August 20, 2018
Re: Request for Ruling: Retail Sales and Use Tax
This will reply to your letter in which you request a ruling on behalf of ***** (the “Taxpayer”) concerning the retail sales and use tax exemption for hotel rooms occupied for 90 continuous days or more. I apologize for the delay in responding to your request.
The Taxpayer requests a ruling regarding an airline’s claim that it is tax exempt on hotel rooms that were occupied for 90 continuous days. The airline asserts that it rented a number of rooms for longer than 90 consecutive days. According to the Taxpayer, the airline’s employees check out every day and no one room is occupied for 90 continuous days. The Taxpayer states that the airline does occupy rooms daily, but they are different rooms with different employees.
Virginia Code § 58.1-609.5 8 provides an exemption from the retail sales and use tax for:
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. Subsection B of the regulation addresses the 90-day rule for the exemption and states:
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.
Public Document (P.D.) 10-251 (11/10/10) addresses the proper calculation of the number of room rentals that qualify for the exemption in Virginia Code § 58.1-609.5 8. Each day is the start of a new 90-day period for purposes of calculating the least number of rooms rented during the period. P.D. 14-9 (1/27/14) addresses the Department’s policy with respect to block rentals of hotel rooms on a continuous basis to businesses such as airlines. When a block of rooms is rented under rental contracts, the exemption applies to the least number of rooms rented on a given day during a continuous 90-day period.
The tax should not be imposed on the airline if rooms within the block rentals are occupied for 90 or more continuous days by employees of the airline. For example, if an airline rents a block of 300 rooms for a 90-day period and only occupies 1 out of 300 rooms on a given day during the 90 days, then only 1 room would be exempt from the tax. If during a 90-day period, no rooms are occupied by the business on a given day, then no rooms would qualify for the tax exemption during that period. The determinative factor is the amount of rooms that are occupied by the business on any given day during a 90-day period, not whether the same room is occupied by the same employee.
The Taxpayer states that the airline occupies rooms daily, but they are different rooms with different employees and that no one room is occupied for 90 continuous days. This is not the proper calculation for whether or not a room is tax exempt. During the 90-day period, the least number of rooms occupied on any given day serves as the basis for the amount of rooms that are tax exempt. As mentioned above, each day is the start of a new 90-day period for purposes of calculating the least number of rooms rented during the period. Thus, the airline in this case is due a sales tax credit or refund if it occupied a number of rooms during any given 90-day period. With regard to the local tax issue, please contact the specific locality for more information.
I hope the above information 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 section, regulation and public documents cited are available online at www.tax.virginia.gov in the Laws, Rules & Decisions section of the Department's website. If you have any questions about this ruling, please contact ***** in the Department’s Office of Tax Policy, Appeals and Rulings Division, at *****.
Craig M. Burns