93-167 | Virginia Tax

Tax Type

Retail Sales and Use Tax

Description

Hotel accommodations; 90 continuous days

Topic

Collection of Tax

Exemptions

Taxability of Persons and Transactions

Date Issued

07-29-1993

July 29, 1993

Re: Request for Ruling: Retail Sales and Use Tax

Dear****************

This will reply to your letter to Senior Assistant Attorney ****************on behalf of **************(the Taxpayer) regarding the application of the tax to hotel accommodations. The Office of the Attorney General asked that I respond to your inquiry.

FACTS

The Taxpayer owns and operates a hotel in Virginia and proposes to enter into a contract with an agency of the federal government. Under the terms of the contract, which will be for a period of 90 or more consecutive days, the Taxpayer will provide a specific number of hotel rooms for use by agency employees. Employees will pay for accommodations with personal funds and subsequently be reimbursed by the agency.

Furthermore, the contract will provide that in the event the agency does not intend to use any of the allotted rooms, the Taxpayer will try to rent the rooms to non-agency customers provided that the agency gives at least 24 hours notice to the Taxpayer. In this eventuality, payments received from non-agency customers will be offset against the amounts owed to the Taxpayer by the agency for the use of the rooms.

You request a ruling whether the amounts paid by the agency to the Taxpayer pursuant to the contract will be subject to the Virginia sales and use tax.

DETERMINATION

Virginia Regulation (VR) 630-10-48(B) addresses hotel accommodations furnished for 90 or more continuous days and states that:

- The tax does not apply ... to rooms ... 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 accommodations 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 90 continuous days or more before the exemption becomes effective. In the instant case, however, the agency might occupy any room or rooms for less than 90 continuous days if i) it notifies the Taxpayer that it does not intend to use any rooms and ii) the Taxpayer can rent the rooms to other customers. Under these circumstances it is impossible to tell at the start of the contract period how many rooms, if any, will be occupied by the agency for 90 or more continuous days. Therefore, I cannot agree that the Taxpayer's proposed contract with the agency falls within the exemption.

Accordingly, the Taxpayer will be required to collect the tax from the agency's employees on the rental of accommodations. However, any rooms paid for directly by the agency may be rented exempt of the tax provided that payment is made using public funds as noted in VR 630-10-45(A). Further, if at the end of 90 days the agency continuously occupied any room or rooms, the Taxpayer may refund the tax paid with respect to that specific room or rooms to the agency or credit the agency's account in accordance with the regulation noted above.

I would also like to point out that the exemption as outlined in VR 630-10-48(B) applies only to the 4.5% retail sales and use tax and not to locally administered transient occupancy taxes.

If you should have any further questions, please contact the department.

Sincerely,

W. H. Forst
Tax Commissioner

OTP/6256I

Rulings of the Tax Commissioner