Tax Type
Retail Sales and Use Tax
Description
Meeting and sleeping room costs for government employees; Hotel
Topic
Taxability of Persons and Transactions
Date Issued
12-28-1984
December 28, 1984
Re: Ruling Request: Sales and Use Tax
Dear ****************
This will reply to your letter of September 7, 1984 concerning applicability of sales and use tax to certain situations where a government is ultimately liable for meeting room and sleeping room costs.
FACTS
You have asked about the applicability of sales and use tax to the following three contract situations: a purchase order obligating a federal, state or local government to pay meeting room costs and, if a conference attendee has defaulted on his obligation to pay, sleeping room costs; a letter agreement confirming government liability for meeting room costs and, again, if an attendee has defaulted on payment, sleeping room rentals (but no statement to this effect in the purchase order); and a verbal agreement to pay as above, but without a letter agreement or purchase order.
DETERMINATION
Virginia Retail Sales and Use Tax Regs. § 1-45 provides that the tax does not apply to sales to the United States, the Commonwealth of Virginia-or to Virginia political subdivisions if the purchases are pursuant to required official purchase orders to be paid for out of public funds. Sales to governmental employees for their own consumption or use are taxable. This result is mandated by § 58-441.6(p) of the Code of Virginia, which provides an exemption for tangible personal property for use or consumption by the United States, Virginia or a Virginia political subdivision. For example, if a federal employee who is. traveling pursuant to official government orders pays for meals or lodging by a travel advance or by personal funds which will be reimbursed by the federal government, the meals and lodging are subject to the tax. The tax will not apply if the federal government pays directly for the meals or lodging pursuant to a purchase order (that is, by direct billing to the federal government or by use of a federal government credit card).
However, in the case of Virginia state or local government employee purchases of meals or lodging, the tax applies whether purchases are pursuant to required official purchase orders or not. (Va. Regs. § 1-45(D). This rule is established policy because meals and lodging are used or consumed, not by the Virginia state or local government, but by the employee.
In sum, meals and lodging for Virginia state or local government employees will always be subject to the tax. In the case of federal government employees, the tax will apply unless the employee pays by government credit card or unless the employee defaults and the government pays directly pursuant to a purchase order.
Sincerely
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner