Tax Type
Retail Sales and Use Tax
Description
Leases and rentals; Rental of historic plantation
Topic
Taxability of Persons and Transactions
Date Issued
06-16-1995
June 16, 1995
Re: §58.1-1821 Application: Retail Sales and Use Tax
Dear*************
This will reply to your letter dated November 3, 1994, in which you apply for correction of an assessment issued to your client,************* (the "Taxpayer"), for the period June 1991 through May 1994.
FACTS
The Taxpayer owns and operates a historic plantation. It rents the mansion and grounds out for weddings, wedding receptions, and similar social events. The Taxpayer's customers may choose between two rental packages. The first package consists of the rental of the Taxpayer's facilities only. The second package includes the provision of food and beverages with the rental of its facilities. The Taxpayer provides personnel to assist with greeting and directing guests, handling wedding gifts, parking, consulting, and similar services under either package.
The Taxpayer protests tax assessed on charges for the rental of its facilities under the first package. The Taxpayer properly charged the tax on rental charges and sales of food and beverages under the second package.
DETERMINATION
The auditor assessed the Taxpayer based on Virginia Regulation (VR) 630-1048 (copy enclosed) because the Taxpayer occasionally rented overnight accommodations during the audit period. Therefore, rentals of facilities under the first package were deemed taxable rentals of "accommodations." This is consistent with the department's longstanding policy that businesses regularly engaged in the rental of transient accommodations are required to collect tax on rentals of meeting, conference, and reception rooms.
However, based on information furnished by the Taxpayer, its rentals of overnight accommodations were sporadic in nature (generally less than ten nights per year) and accounted for less than one percent of total revenues. As such, the Taxpayer's situation is more analogous to that set out in P.D. 89-257 (9/25/89, copy enclosed). In that determination, a nonprofit corporation rented its historic properties to its members and the general public for social events. The charge for use of the facilities often included the provision of food and beverages. The Department ruled that the rental charges for use of the facilities were exempt from the tax if no sales of tangible personal property, i.e., food or beverage, were made in connection with the rental charge for the facilities.
VR 630-10-97.1 (copy enclosed) provides that services are taxable when provided in connection with the sale of tangible personal property. The Taxpayer made no sales of tangible personal property in connection with its rental of facilities under the first package. For this reason, and consistent with P.D. 89-257 cited above, the Taxpayer's rental charges under the first package are exempt. The Taxpayer should pay the tax on all purchases used in providing services under either package with the exception of items purchased for resale under the second package.
I note that the Taxpayer has paid the uncontested portion of the assessment in full. Therefore, the remaining balance has been abated. If you have any questions concerning this letter, please contact***********.
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- Sincerely,
Danny M. Payne
Tax Commissioner
- Sincerely,
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OTP/8800S
Rulings of the Tax Commissioner