The Georgia Department of Revenue issued a letter ruling, providing guidance for the application of the State Hotel-Motel Fee (“Fee”).  A taxpayer was concerned with whether they were required to collect the Fee based on the local jurisdiction mandating that they were required to collect and remit an excise tax on any rooms furnished to the public.

Taxpayer, a not-for-profit organization that offers youth camps and adult retreats, provides various types of accommodations including dorms, cabins, and multi-housing units, all of which accommodate several people per room.  However, these are not private rooms and guests cannot exclude other guests from these rooms.  Additionally, Taxpayer does not provide linens or traditional hotel-type services for these accommodations.  There is no daily room service in the manner of a hotel or motel, and guests are generally expected to perform basic cleaning upon their departure.  In addition to these accommodations, Taxpayer offers a lodge.  The lodge is a stand-alone building with 21 rooms providing private sleeping quarters.  Linens are provided at the lodge.

In Georgia, innkeepers must charge a Fee of $5.00 per night to hotel customers for each night a hotel room is rented unless the rental is specifically excluded from the fee or until the rental becomes an extended stay rental.  Related legislation defines an “innkeeper” as any person who is subject to taxation for the furnishing for value to the public a hotel room.  Any entity required by the local jurisdiction to collect an excise tax on its sales of accommodations is an innkeeper, requiring them to collect the Fee.  For the imposition of the Fee, a “hotel” is considered any building having five or more hotel rooms under common ownership, regardless of the name of the facility or its classification.  A “hotel room” is a room in a hotel that provides private sleeping accommodations to paying customers that typically includes linen or housekeeping service.  Furthermore, a “hotel room” is occupied by transients or travelers who have an agreement for the private use or possession of the room.  Rooms must also provide the customer with the right to exclude other customers from the room to be considered a “hotel room.”

Here, Taxpayer’s dorms, cabins, and multi-unit housing did not provide private sleeping accommodations with linens and therefore did not fall within the definition of hotel rooms.  The lodge, contrarily, is a single building under common ownership with 21 separate, private sleeping accommodations that include linens.  Accordingly, the lodge is a hotel, and the rooms within the lodge are considered “hotel rooms” subject to the State Hotel-Motel Fee.

As an entity required by the local jurisdiction to collect an excise tax on its furnishing of accommodations, Taxpayer is considered an innkeeper.  As an innkeeper, Taxpayer is obligated to collect the State Hotel-Motel Fee on its rentals of hotel rooms.  Although Taxpayer’s dorms, cabins, and multi-unit housing were not considered hotel rooms subject to the Fee, the lodge was considered a hotel.  Therefore, rentals of these rooms are subject to the State Hotel-Motel Fee.  Georgia seemingly is taking the stance that an entity’s status, here a not-for-profit organization, does not affect whether they may be subject to the obligation of collecting the State Hotel-Motel Fee on a hotel room rental.

This may affect you if you provide private sleeping accommodations with linens.  To register to pay tax in Georgia, you will need to visit the Georgia Tax Center Website.  If you would like to apply for a voluntary disclosure you can apply using the Voluntary Disclosure Application.  A qualified tax attorney can assist with the execution of the application and potential questions or concerns that may arise in the process.

Jeanette Moffa is an attorney who concentrates on state and local taxes at Moffa, Sutton, & Donnini, P.A. She is an executive council member of the American Bar Association Tax Section State and Local Tax Committee and the Florida Bar Tax Section. Ms. Moffa is an author of both the CCH’s Expert Treatise Library: Sales and Use Tax as well the ABA’s Sales and Use Tax Deskbook. In addition, her regular columns on state and local tax issues can be found in State Tax Notes and Actionline, a publication from the Florida Bar’s Real Property, Probate, and Trust Law Section. She also serves as assistant editor to the Sales and Use Tax Deskbook and Actionline. Ms. Moffa is a regular speaker at the American Bar Association Tax Section conferences, the Institute of Professionals in Taxation, the Florida Bar Tax Section, the Florida Bar Real Property, Probate, and Trust Law Section, and the FICPA. In her free time, she teaches as an adjunct professor at Broward College. She can be reached at JeanetteMoffa@MSDTaxLaw.com.

Posted in Georgia Sales Tax, Multi-state sales and use tax