Tax Type
Retail Sales and Use Tax
Description
User fees for historic site that includes food and beverages
Topic
Taxability of Persons and Transactions
Date Issued
09-25-1989
September 25, 1989
Re: §58.1-1821 Application: Sales and Use Tax
Dear*********
This will reply to your letter of November 10, 1988, in which you submitted an application for correction of an assessment in the above issued referenced case for the period March 1985, through February 1988.
FACTS
************ ("The Taxpayer") is a nonprofit corporation chartered by Congress to encourage participation in the preservation of historic buildings. The Taxpayer owns four historic properties in the Commonwealth, two of which have recently been audited by the department, ********* ("Site A") and ********** ("Site B").
In order to maintain these historic properties, the Taxpayer is involved in numerous income producing projects such as gift shops, craft shows, entrance fees to the properties, etc. The Taxpayer allows members and the general public to use its facilities for social or other events. The charge for the use of the facilities [Special Property Use fee ("SPU fee")], generally includes food and beverages.
The Taxpayer protests the assessment for uncollected sales tax on the SPU fee at Site A contending that the SPU fee is not subject to the tax since it is a service. The Taxpayer also protests the assessment imposed at Site B contending that the sample techniques used by the department's auditors in calculating nontaxed capital purchases were not representative of the Taxpayer's business at this historic site.
DETERMINATION
Virginia Regulation 630-10-64(A), states that "[r]etail sales of meals by...clubs...and others are taxable. Cover, minimum and room service charges in connection with the provision of meals are part of the sales price and are taxable." (Emphasis added). "Sales price" as defined by Virginia Regulation 630-10-95(A)(1), is "the total amount for which services are sold and includes any services in connection with such sale."
The auditor generally assessed the tax only in those instances where either alcohol or food was sold by the Taxpayer in connection with the rental of the facilities at Site A based on the above cited regulation sections. Also, the department's treatment of the Taxpayer in this regard is identical to that of country clubs and other similar organizations which furnish facilities for social and other events which is in accord with Virginia Regulation 630-10-63, copy enclosed.
The Taxpayer's main contention is that the SPU fee is a fee for a service and that sales of services are "only taxed if they are specifically made taxable." However, Virginia Regulation 630-10-97.1, states that "[t]he tax does apply to charges for...any services included in or in connection with the sales of tangible personal property...." (Emphasis added).
Based on the foregoing, I find no basis for correction of the assessment, with the exception of audit entries where sales of tangible personal property were not included in the SPU fee. In the future, only in those instances where the no tangible personal property is provided by the Taxpayer in connection with the SPU fee will the charge be exempt from the tax.
The Taxpayer also contests the particular audit sample used at Site B contending that it is not representative of their business operation for that period. Since the audit, the Taxpayer has submitted complete and accurate records representative of the operation at Site B for the audit period. I have asked the department's audit staff to review this information and make any revisions that it deems appropriate in light of the information.
If you have any questions, please contact us.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner