Tax Type
Retail Sales and Use Tax
Description
Lodging
Topic
Taxability of Persons and Transactions
Date Issued
07-10-1998
July 10, 1998
Re: Request for Ruling: Retail Sales and Use Tax
Dear**********:
This will reply to your letter in which you request a ruling on the application of the retail sales and use tax to certain purchases made by hotels.
FACTS
(the "Taxpayer') provides amenities such as shampoo, soap, notepads, and similar items to hotel guests as part of the room accommodations. The Taxpayer includes the cost of these items in the charge for the room and suggests that the resale exemption applies to purchases of these items. To support its contention, the Taxpayer references Public Document 95-172 (6/26/95), in which the department ruled that food items provided to hotel guests as part of a complementary continental breakfast could be purchased exempt of the tax. The cost of the food items provided in the continental breakfast were included in the taxable room charge and for this reason, the department agreed that the resale exemption applied to purchases of the food.
RULING
Code of Virginia Sec. 58.1-603 imposes the tax on the "gross proceeds derived from the sale or charges for rooms, lodgings or accommodations furnished to transients....' Code of Virginia Sec. 58.1-602 defines "gross proceeds' to mean "the charges made or voluntary contributions received for the lease or rental of tangible personal property or for furnishing services....
Title 23 of the Virginia Administrative Code (VAC) 10-210-730(D) addresses purchases made by hotels and states that "[p]urchases of furniture, linens, carpeting, drapes, and other tangible personal property by such businesses are taxable at the time of purchase.' Therefore, hotels may not purchase these items exempt of the tax for resale regardless that the total charge made to guests for accommodations is also taxable. This is the department's longstanding policy.
Code of Virginia Sec. 58.1-604 imposes the tax on tangible personal property used or consumed in Virginia, and hotels are the users and consumers of items such as soap, shampoo, and notepads when providing room accommodations to guests. Therefore, the purchase of such items by hotels is taxable (and not for resale) since charges paid by hotel guests are for lodging and accommodations and not for specific items found in the hotel room. The department's policy with respect to this issue is well established as explained in the enclosed copy of Public Document 95-287 (11/8/95). Based on the above, soap, shampoo, notepads, and similar items provided to guests as part of the room accommodations do not qualify for the resale exemption. The Taxpayer should continue to pay sales and use taxes on purchases of these items.
If you have any questions, please contact ***** in the Office of Tax Policy at *****.
Sincerely,
Re: Request for Ruling: Retail Sales and Use Tax
Dear**********:
This will reply to your letter in which you request a ruling on the application of the retail sales and use tax to certain purchases made by hotels.
FACTS
(the "Taxpayer') provides amenities such as shampoo, soap, notepads, and similar items to hotel guests as part of the room accommodations. The Taxpayer includes the cost of these items in the charge for the room and suggests that the resale exemption applies to purchases of these items. To support its contention, the Taxpayer references Public Document 95-172 (6/26/95), in which the department ruled that food items provided to hotel guests as part of a complementary continental breakfast could be purchased exempt of the tax. The cost of the food items provided in the continental breakfast were included in the taxable room charge and for this reason, the department agreed that the resale exemption applied to purchases of the food.
RULING
Code of Virginia Sec. 58.1-603 imposes the tax on the "gross proceeds derived from the sale or charges for rooms, lodgings or accommodations furnished to transients....' Code of Virginia Sec. 58.1-602 defines "gross proceeds' to mean "the charges made or voluntary contributions received for the lease or rental of tangible personal property or for furnishing services....
Title 23 of the Virginia Administrative Code (VAC) 10-210-730(D) addresses purchases made by hotels and states that "[p]urchases of furniture, linens, carpeting, drapes, and other tangible personal property by such businesses are taxable at the time of purchase.' Therefore, hotels may not purchase these items exempt of the tax for resale regardless that the total charge made to guests for accommodations is also taxable. This is the department's longstanding policy.
Code of Virginia Sec. 58.1-604 imposes the tax on tangible personal property used or consumed in Virginia, and hotels are the users and consumers of items such as soap, shampoo, and notepads when providing room accommodations to guests. Therefore, the purchase of such items by hotels is taxable (and not for resale) since charges paid by hotel guests are for lodging and accommodations and not for specific items found in the hotel room. The department's policy with respect to this issue is well established as explained in the enclosed copy of Public Document 95-287 (11/8/95). Based on the above, soap, shampoo, notepads, and similar items provided to guests as part of the room accommodations do not qualify for the resale exemption. The Taxpayer should continue to pay sales and use taxes on purchases of these items.
If you have any questions, please contact ***** in the Office of Tax Policy at *****.
Sincerely,
Rulings of the Tax Commissioner