Tax Type
Retail Sales and Use Tax
Description
Hotel; 90 continuous day exemption
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
04-20-1990
April 20, 1990
Re: Request for Ruling/Sales and Use Tax
Dear**********************
This will reply to your letter of March 28, 1990 in which you request a ruling as to the proper application of the sales and use tax for rooms occupied for ninety consecutive days or more.
FACTS
**************(the Taxpayer) has entered into an agreement with an airline to provide hotel rooms for all crew members for the period of October 1, 1989 through September 30, 1991. The number of rooms occupied by the airline varies from night to night depending on the number of personnel laying over. Typically the airline occupies an average of fourteen (14) rooms per night each month. The Taxpayer is requesting authorization to use an averaging method, to be computed on the first day of each month, in order to determine the number of rooms qualifying for the 90 consecutive day occupancy exemption.
RULING
Virginia Regulation §630-10-48(B) deals with hotel and motel accommodations furnished for 90 continuous days or more and state the following:
-
- The tax does not apply ... 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 accommodation 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.
As can be seen from the above, accommodations must be occupied for ninety continuous days or more before the dealer furnishing the room may refund the tax. In the Taxpayers' case, the average number of rooms occupied over a ninety day period does not represent the number of rooms occupied for ninety continuous days. This is true whether the averages are computed on a daily or monthly basis. Therefore, the only true figure that represents rooms occupied for ninety continuous days, would be the least number of rooms occupied on a given day during a continuous ninety day period. According to the daily occupancy rate for the months of October 1989 through January 1990 furnished with your letter, the maximum number of rooms occupied for 90 continuous days during the four month period was six (6) rooms on December 10. Therefore, during the four month period presented, six rooms are the only rooms which qualify for the 90 continuous day exemption.
For the reasons stated above, the averaging method, as outlined in your letter, is not an acceptable alternative for computing the refund. However, in an effort to comply with the regulation and also provide a reasonable alternative for computing the refund, I will allow the Taxpayer to compute the refund due to the airline on the first day of each month based on the least number of rooms occupied during the previous ninety day period. This method of computing the refund shall only be applicable to the situation as outlined in your letter. Any variation from the facts presented in your letter will be subject to additional review and determination by the department.
I would also like to point out that the exemption as outlined in Virginia Regulation 630-10-48(B) applies only to the 4 1/2 % retail sales and use tax and not to locally administered taxes.
If you should have any further questions, please feel free to contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner