sales tax; transient lodging
exemptions
Retroactive to June 8, 1994, excludes, from transaction privilege taxation (TPT), food and drinks that are served complimentary by and at a hotel or any other temporary lodging.
Currently, if an item is resold in the regular course of business then the item is not assessed a TPT. DOR requires proof that an item is actually resold in the regular course of business. Therefore, DOR maintains that if an item is not specifically shown to be resold, then that item is subject to a tax under the vendor’s retail classification. In this case, if a hotel provides food to customers for free (even if the food is ultimately incorporated in the room rate), the food is subject to taxation because it is not separately shown as a resale item. Essentially, the hotel is assessed a TPT on the room rate and the hotel restaurant is assessed a TPT on the food.
S.B. 1130 specifically exempts, from TPT, food and drink that are served complimentary by and at the hotel.
A fiscal note has been prepared.
· Exempts, from the retail classification of TPT and use taxation, food and drink served free of charge at hotels and other temporary lodgings.
· Applies changes retroactively to June 8, 1994.