My nonprofit stables horses and rents out conference space to support our educational programs — do we owe sales tax when we charge horse owners for stabling?

Plain-English summary

A nonprofit organization that runs educational programs and youth camping also offers horse stabling facilities and conference space for retreats and other events, to support its mission. It asked the Department whether renting out its equestrian facilities to horsemen, for horse-related activities, is exempt from Virginia retail sales and use tax.

Background rules the Department laid out. Virginia Code § 58.1-602 defines "accommodations" as rooms, lodging, or space regularly furnished to transients for consideration — but that definition specifically excludes space offered for conferences, meetings, or events by someone who doesn't also offer overnight rooms. Section 58.1-603 4 taxes the gross proceeds from accommodations furnished to transients, and separately, § 58.1-603 taxes the gross proceeds from the sale or rental of tangible personal property. The Department's long-standing policy (citing P.D. 94-142, P.D. 95-223, P.D. 09-2, and P.D. 20-177) is that when a single lump-sum charge covers both taxable and nontaxable items, the WHOLE charge is taxed — while a charge for real property use alone, without tangible personal property bundled in, is not taxable (P.D. 87-69, P.D. 98-85, P.D. 02-38, P.D. 12-82).

The actual answer turned on services, not facility rental. Title 23 VAC 10-210-4040 A provides that charges for services are generally exempt from sales and use tax, unless the services are provided in connection with a sale of tangible personal property. The Department concluded that the Taxpayer's charges to customers for STABLING horses are a service, and therefore not subject to sales and use tax. But 23 VAC 10-210-4040 E flips who owes the tax: a service provider is treated as the taxable user and consumer of the tangible personal property it buys to provide that service. So the nonprofit itself must pay sales tax to its suppliers on the nonprescription drugs, feed, and other supplies it purchases to care for the stabled horses — regardless of whether the supplier separately states the tax on the bill (citing P.D. 17-43).

What this means for you

Nonprofits and businesses providing animal-boarding or similar care services

If you charge customers for a service like stabling, boarding, or caring for their property, that charge is generally exempt from sales tax as a service. But don't assume that means you're tax-free on your own purchases — you're the "consumer" of the supplies you use to provide the service, and you owe sales tax to your vendors on those supplies just like any other buyer.

Organizations that also rent event or conference space

The Department's accommodations framework (an overnight stay is generally required before tax applies to venue-space rental, unless tangible personal property is bundled into one lump-sum charge) is relevant if you separately rent out event or retreat space — but it wasn't the basis for the Department's actual conclusion here, which turned entirely on the stabling SERVICE, not the rental of real property.

Accountants and tax professionals advising service-based nonprofits

Watch for the service-provider trap: a client who correctly doesn't charge sales tax on an exempt service can still owe use or sales tax on the supplies consumed in providing it. That tax liability doesn't disappear just because the output is a nontaxable service.

Common questions

Q: Do I need to charge sales tax when I bill a customer for boarding or stabling their horse?
A: No — stabling is treated as an exempt service under 23 VAC 10-210-4040 A, not a taxable rental of property.

Q: If I don't charge my customers sales tax on stabling, do I owe any tax myself?
A: Yes. As the service provider, you're the taxable "user and consumer" of the feed, medications, and other supplies you buy to provide that service, so you owe sales tax to your suppliers on those purchases.

Q: Does it matter if my supplier doesn't separately list sales tax on my invoice?
A: No — you owe the tax on those supply purchases regardless of how the supplier's invoice is itemized.

Q: What if I also rent conference or event space at my facility?
A: That's governed by a separate accommodations framework (generally requiring an overnight stay before tax applies to venue-space rental alone), but this ruling's actual conclusion addressed only the stabling service, not event-space rentals.

