Tax Type
Retail Sales and Use Tax
Description
Occasional Sales; Sale of Hotel Assets
Topic
Taxability of Persons and Transactions
Date Issued
03-13-1992
March 13, 1992
Re: §58.1-1821 Application: Sales and Use Tax
Dear***********************
This will reply to your letter of July 18, 1990, in which you submit an application for correction of sales and use tax assessed to your corporation as the result of a recent audit.
FACTS
Your corporation is engaged in the operation of hotels that it wholly owns and participates as a partner or joint venturer in the operation of other hotels. The corporation was assessed for its failure to collect tax on the sale of the assets (tangible personal property) of one of its wholly owned hotels to a joint venture in which it held a 25% interest.
You contest the assessment on the grounds that the transaction was an exempt "occasional" sale.
DETERMINATION
Virginia Code §58.1-608 (A) (10) (b) exempts occasional sales from the tax. The term "occasional sale" is defined in Virginia Code §58.1-602 as:
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- a sale of tangible personal property not held or used by the seller in the course of an activity for which he is required to hold a certificate of registration, including the sale or exchange of all or substantially all the assets of any business, provided that such sale or exchange is not one of a series of sales and exchanges sufficient in number, scope, and character as to constitute an activity requiring the holding of a certificate of registration.
The tangible personal property in question was clearly used in the course of a registerable activity, the rental of transient accommodations. As such, we now must determine whether the transaction represents the sale or exchange of all or substantially all of your corporation's business.
You contend that the sale of a single hotel constitutes the sale of a "business" within the meaning of the statute and Virginia Regulation 630-10-75. Had the corporation operated only one hotel, your conclusion would be correct. However, the corporation is engaged in the business of operating a chain of hotels; as such, the sale of a single hotel does not constitute the sale of all or substantially all of the corporation's assets, either nationwide or in Virginia.
I have reached this same conclusion in numerous rulings and determinations involving similar situations. Copies of four of these documents are enclosed for your review. Based upon the facts of the current case and past precedent in similar cases, I see no basis for granting the corporation relief from the tax and interest assessed.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner