Tax Type
Retail Sales and Use Tax
Description
Reservation System utilized by hotels.
Topic
Taxability of Persons and Transactions
Date Issued
01-25-1982
January 25, 1982
Re: Request for Ruling/Sales and Use Tax
Dear *************
This will reply to your letter of November 17, 1980 requesting a ruling on the applicability of the Virginia sales and use tax to charges for the ********* Reservation System utilized by your hotels.
FACTS
*****a wholly owned subsidiary of **** leases a *** reservation terminal to each franchise ***. This terminal is used for transmitting and receiving reservation information at franchises nationwide. All requests made through the terminal are routed through subsidiary' s central computer located in ***********.
Each franchise pays a one-time installation charge for the terminal plus a monthly fee for use of the terminal and the conjunctory services. This fee is based upon the number of guest rooms located in the inn.
DETERMINATION
Based upon the facts which you presented, we have determined that the total charge made for the **** Reservation Service represents the charge for a service. As a result this transaction is exempt from the sales tax under the provisions of Virginia Code §58-141.6(a). However, it should be noted that ***** Corporation is liable for payment of the use tax on all terminals and other tangible personal property used in Virginia in providing the service to the franchise
This ruling will be effective February 1, 1982. On and after this date, no tax will apply to charges made by **** this for the**** Reservation System. However, any terminals and other tangible personal property installed in Virginia by on or after this date will be subject to this use tax.
If you have any additional questions relative to this matter, please feel free to contact us.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner