The Virginia Tax Commissioner ruled that an airline is entitled to a refund of Virginia sales and use tax paid on hotel rooms occupied for longer than 90 continuous days. Virginia code provides a retail sales and use tax exemption on the sale or charges on any room(s), lodgings, or accommodations furnished to guests for more than 90 continuous days. The taxpayer that brought forth the ruling request stated that the airline occupied rooms daily but that they were different rooms with different employees, and that no one room was occupied for 90 continuous days. The Tax Commissioner expressed that this is not the proper way to calculate whether a room qualifies for a tax exemption.
During a 90-day period, the least number of rooms occupied on any given day serves as the basis for the amount of rooms that are tax exempt. If a block of rooms is rented under a rental contract, the exemption applies to the least number of rooms rented on a given day during a continuous 90-day period. The number of rooms occupied by the business on any given day during the period and not whether the same room is occupied by the same employee is the information used to determine the tax exemption.
The Commissioner concluded that if the airline occupied a number of rooms during a continuous 90-day period, it is due a sales tax credit or refund. (Ruling of Commissioner, P.D. 18-159, Virginia Department of Taxation, August 20, 2018).