My event venue rental packages include tables and chairs along with the space — does that make the whole rental taxable in Virginia, even without food or an overnight stay?

Plain-English summary

An event planner that also operates its own event venue was audited for January 2015 through December 2019 — a five-year lookback because the business had never registered for sales tax. The Department assessed tax on untaxed sales because the taxpayer's rentals of the venue bundled in tangible personal property and, in some years, overnight accommodations. Its facility hosted five to thirteen event-days a year over the audit period, with a handful of overnight stays each year.

The taxpayer's two arguments. First, it said its real business was event-planning services — arranging and coordinating events using its expertise — not selling goods, and that Va. Code § 58.1-609.5(1) exempts professional/personal-service transactions where any sale is just an "inconsequential element" with no separate charge. It pointed to P.D. 18-215, where an event planner was found nontaxable because it paid vendors directly with clients' own funds, without markup, and the vendors (not the planner) collected sales tax from the clients. Second, it argued any overnight accommodations were merely incidental to the venue rental, citing P.D. 95-158 — a historic plantation whose wedding/reception rentals were only taxable when they included food and beverage, because the plantation wasn't in the regular business of renting rooms to transients.

Why neither argument saved the assessment. On accommodations, Virginia taxes gross proceeds from accommodations furnished to "transients" (§ 58.1-603(4)), which under Department precedent generally requires an overnight stay for space-rental-alone to be taxed — but the Department has also long held (P.D. 87-69, 98-85, 02-38, 12-82, 23-74) that a rental fee IS taxable even without an overnight stay once tangible personal property is bundled into a single charge. Here, EVERY one of the taxpayer's wedding packages included tables, chairs, and bench seating for one lump-sum price — exactly the bundled-property pattern that makes the whole charge taxable, regardless of whether food, beverage, or an overnight stay was also involved.

But the ruling's real turning point was documentation, not doctrine. The Department never had to fully resolve whether the taxpayer's operations matched P.D. 95-158 or P.D. 18-215, because the taxpayer had no written contracts with its customers and provided none during the audit. Virginia dealer recordkeeping rules (§ 58.1-633 A, 23 VAC 10-210-470) require dealers to keep the records necessary to verify tax compliance — records this taxpayer simply didn't have. Under Va. Code § 58.1-205, an assessment is presumed correct, and the taxpayer bears the burden of disproving it. Without contracts or other evidence showing what each package actually contained, the taxpayer could not carry that burden, and the Department upheld the entire proceeds from its package sales as taxable.

What this means for you

Event venues and planners who bundle tables, chairs, or other items into a rental price

If your venue-rental price includes ANY tangible personal property — tables, chairs, linens, staging, whatever — on top of the space itself, expect the WHOLE charge to be taxable under Virginia's bundled-transaction rule, even if there's no food, beverage, or overnight stay. Separately stating and itemizing a true no-goods "planning fee" from the property rental is what preserves any exempt-service argument.

If you want to rely on the "true object is my expertise" argument

You need the paperwork to prove it: contracts showing vendors billed clients directly, that you paid on the client's behalf without markup, and that any sales tax was collected by the actual vendor — the structure the Department accepted in P.D. 18-215. Without that documentation, the argument can't get off the ground no matter how the business actually operates.

Accountants and tax professionals

Keep in mind the two separate legal tests running through this ruling: the true object/service test for whether a transaction is a nontaxable service (§ 58.1-609.5(1)) and the transient-accommodations/bundled-property test for venue rentals (§ 58.1-603(4), § 58.1-602). But no legal theory helps a client who cannot document what was actually sold — that failure alone was enough to uphold the full assessment here.

Common questions

Q: Does an overnight stay have to be involved for a venue rental to be taxable?
A: Not if tangible personal property (like tables and chairs) is bundled into the rental charge — Department precedent taxes that combined charge regardless of an overnight stay.

Q: What if my catering/venue business genuinely is more like a historic-house rental that only occasionally includes food?
A: That distinction (drawn in P.D. 95-158) can matter, but only if you can document your actual practices — which packages included what, and how charges were broken out.

Q: Could better records have changed the outcome here?
A: Possibly — the ruling suggests the taxpayer's characterization of its business wasn't necessarily wrong, but it had no contracts or other evidence to prove it, so the Department had nothing to weigh against the assessment.

Q: What's the practical lesson for event businesses?
A: Use written contracts that separately state any true service/planning fee from charges for tangible items and property rental — and keep them, since the burden is on you to prove the taxable/nontaxable split if audited.

Citations and references

Statutes:

• Va. Code § 58.1-609.5 1 — exemption for service transactions with only inconsequential sales elements
• Va. Code § 58.1-603 4 — tax on gross proceeds from accommodations furnished to transients
• Va. Code § 58.1-602 — definitions of "retail sale," "accommodations," "transient"
• Va. Code § 58.1-633 A; 23 VAC 10-210-470 — dealer recordkeeping requirements
• Va. Code § 58.1-205 — assessment is prima facie correct; burden on the taxpayer

Prior rulings the Department relied on (described here, not linked): P.D. 97-84 (2/19/1997) and P.D. 18-215 (12/28/2018) on the event-planning true-object test; P.D. 87-69 (2/27/1987), P.D. 89-257 (9/25/1989), P.D. 98-85 (5/19/1998), P.D. 02-38 (4/1/2002), P.D. 12-82 (5/11/2012), and P.D. 23-74 (6/23/2023) on transient accommodations and bundled tangible personal property; P.D. 95-158 (6/16/1995) on occasional venue rentals; and P.D. 10-242 (10/21/2010) and P.D. 13-212 (11/14/2013) on lump-sum charges combining real property and tangible personal property.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 25-27

Original ruling text

February 18, 2025

Re: § 58.1-1821 Application: Retail Sales and Use Tax

Dear *:

This is in response to your letter submitted on behalf of * (the “Taxpayer”), in which you seek correction of the retail sales and use tax assessment issued for the period January 2015 through December 2019.

FACTS

An audit was conducted on the books and records of the Taxpayer, an event planner and operator of an event venue, for the period at issue. As a result of the audit, an assessment was issued for untaxed sales because the Taxpayer included tangible personal property and overnight accommodations with its rentals of the event venue. The Department conducted an audit for a five-year period because the Taxpayer was not registered for sales tax prior to the audit.

The Taxpayer filed an application for correction contending that its sales are not subject to tax because it was merely providing event planning services and did not sell tangible personal property. In addition, the Taxpayer asserts any overnight rentals were incidental to the rental of the venue.

DETERMINATION

Event Planning

The Taxpayer characterizes its activities as an event planner. The information provided does not indicate whether its activities are available for any event location or limited exclusively for events held at its venue. Virginia Code § 58.1-609.5 1 provides, in pertinent part, that the retail sales and use tax does not apply to “[P]rofessional, insurance, or personal service transactions which involve sales as inconsequential elements for which no separate charges are made.” The Department has held that event planning services may be provided exempt from the responsibility of collecting and remitting retail sales and use tax when the “true object” of the transactions was the planner’s expertise and creativity in developing and arranging conferences or special events and negotiating with dealers for various products and services in the production of such events. See Public Document (P.D.) 97-84 (2/19/1997).

The Taxpayer asserts that its operations are closely related to the taxpayer in P.D. 18-215 (12/28/2018) because it primarily engaged in event planning services and there was no sale of tangible personal property. In this determination, the event planner was found to be engaged in non-taxable services when it purchased tangible personal property using its clients’ funds so long as there is no mark-up. The vendors contracted directly with the clients and charged sales tax, as appropriate, and the sales tax was paid to the vendors when the event planner paid the invoices on behalf of the clients. In the present case, the evidence available during the application for correction process fails to support the Taxpayer’s description of its business operations. This point will be further discussed below in the section styled “Taxpayer Records.”

Event Venue Rental

The Taxpayer claims that its facility was used for five days in 2015 with no overnight stays, nine days in 2016 with three overnight stays, eight days in 2017 with two overnight stays, ten days in 2018 with one overnight stay, and thirteen days in 2019 with three overnight stays.

