DEPARTMENT OF STATE REVENUE
SUBJECT: Sales Tax Application to Furnishing of Accommodations
SUMMARY OF CHANGES
This version of the bulletin has been changed from the previous version to now include a hotel tax matrix, which identifies various hotel transactions and provides guidance as to whether those transactions are subject to sales/use tax and innkeeper's tax. This version of the bulletin also has been changed to clarify that if an accommodation is rented for 30 or more consecutive days, the renter is entitled to a refund of any sales tax paid on the first 29 days of the rental. Additional clarification also has been provided regarding the exemptions available to government and nonprofit rentals of accommodations.
Indiana sales tax applies to the rental of rooms, lodgings, camping space, or other accommodations in Indiana furnished by any person engaged in the business of renting or furnishing such accommodations for periods of less than 30 consecutive days. Persons furnishing such accommodations must register as retail merchants and must collect sales tax from their customers.
DEFINITION OF ACCOMMODATIONS
"Accommodation" means any space, facility, structure, or combination thereof including booths, display spaces and banquet facilities, together with all associated real or personal property, which is intended for occupancy by persons for a period of less than 30 consecutive days. The term includes, but is not limited to, the following:
• Rooms in hotels, motels, lodges, ranches, villas, apartments, houses, bed and breakfast establishments, and vacation homes or resorts;
• Gymnasiums, coliseums, banquet halls, ballrooms, arenas, and other similar accommodations regularly offered for rent;
• Cabins or cottages;
• Tents or trailers (when situated in place);
• Houseboats and other craft with overnight facilities;
• Space in camper parks and trailer parks wherein spaces are regularly offered for rent for periods of less than 30 days; and
• The renting or furnishing of cubicles or spaces used for adult relaxation, massage, modeling, dancing, or other entertainment to another person.
The term "accommodation" does not include vendor spaces occupied for periods of less than 30 consecutive days by merchandise trailers, absent the incorporation of tangible property or an amenity designed to support occupancy by human beings. Examples of amenities designed to support occupancy by human beings include, but are not limited to, utility connections and structures such as roofs and walls. Accordingly, "primitive" campsites (those that provide no amenities) and parking spaces for cars and trucks are not included in the term "accommodation."
The tax is imposed on the gross receipts received by the retail merchant and includes the amount that represents consideration for the rendition of those services which are essential to the furnishing of rooms or accommodations, as well as those services which are provided in the ordinary and regular course of business of furnishing rooms or accommodations. Such amounts are subject to tax even if they are separately itemized on the statement or invoice. This includes, but is not limited to, telephone access charges, food or drink services provided by a retail merchant to customers, and membership fees charged to customers, provided the charges are included in the room charge.
EXEMPTIONS FROM THE TAX
An accommodation that is rented for 30 consecutive days or more is not subject to the sales tax. The customer is required to pay, and the accommodation provider is required to collect and remit, the tax for the first 29 days if the customer is billed on less than a monthly basis. However, if the guest ends up staying for 30 or more consecutive days, the guest is entitled to a refund of the sales tax.
A business rents accommodations for its employees and signs a lease for 4 months, payable monthly. The first 29 days would not be subject to tax.
A business rents accommodations for its employees and signs a lease for 4 months. The business pays the rental on a weekly basis. The business is required to pay sales tax on the first 29 days of the rental. However, upon the 30th consecutive day of the rental, the business is entitled to a refund of sales tax paid on the first 29 days. The business can either seek a refund from the department (via a Form GA-110L Claim for Refund) or from the hotel or accommodation provider. If the hotel or accommodation provider refunds the tax to the business, the hotel or accommodation is then eligible to seek a refund of the tax from the department, assuming the refund is sufficiently documented.
When a business entity rents rooms for employees, the entity–not the employee who stays in the room–is renting the rooms, for the purpose of determining whether the rental is for 30 consecutive days or more. The contract does not have to be for a specific room as long as the continuous stay portion of the contract remains in effect.
An innkeeper moves two occupants of rooms rented on an extended stay to make a contiguous area available for a convention that wants all of their rooms together. Moving the people in the extended stay contract does not void the contract.
