Document Number
09-167
Tax Type
Retail Sales and Use Tax
Description
Some memberships benefits are deem intangible benefits
Topic
Tangible Personal Property
Taxable Transactions
Date Issued
10-23-2009



October 23, 2009



Re: Request for Ruling: Retail Sales and Use Tax

Dear *****:

This is in response to your letter submitted on behalf ***** (the "Taxpayer"), in which you request a ruling on the application of the retail sales and use tax to the sale of memberships that include additional benefits.

FACTS


The Taxpayer sells memberships to retail wholesale establishments. The memberships include additional features and benefits such as:
  • Higher percentages of cash back on purchases paid for with a specific card.
    Healthcare related discounts such as percentages off of select medical services, prescription drugs and health insurance premiums.
    Discounts on financial services (special pricing on automobiles, boats and recreational vehicles).
    Discounts on personal services (check printing, roadside assistance, travel service and service agreements).
Other discounts may be available based on the type of membership purchased. Access to the discounts comes automatically with the membership, regardless of whether the member decides to take advantage of them. The prices of these features are not a part of the sales prices of the membership, but an additional expense to the
member.

RULING


Virginia Code § 58.1-603 imposes a tax "upon every person who engages in the business of selling at retail or distributing tangible personal property in this Commonwealth, or who rents or furnishes any of the things or services taxable under this chapter, or who stores for use or consumption in this Commonwealth any item or article of tangible personal property as defined in this chapter, or who leases or rents such property within this Commonwealth . . . ."

Virginia Code § 58.1-602 defines sale as "any transfer of title or possession, or both, exchange, barter, lease or rental, conditional or otherwise, in any manner or by any means whatsoever, of tangible personal property and any rendition of a taxable service for a consideration ..."

In this instance, the memberships do not entitle the members to receive tangible personal property. Based on the information provided, the additional benefits associated with the purchase of the memberships are deem intangible benefits. Accordingly, the Taxpayer is not required to charge, collect or remit the Virginia retail sales and use tax on the sale of memberships that include additional benefits to its customers.

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 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 Tax Policy, Appeals and Rulings, at *****.
                • Sincerely,

                • Janie E. Bowen
                  Tax Commissioner



AR/1-3326583378.P

Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46