ARIZONA STATE SENATE
Phoenix, Arizona
sales tax, transient lodging
Purpose
Retroactive to June 8, 1988,
excludes, from transaction privilege taxation (TPT), food and drinks that are
served complimentary by and at a hotel or any other temporary lodging.
Background
Currently, if an item is
resold in the regular course of business then the item is not assessed a
TPT. The Department of Revenue (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.
The fiscal impact has yet to
be determined.
Provisions
1. Exempts, from the retail classification of TPT and use taxation, food and drink served free of charge at hotels and other temporary lodgings.
2. Applies changes retroactively to June 8, 1988.
Prepared by Senate Staff
January 25, 2001