Tax Type
Retail Sales and Use Tax
Description
Tax treatment of the seasonal leases; Privately-owned campground
Topic
Exemptions
Taxable Transactions
Date Issued
12-13-2012
December 13, 2012
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****:
This is in response to your letter submitted on behalf of ***** (the "Taxpayer") requesting a ruling on the application of the retail sales and use tax to sales of accommodations. I apologize for the delay in responding to your correspondence.
FACTS
The Taxpayer is a privately-owned campground, which operates as a seasonal campground, open from April 1 through October 31 every calendar year. The Taxpayer's seasonal campers lease campsites from the Taxpayer during the entire seven-month operating period. The lease also entitles the customers to onsite winter storage for the five-month winter off season. The Taxpayer states that a lease agreement is never signed for less than 90 days. The Taxpayer further states that if a customer's lease is cancelled prior to the end of the seven-month period, the money is prorated and refunded to the customer.
The Taxpayer maintains that over the 35 years that it has been in business, it has never charged tax on its seasonal leases. The Taxpayer states while being audited by the Department, an issue arose regarding the tax treatment of the seasonal leases. The Taxpayer requests that the Tax Commissioner issue a ruling authorizing an exemption for the Taxpayer in instances where it sells accommodations to its seasonal campers pursuant to its seven-month leases.
RULING
Virginia Code § 58.1-602 provides, in pertinent part:
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- The terms "retail sale" and a "sale at retail" shall specifically include the following: (i) 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 a consideration.
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- Virginia Code § 58.1-602 provides, in pertinent part:
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- 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 the Commonwealth or not.
In this instance, the Taxpayer enters into a lease with its customers for a seven-month period. Pursuant to the lease, it is clear the furnishing of accommodations will begin and end on a specific date, and the accommodations will be furnished for a period of 90 continuous days or more. Accordingly, pursuant to the Va. Code § 58.1-602 definition of retail sale, the charges for accommodations made pursuant to the seven month leases are exempt of the Virginia retail sales and use tax.
Additionally, pursuant to Va. Code § 58.1-602, the Taxpayer's customers would not be considered transients because the leases permit the use of the real estate by the Taxpayer's customers. See, P.D. 89-245 (9/19/89). Accordingly, the retail sales and use tax would not apply to the charges for accommodations made pursuant to the seven-month leases.
I trust this responds to your inquiry. 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 and public documents cited are available on-line at www.tax.virginia.gov in the Laws, Rules and Decisions 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 *****.
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- Sincerely,
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Craig M. Burns
Tax Commissioner
AR/1-4862343842.P
Rulings of the Tax Commissioner