Tax Type
Retail Sales and Use Tax
Description
Transient hotel accommodations; Setup charges
Topic
Taxability of Persons and Transactions
Date Issued
03-18-1988
March 18, 1988
Re: Request for Ruling/Sales and Use Tax
Dear****************
This will reply to your letter dated October 10, 1987 in which you request a ruling on the applicability of the sales and use tax to the setup fees charged by hotels for the labor associated with preparing meeting space for sessions within the hotel.
FACTS
*************(taxpayer) is involved in a session to be held at a hotel. The hotel is providing the meeting room for this session at no charge to taxpayer, provided more than 33 room nights of revenue will be generated by the session. There will, however, be a $25.00 + tax per day per room setup fee for the meeting room. If the session provides less than 33 room nights of revenue, taxpayer may be charged a rental fee (up to $225.00 + tax) plus the $25.00 + tax per day per room setup fee for the meeting room.
Taxpayer requests a ruling on the taxability of the setup fee charged by the hotel.
RULING
The term "retail sale" as defined in §58.1-602(14) of the Code of Virginia includes "the sale or charges for any room or rooms, lodging, or accommodations furnished to transients for less than ninety continuous days by any hotel, motel, ... or any other place in which rooms, lodging, space, or accommodations are regularly furnished for a consideration." It has been the policy of the department that it is a typical "accommodation" in hotels throughout Virginia to provide conference facilities of varying types. When a charge is made for use of such accommodations in a hotel, it is taxable.
Virginia Regulation 630-10-48(C) further provides that "[a]ny additional charges made in connection with the rental of a room or other lodging or accommodations are deemed to be a part of the charge for the room and are subject to the tax." While room setup charges are not taxable in and of themselves, charges in connection with the rental of accommodations are taxable under VR 630-10-48(C). Thus, setup charges billed in connection with the rental of rooms or a conference room are taxable.
While sales to institutions of learning owned and operated by the Commonwealth of Virginia have the same status as other sales to the state for its use and consumption, Virginia Regulation 630-10-45 specifically states that an exemption is not allowed for meals and lodging whether purchases are pursuant to required official purchase orders or not. The governmental exemption is therefore not applicable to the furnishing of transient lodging and meal functions to the Commonwealth. (see also 1969-1970 Va. Op. Att'y Gen. 291).
Therefore, based on the foregoing, charges imposed by the hotel on the space for the meeting room are subject to the sales and use tax.
If you have any further questions regarding this matter, please do not hesitate to contact me.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner