Were a seasonal campground's seven-month campsite leases subject to Virginia retail sales tax as transient accommodations?

Plain-English summary

Virginia exempted the campground's seven-month seasonal leases from retail sales and use tax. The campers were not purchasing transient accommodations for fewer than 90 continuous days.

The campground operated from April 1 through October 31. Seasonal campers leased a site for that entire seven-month period and also received winter storage during the five-month off-season. No lease was signed for fewer than 90 days, and an early cancellation produced a prorated refund.

Va. Code § 58.1-602 treated accommodations furnished by campgrounds to transients for fewer than 90 continuous days as retail sales. These agreements instead specified a beginning and ending date covering more than 90 continuous days.

The statute also excluded purchasers of camping memberships and similar real-estate-use contracts from the transient definition. The campsite leases permitted customers to use the campground's real estate, so Virginia also found they were not transients.

What this means for you

• Use written leases with clear start and end dates.
• Confirm that accommodations are furnished for at least 90 continuous days.
• Document any real-estate-use interest and early-cancellation treatment.
• Short stays or materially different agreements require a fresh analysis.

Common questions

Q: How long was the operating season?
A: Seven months, from April 1 through October 31.

Q: Did winter storage change the result?
A: The lease included winter storage, but the ruling relied on the seven-month accommodation period and nontransient status.

Q: Were the customers treated as transients?
A: No.

Citations and references

• Va. Code § 58.1-602.
• P.D. 89-245 (September 19, 1989).

Subject

Tax treatment of the seasonal leases; Privately-owned campground

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 12-209

Original ruling text

December 13, 2012

Re: Request for Ruling: Retail Sales and Use Tax

Dear *:

This is in response to your letter submitted on behalf of * (the "Taxpayer") requesting a ruling on the application of the retail sales and use tax to sales of accommodations. I apologize for the delay in responding to your correspondence.

FACTS

The Taxpayer is a privately-owned campground, which operates as a seasonal campground, open from April 1 through October 31 every calendar year. The Taxpayer's seasonal campers lease campsites from the Taxpayer during the entire seven-month operating period. The lease also entitles the customers to onsite winter storage for the five-month winter off season. The Taxpayer states that a lease agreement is never signed for less than 90 days. The Taxpayer further states that if a customer's lease is cancelled prior to the end of the seven-month period, the money is prorated and refunded to the customer.

The Taxpayer maintains that over the 35 years that it has been in business, it has never charged tax on its seasonal leases. The Taxpayer states while being audited by the Department, an issue arose regarding the tax treatment of the seasonal leases. The Taxpayer requests that the Tax Commissioner issue a ruling authorizing an exemption for the Taxpayer in instances where it sells accommodations to its seasonal campers pursuant to its seven-month leases.

RULING

Virginia Code § 58.1-602 provides, in pertinent part:

The terms "retail sale" and a "sale at retail" shall specifically include the following: (i) the sale or charges for any room or rooms, lodgings, or accommodations furnished to transients for less than 90 continuous days by any hotel, motel, inn, tourist camp, tourist cabin, camping grounds, club, or any other place in which rooms, lodging, space, or accommodations are regularly furnished to transients for a consideration.

Virginia Code § 58.1-602 provides, in pertinent part:

The term "transient" shall not include a purchaser of camping memberships, time-shares, condominiums, or other similar contracts or interests that permit the use of, or constitute an interest in, real estate, however created or sold and whether registered with the Commonwealth or not.

In this instance, the Taxpayer enters into a lease with its customers for a seven-month period. Pursuant to the lease, it is clear the furnishing of accommodations will begin and end on a specific date, and the accommodations will be furnished for a period of 90 continuous days or more. Accordingly, pursuant to the Va. Code § 58.1-602 definition of retail sale, the charges for accommodations made pursuant to the seven month leases are exempt of the Virginia retail sales and use tax.

Additionally, pursuant to Va. Code § 58.1-602, the Taxpayer's customers would not be considered transients because the leases permit the use of the real estate by the Taxpayer's customers. See, P.D. 89-245 (9/19/89). Accordingly, the retail sales and use tax would not apply to the charges for accommodations made pursuant to the seven-month leases.

I trust this responds to your inquiry. This response is based on the facts provided as summarized above. Any change in facts or the introduction of new facts may lead to a different result.

The Code of Virginia sections and public documents cited are available on-line at www.tax.virginia.gov in the Laws, Rules and Decisions section of the Department's web site. If you have any questions about this response, you may contact * in the Department's Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/1-4862343842.P