Tax Type
Retail Sales and Use Tax
Description
Lodging; Nongovernment funds
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
03-11-1991
March 11, 1991
Re: Request for Ruling: Sales and Use Tax
Dear*****************
This will respond to your letter of January 23, 1991 (590/004) in which you request a ruling on the applicability of the sales and use tax to purchases of lodging by the***********(the "Center"), which is part of the*************(the "Department"), for its conference attendees.
FACTS
The Center is an active agency of the federal government which provides academic and clinical orientation into the Department as well as coordinating and hosting major task forces and conferences. Funding for its Chaplain program is provided through the Department, yet the Center is supplemented for conference activities by a discretionary fund with receipts from the Chapel programs of the Department's 172 medical centers throughout the United States.
The Center recently held a conference for**************. The motel providing the lodging for the conference attendees included the sales tax in the charges for the lodging. You maintain that the Center should not have been charged the sales tax because the lodging was paid for with governmental funds, through a check drawn on its ******************** Fund. You point out that the funds are maintained in a separate account because of the church/state nature of such funds.
You request a ruling on whether the motel was correct in charging the sales tax on the lodging.
RULING
Virginia Regulation (VR) 630-10-45 describes in detail how the Virginia retail sales and use tax applies to sales to the federal government and specifically to the rental of hotel rooms by the federal government and federal employees. This regulation provides that the tax does not apply to sales to the United States if the purchases are pursuant to required official purchase orders to be paid out of public funds. However, the tax applies when such sales are made without the required purchase orders and are not paid for out of public funds.
Regarding purchases by governmental employees, the regulation specifies:
-
- [s]ales to governmental employees for their own consumption or use are taxable. For example, if a federal employee is traveling on government business and payment for meals and lodging is made directly by the federal government pursuant to a purchase order (e.g., by direct billing to government or use of government credit card), no tax will apply. However, if the employee pays for the meals and lodgings with personal funds and will be reimbursed by the government or utilizes a travel advance, no exemption is available even though the employee may be traveling pursuant to official government orders.
- [s]ales to governmental employees for their own consumption or use are taxable. For example, if a federal employee is traveling on government business and payment for meals and lodging is made directly by the federal government pursuant to a purchase order (e.g., by direct billing to government or use of government credit card), no tax will apply. However, if the employee pays for the meals and lodgings with personal funds and will be reimbursed by the government or utilizes a travel advance, no exemption is available even though the employee may be traveling pursuant to official government orders.
Applying the facts in this case to the regulation cited above, I find that the Center does not qualify for exemption from the retail sales and use tax regarding its purchases of lodging for its conference participants. The payment for the lodging is made out of its ***********Fund which is comprised of nongovernmental funds donated to the School, not government or public funds as required above.
I regret that I am unable to provide you with a more favorable reply. If you have any further questions about this matter, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner