Tax Type
Retail Sales and Use Tax
Description
Services; Membership fees
Topic
Taxability of Persons and Transactions
Date Issued
09-17-1996
September 17, 1996
Re: Ruling Request: Retail Sales & Use Tax
Dear**************
This will reply to your letter of June 14, 1996 in which you request a ruling on the application of the retail sales and use tax to membership fees paid by members of a service provider, (the "Taxpayer").
FACTS
The Taxpayer is a corporation providing services to specific industries nationwide. The Taxpayer provides two types of services. The first is an informational and statistical analysis function. In the second function, the Taxpayer evaluates real and personal property. The results are communicated to customers in the form of publications and informational reports. In order for customers to have access to such reports either in tangible form or by electronic means, they must pay a membership fee to the Taxpayer. The payment of the membership fee grants to the member the right to purchase copies of the Taxpayer's reports, evaluations, publications, or the right to have access to on-line services, all at additional costs to the customer.
DETERMINATION
Code of Virginia § 58.1-603 imposes a tax on the sale of tangible personal property in Virginia. "Sale" is defined in Code of Virginia § 58.1-602 as "any transfer of title or possession ... of tangible personal property and any rendition of a taxable service for a consideration ...." Based on the facts outlined in your letter, there is no transfer of tangible personal property which is directly related to the imposition of the membership fees. Accordingly, the membership fees are not subject to the tax. I have enclosed a copy of a previous ruling (P.D. 84-89, 07/03/84) which will help in further explaining the department's longstanding position.
If you should have any additional questions regarding this matter, please contact ******* of the department's Office of Tax Policy at ****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11338Q
Rulings of the Tax Commissioner