, you may contact ***** in the Department's Office of Policy and Administration, Appeals and Rulings, at *****.
                • Sincerely,

                • Janie E. Bowen
                    • Tax Commissioner



AR/1-702334201P

Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46