Tax Type
Retail Sales and Use Tax
Description
Government transactions; Meals and lodging purchased for credit union employees
Topic
Taxability of Persons and Transactions
Date Issued
06-28-1996
June 28, 1996
Re: Request for Ruling: Retail Sales and Use Tax
Dear**********
This is in response to your letter seeking a ruling on the application of the sales tax to room rental charges made by ********* (the Taxpayer).
FACTS
The taxpayer is a federally chartered credit union exempt from the sales and use tax under federal law, 12 U.S.C.A. § 1768. The Taxpayer seeks an exemption from state and local sales tax specifically on lodging accommodations for credit union volunteers and employees traveling on behalf of the Taxpayer.
RULING
Virginia Regulation (VR) 630-10-45 (B), copy enclosed, provides that "[t]he tax does not apply to sales to federally chartered credit unions...." Subsection A of this same regulation provides an exception to the retail sales tax for the purchase of meals and lodgings by the federal government "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."
You maintain that credit union employees are not government employees and should not be considered as such. If this is the case, there is no exemption available for lodging accommodations paid for by employees, as the lodging is used and consumed by the individual and not by the credit union. I have enclosed P.D. 91-28 (3/11/91) which further explains purchases by governmental employees.
The Taxpayer is exempt from the sales tax on the purchase of meals and lodging when payment is made directly by the Taxpayer pursuant to an official purchase order, government credit card, or government check. Nevertheless, if the employee pays for the lodging with personal funds and will be reimbursed by the Taxpayer, or utilizes a travel advance, the exemption will not apply.
I trust the foregoing has responded to your questions. If you should have any further questions regarding this ruling, you may contact ****** at**********.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11110T
Rulings of the Tax Commissioner