NONPROFIT AND GOVERNMENT RENTALS
The tax does not apply to the rental of meeting rooms to charitable or nonprofit organizations if the facility is to be used for furtherance of the purpose for which the organizations are granted the exemption. In order to qualify for the exemption, an organization must present a properly completed exemption certificate to the accommodations provider, and the room must be invoiced to and paid directly by the charitable or nonprofit organization. Payment made by a member of the charitable or nonprofit organization that will be reimbursed by the organization disqualifies the purchase from exemption. Unlike meeting rooms, the rental of ordinary hotel/motel transient (i.e., sleeping) rooms for periods of less than 30 consecutive days to members of charitable or nonprofit organizations is subject to sales tax, even if the charitable or nonprofit organization pays for the room(s). There is an exception from this general rule for charitable or nonprofit organizations that rent ordinary hotel/motel transient (i.e., sleeping) rooms for individuals as part of the organization's mission, such as housing individuals who are displaced by natural disasters. In these rare instances, where the room is being rented to further the explicit mission of the organization and the rental is for the benefit of a non-member of the organization, the rental is not subject to tax. For more information related to the exemptions available to charitable or nonprofit organizations, please refer to the Hotel Tax Matrix below and Sales Tax Information Bulletin #10, available online at: http://www.in.gov/dor/3650.htm.
A nonprofit organization holds an annual conference at a hotel. As part of the conference, the nonprofit organization rents several meetings rooms and also rents a block of transient (i.e., sleeping) rooms for its members attending the conference. The hotel invoices the nonprofit for all the rentals, and the nonprofit organization pays the charges directly from its corporate funds. Rental of the meeting rooms is exempt from tax, but rental of the transient rooms is subject to tax, even though payment was made directly by the exempt organization.
With regard to rentals made by the federal government, its agencies, and instrumentalities, the tax does not apply to the rental of meeting or transient (i.e., sleeping) rooms if the federal government, agency, or instrumentality submits a properly completed exemption certificate and the accommodation is invoiced to and paid directly by the government entity.
With regard to Indiana state and local government entities, the tax does not apply to the rental of meeting rooms if the government entity predominantly uses the facility to perform its governmental function, submits a properly completed exemption certificate, and the accommodation is invoiced to and paid directly by the government entity. Similarly to rentals by federal government employees, but unlike the exemption available for charitable or nonprofit organizations, the rental of ordinary hotel/motel transient (i.e., sleeping) rooms for periods of less than 30 consecutive days to Indiana state or local government entities is not subject to sales tax. In order to qualify for the exemption, the government organization must submit a properly completed exemption certificate and the room must be invoiced to and paid directly by the government entity. Payment made by a government employee that will be reimbursed by the government entity disqualifies the purchase from exemption. The exemption available to state and local government entities is available only to Indiana state and local government entities and does not apply to out-of-state government entities. For more information related to the exemptions available to Indiana state and local government entities, please refer to the Hotel Tax Matrix below and Sales Tax Information Bulletin #4, available online at: http://www.in.gov/dor/3650.htm.
A county sheriff's office rents a transient hotel room for one of its employees attending a conference on behalf of the office. The employee submits an ST-105 exemption certificate, claiming the government exemption, but pays for the room with his own credit card. He explains that he will be reimbursed by the county when he submits his travel report. The rental of the room is subject to tax. Had the employee paid for the room with a credit card or check in the name of the county, the rental would have been exempt from tax.
Note: A person is not a retail merchant if the person is a promoter that rents a booth or display space in a facility that is operated by a political subdivision (including a capital improvement board established under
IC 36-10-8 or IC 36-10-9) or the state fair commission. However, this does not exempt the renting of accommodations by a political subdivision or the state fair commission to a promoter or an exhibitor.
RELIANCE ON GENERAL SALES TAX EXEMPTION CERTIFICATES
Any organization or entity renting a transient (i.e., sleeping) or meeting room exempt from sales tax must provide the retail merchant with a properly completed and facially valid exemption certificate, such as the Form ST-105 General Sales Tax Exemption Certificate, available online at: http://www.in.gov/dor/3504.htm. This is true regardless of whether the entity renting a room is a federal, state, or local government entity.
The employee of a nonprofit organization rents a transient (i.e., sleeping) room and pays for the room with a credit card issued by the nonprofit organization. The nonprofit employee fills out a Form ST-105 and claims the exemption applicable to nonprofit organizations. The retail merchant is not relieved of its obligation to collect and remit sales tax. The Form ST-105 is not facially valid since a nonprofit organization may not rent a hotel sleeping room exempt for use by its own employee, even when directly invoiced for the transaction.
The rental of rooms, lodgings, camping space or other accommodations to a person for periods of less than 30 consecutive days for the purpose of subleasing or subletting such accommodations to others, may be done exempt from tax. However, in such situations, the sublessor must register as an Indiana retail merchant and must collect the tax from the person to whom the accommodation is ultimately leased.
HOTEL TAX MATRIX
The following matrix identifies various hotel transactions and provides guidance as to whether the transactions are subject to sales/use tax and innkeeper's tax. For more information related to innkeeper's tax, please refer to Departmental Notice #40, County Innkeeper's Taxes.