Virginia Code § 58.1-603 4 provides that the sales tax applies to “gross proceeds derived from the sale or charges for accommodations furnished to transients as set out in the definition of ‘retail sale’ in Virginia Code § 58.1-602.” The Department has interpreted the definitions of “retail sale,” “accommodations,” and “transient” found in Virginia Code § 58.1-602 to require an overnight stay for tax to apply to the rental of venue space without the transfer of tangible personal property. See P.D. 87-69 (2/27/1987) and P.D. 89-257 (9/25/1989). Conversely, the Department has ruled that fees charged for the use of real property, for which an overnight stay was not provided, were taxable when the total charge included the provision of tangible personal property. See P.D. 87-69, P.D. 98-85 (5/19/1998), P.D. 02-38 (4/1/2002), P.D. 12-82 (5/11/2012), and P.D. 23-74 (6/23/2023).

The Taxpayer contends that its operations were nearly identical to those in P.D. 95-158 (6/16/1995). In that determination, the Department discussed a historic plantation that rented the mansion and grounds out for weddings, receptions, and similar events. Because the plantation did not rent rooms and accommodations to transients on a regular basis, only those rental transactions that included the provision of food and beverages were taxable. This ruling is consistent with the Department's current policy that the rental of facilities by entities that are not in the regular business of renting rooms and accommodations to transients are dealers for retail sales tax purposes only when the charges include the provision of tangible personal property such as food and beverages, tables and chairs, or other items for entertaining. See P.D. 13-212 (11/14/2013) and P.D. 23-74.

While the Taxpayer’s rental of overnight accommodations may not have been a regular part of its business and it did not sell food and beverages, all of its wedding packages apparently included tables, chairs, and bench seating. The inclusion of such tangible personal property with real property facilities in a venue rental package for which one lump charge is made is subject to sales tax. See P.D. 10-242 (10/21/2010) and P.D. 23-74, which appear to closely resemble the Taxpayer’s operations.

Taxpayer Records

The issue in this case, however, is not whether the Taxpayer’s operations differed from or were similar to the businesses in P.D. 95-158, P.D. 18-215, or P.D. 23-74. Instead, the Taxpayer has failed to provide documentation of its business transactions that would evidence its operational activities and verify the taxability of such transactions.

During the performance of the audit, copies of contracts evidencing the services, realty, accommodations, and tangible personal property included in the wedding packages were requested. The Taxpayer responded that it did not maintain written contracts with its customers.

Under Virginia Code § 58.1-633 A, dealers are required to “keep and preserve suitable records of the sales, leases, or purchases, as the case may be, taxable under this chapter, and such other books of account as may be necessary to determine the amount of tax due hereunder, and such other pertinent information as may be required by the Tax Commissioner.” Title 23 of the Virginia Administrative Code (VAC) 10-210-470 also provides that a dealer is “required to keep and preserve for three years adequate and complete records necessary to determine the amount of tax liability.”

The purpose of an audit by the Department is to evaluate a dealer’s sales and use tax compliance. A dealer is required to maintain proper records and provide them for inspection, such that its sales and use tax compliance can be determined.

CONCLUSION

Virginia Code § 58.1-205 provides that any assessment of tax by the Department is deemed to be prima facie correct and that the burden is on the taxpayer to prove the assessment is erroneous or incorrect. Because the Taxpayer failed to provide adequate documentation to authenticate its activities, the entire proceeds from the package sales were properly held as subject to tax.

Accordingly, the assessment is upheld. An updated bill, with interest accrued to date, will be sent to the Taxpayer. The outstanding balance should be paid within 30 days of this determination to avoid additional interest charges.

The Code of Virginia sections and regulation 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 you have any questions regarding this determination, you may contact * in the Office of Tax Policy and Legal Affairs, Tax Adjudication and Resolution Division, at or **.

Sincerely,

James J. Alex

Tax Commissioner

Commonwealth of Virginia

AR/3460.B

Related Documents

87-69

89-257

95-158

97-84

98-85

02-38

10-242

12-82

13-212

18-215

23-74