Tax Type
Retail Sales and Use Tax
Description
Enterprise zones and similar tax incentives; Employee meals and lodging
Topic
Taxability of Persons and Transactions
Date Issued
06-14-1996
June 14, 1996
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear**************
This is in reply to your letter in which you request a refund of sales tax paid by your client,*********(the "Taxpayer"), under the Enterprise Zone Act.
FACTS
The Taxpayer is a "qualified business firm" located within an area designated as an enterprise zone under Code of Virginia § 59.1-274. The Taxpayer applied for a refund of sales tax paid on items purchased for the conduct of its business within the enterprise zone, pursuant to Code of Virginia § 59.1-282. The department denied the portion of the refund relating to sales tax paid on employee meals and lodging. You request reconsideration of this position.
DETERMINATION
Code of Virginia § 59.1-282 provides that the Department of Housing and Community Development must certify to the Tax Commissioner that a qualified business firm is exempt from the payment of taxes for all items purchased for the conduct of its business located within the enterprise zone. The Department of Taxation reviews the requested amount and makes the appropriate refund. You assert that employee meals and lodging costs are a significant part of the Taxpayer's business and are incurred through the ordinary course of business; therefore, the sales tax paid should be refunded to the Taxpayer.
Based on the information provided, the meals and lodging were provided to employees of the Taxpayer for their convenience and were used and consumed by those individuals. No evidence has been presented to indicate that the meals and lodging were purchased for the conduct of the Taxpayer's business in the enterprise zone. Accordingly, there is no basis to refund the sales tax paid on meals and lodging used and consumed by employees.
It is my understanding that the department has refunded the taxes paid on purchases of all other items used in the conduct of the Taxpayer's business in the enterprise zone. If you have any questions regarding this matter, you may contact *****at *******.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/9599F
Rulings of the Tax Commissioner