Tax Type
Retail Sales and Use Tax
Description
Hotel that rents blocks of rooms on an ongoing basis to an airline.
Topic
Credits
Exemptions
Date Issued
11-10-2010
November 10, 2010
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****:
This will reply to your letter in which you request a ruling on behalf of ***** (the "Taxpayer") concerning the exemption for hotel rooms occupied for ninety continuous days. I apologize for the delay in the Department's response.
FACTS
The Taxpayer is a hotel that rents blocks of rooms on an ongoing basis to an airline. The airline provides the Taxpayer with a monthly crew accommodation manifest that shows the number of rooms the airline's employees have occupied each day of the month. The number of occupied rooms may vary each day. Using this information, the Taxpayer computes a sales tax credit for the exempt rooms occupied by the airline's employees and credits this amount on the monthly invoice issued to the airline. The credit is given based on the exemption in Va. Code § 58.1-609.5 8.
RULING
Virginia Code § 58.1-609.5 8 provides an exemption from the retail sales and use tax for:
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- The sale or charges for any room or rooms, lodgings, or accommodations furnished to transients for more 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 a consideration.
Title 23 of the Virginia Administrative Code 10-210-730 interprets this statute. Section B of the regulation addresses the ninety day rule for the exemption and states:
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- The tax does not apply, however, to rooms, lodgings or accommodations supplied to a guest for a period of 90 continuous days or more. After a transient has occupied a room or received other accommodations for 90 continuous days or more, the dealer furnishing the room or other accommodations may refund any sales tax actually collected from the person. In filing a subsequent return with the Department of Taxation, the dealer may deduct from gross sales in the place provided the amount of the charges for which the tax was refunded.
The Taxpayer bases its calculation of the sales tax credit for the number of rooms that qualify for the exemption on Public Document ("P.D.") 90-76 (4/20/90). This ruling discusses a hotel that proposed the use of an averaging method to calculate the number of continuously occupied rooms over a ninety day period for purposes of the exemption. The customer in this ruling is an airline and the facts are essentially the same as those in the Taxpayer's case. The ruling states "the only true figure that represents rooms occupied for ninety continuous days, would be the least number of rooms occupied on a given day during a continuous ninety day period." The ruling then grants permission for the hotel to calculate sales tax refunds for exempt rooms on the first clay of each month based on the least number of rooms occupied during the previous ninety day period. In essence, this method creates a cutoff point on the first day of each month for counting the number of days that the hotel's rooms are occupied.
Based on an analysis of the methodology described in P.D. 90-76 and used by the Taxpayer, I do not agree that ninety day periods can be set starting with the first day of each month for purposes of administering this exemption. The statute is clear that a room must be occupied for more than ninety continuous days to qualify for the exemption. The statute does not state that a specific method should be used to count consecutive days and it does not limit the ninety continuous day requirement in any way.
In Shelor Motor Co. v. Miller, 261 Va. 473, 479, 544 S.E.2d 345, 348 (2001), the Court stated, "it is well settled that when the language of a statute is plain and unambiguous, we are bound by the plain meaning of that language." Based on the plain language of the exemption statute, each day begins a new period for purposes of counting ninety continuous days. The Taxpayer does not dispute the number of rooms the airline claims to have rented during the period at issue. Thus, the airline in this case is due a sales tax credit or refund on the rental of five additional hotel rooms from February 13 through March 2.
I trust the foregoing responds to your inquiry. This ruling 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. To the extent that P.D. 90-76 can be read to require a cutoff point on the first day of each month for computing the number of days that a hotel's rooms are occupied, this ruling supersedes P.D. 90-76.
The Code of Virginia section, regulation and public document 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 concerning this ruling, please contact ***** in the Department's Office of Tax Policy, Appeals and Rulings, at *****.
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- Sincerely,
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- Craig M. Burns
Tax Commissioner
- Craig M. Burns
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AR/1-3816121554.S
Rulings of the Tax Commissioner