Tax Type
Retail Sales and Use Tax
Description
Lodging; Internet and special event services
Topic
Taxability of Persons and Transactions
Date Issued
03-17-1999
March 17, 1999
Re: Ruling Request: Retail Sales and Use Tax
Dear********************
In your letter of October 9, 1998, you request an updated ruling concerning the application of the retail sales and use tax to various video entertainment services sold by * * * * * (the Taxpayer). I apologize for the delay in responding to your letter.
The Taxpayer provides pay-per-view video entertainment services, television programming and video game services for hotel guests. These services are essentially the same as those services described in the Taxpayer's prior letter which was addressed by the department in Public Document (P.D.) 96-306 (10/25/96, copy enclosed). Accordingly, the application of the sales and use tax to the above services continues to apply in the same manner as set out in P.D. 96-306.
FACTS
The Taxpayer has expanded its services to include two types of Internet services and a special events service. In first type of Internet service, a hotel guest may access the Internet using a remote control and an Internet browser on the television located in the hotel room. A control rack installed at the hotel contains a personal computer to facilitate the Internet connections via the pay-per-view wire linked to the television in the hotel room. Billing is based on per day, per minute, per hour, or other time period.
In the second type of Internet service provided, hotel guests may connect their laptop computers to a port in the hotel room. The hotel guests use their own Internet browser. Billing is based on time periods similar to the television-accessed Internet services described above.
The Taxpayer also plans on providing live, time delayed, simulcast or rebroadcast of special pay-per-view sporting and entertainment events. These events would be delivered via satellite or replayed using the pay-per-view system located at the hotel.
RULING
Title 23 of the Virginia Administrative Code (VAC) 10-210-730(C) provides, in part, that:
Any additional charges made in connection with the rental of a room or other lodging or accommodations are deemed to be a part of the charge for the room and are subject to the tax. For example, additional charges for movies, local telephone calls and similar services are subject to the tax.
Special event services. Based on the policy set out in the above cited regulation, the tax applies to any additional charges made to hotel guests for special event services provided in connection with taxable accommodations. The responsibility for charging and collecting the sales tax on such additional charges rests with the hotel. If these services are only billed to the hotel and provided to hotel guests without any additional charge, the charge by the Taxpayer to the hotel is not taxable.
Internet access services. Effective July 1, 1998, Code of Virginia § 58.1-609.5(1) exempts from the retail sales and use tax:
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. . . services not involving an exchange of tangible personal property which provide access to or use of the international network of computer systems commonly known as the Internet and any other related electronic communication service.
Property used in Virginia. In conducting its business in Virginia, the Taxpayer is liable for the tax on the cost price of any equipment, wiring or other tangible personal property which it installs, furnishes or maintains at hotels in Virginia and for which it retains exclusive control and ownership of such property.
If you have any questions about this ruling, please contact * * * * * at * * * * *.
1
Sincerely,
Danny Payne
Tax Commissioner
Related Documents
Rulings of the Tax Commissioner