Citations and references

Statutes and regulations:

• Va. Code § 58.1-602 — defines "accommodations," "transient," and "gross proceeds"
• Va. Code § 58.1-603 4 — sales tax on gross proceeds from accommodations furnished to transients
• 23 VAC 10-210-4040 A — charges for services generally exempt from sales and use tax
• 23 VAC 10-210-4040 E — a service provider is the taxable user/consumer of tangible personal property purchased to provide the service

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 25-2

Original ruling text

January 10, 2025

Re: Request for Ruling: Retail Sales and Use Tax

Dear *:

This will respond to the letter submitted on behalf of * (the “Taxpayer”) in which it seeks a ruling on the application of the Virginia retail sales and use tax on its equestrian and stabling services.

FACTS

The Taxpayer, a non-profit organization that provides educational programs and camping for youth and offers horse stabling facilities and conference space for retreats and other events to support its mission. The Taxpayer requests a ruling to determine if the rental of their equestrian facilities is exempt from sales and use tax when rented to horsemen and for horse-related activities.

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.

RULING

Virginia Code § 58.1-602 defines accommodations as:

[A] ny room or rooms, lodgings, or accommodations in any hotel, motel, inn, tourist camp, tourist cabin, camping grounds, club, short-term rental, or any other place in which rooms, lodging, space, or accommodations are regularly furnished to transients for a consideration. “Accommodations” does not include rooms or space offered by a person in the business of providing conference rooms, meeting space, or event space if the person does not also offer rooms available for overnight sleeping.

Virginia Code § 58.1-603 4 imposes sales tax on the “gross proceeds derived from the sale or charges for rooms, lodgings or accommodations furnished to transients set out in the definition of “retail sale” in Virginia Code § 58.1-602.” The term “transient” does 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. Further, a purchaser of a right or license which entitles the purchaser to use the amenities and facilities of a specific real estate project on an ongoing basis throughout its term shall not be deemed a transient, provided that the term or time period involved is for seven years or more.

In addition, Virginia Code § 58.1-603 imposes the retail sales tax on the sale or rental of tangible personal property in Virginia. The tax is imposed on the gross proceeds derived from a lease or rental of tangible personal property. “Gross proceeds” includes the total amount charged for tangible personal property. See Virginia Code § 58.1-602. The Department’s policy has been that, when a dealer charges one lump sum amount for both taxable and nontaxable items in a transaction, the tax is applied to the entire transaction. See P.D. 94-142 (4/29/1994), P.D. 95-223 (8/29/1995), P.D. 09-2 (2/4/2009), and P.D. 20-177 (10/6/2020). Conversely, the Department has ruled that fees charged for the use of real property, for which an overnight stay was not provided, were not taxable provided that no tangible personal property was included in the total amount charged. See P.D. 87-69 (2/27/1987), P.D. 98-85, P.D. 02-38 (4/1/2002), and P.D. 12-82 (5/11/2012).

Title 23 of the Virginia Administrative Code (VAC) 10-210-4040 A provides that charges for services generally are exempt from the retail sales and use tax. However, services provided in connection with sales of tangible personal property are taxable.

In this instance, the Taxpayer's charges to its customers for the stabling of horses is not subject to the sales and use tax. With regard to the provision of such services, Title 23 VAC 10-210-4040 E provides that “a service provider is the taxable user and consumer of all tangible personal property purchased for use in providing exempt services.” As a service provider, the Taxpayer is required to pay the sales tax to its suppliers of tangible personal property, e.g., nonprescription drugs, feed, and other supplies used in providing its equestrian stabling services, whether separately stated or not. See also P.D. 17-43 (4/3/2017).

The Code of Virginia sections and regulations cited are available online at law.lis.virginia.gov. The public documents cited are available at tax.virginia.gov in the Laws, Rules, & Decisions section of the Department’s website. If there are any questions regarding this determination, please contact * in the Department’s Office of Tax Policy and Legislative Affairs, Tax Adjudication and Resolution Division, at , or via email at **.

Sincerely,

James J. Alex

Tax Commissioner

Commonwealth of Virginia

AR\4705.F

Related Documents

87-69

94-142

95-223

98-85

02-38

09-2

09-2

12-82

17-43

20-177

23-74