Florida Department of Revenue
Hotel/ Transient Rentals
Standard Industry Guide
Standard Industry Guide
Hotels
PURPOSE ............................................................................................................................................... 3
OVERVIEW OF METHODS OF OPERATION............................................................................................. 4
ACCOUNTING SYSTEMS ........................................................................................................................ 5
GENERAL TAX CONSIDERATIONS .......................................................................................................... 5
Accommodation Rentals ................................................................................................................... 5
Ground Leases .................................................................................................................................. 6
Ticket Sales ....................................................................................................................................... 6
Vacation Packages ............................................................................................................................ 6
Management Companies .................................................................................................................. 6
TYPES OF EXEMPT TRANSACTIONS ....................................................................................................... 6
Bona Fide Written Leases ................................................................................................................. 6
Continuous Residence ...................................................................................................................... 7
Federal Employees ............................................................................................................................ 7
Governmental Units (Non-Federal) and Other Exempt Organizations ............................................ 7
Military Personnel............................................................................................................................. 8
SPECIAL CONSIDERATIONS ................................................................................................................... 8
Conference Facilities ......................................................................................................................... 8
Audio and Visual Services ................................................................................................................. 8
Catering ............................................................................................................................................ 8
Telephone Calls ................................................................................................................................. 8
Purchases .......................................................................................................................................... 9
Rewards Points Programs ................................................................................................................. 9
GLOSSARY OF TERMS ..........................................................................................................................11
TAX STATUTES AND RULES ..................................................................................................................12
COURT CASES IMPACTING THE INDUSTRY ..........................................................................................12
DECLARATORY STATEMENTS ..............................................................................................................13
TECHNICAL ASSISTANCE ADVISEMENTS .............................................................................................13
TAX INFORMATION PUBLICATIONS (TIP).............................................................................................14
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PURPOSE
This guide provides an auditor with information on the subject industry. This
information will assist an auditor in recognizing areas to test for compliance with Florida
sales and use tax laws.
After reviewing this guide, an auditor will be better able to understand issues involving:



Tax implications affecting the subject industry;
Sales tax issues likely to surface relating to the subject industry; and
Relevant statutes, rules, court cases and other technical documents
Helpful tax publications provided by the Department of Revenue available online:
Industry Specific:
Sales and Use Tax on Rental of Living or Sleeping Accommodations
Sales and Use Tax on Commercial Real Property Rentals
General:
Sales and Use Tax Guide for Business Owners
Audit Information
Florida Sales and Use Tax
Discretionary Sales Surtax
2013 Florida Statutes
Florida Administrative Code Rule 12A
These reference materials and the technical documents cited herein have been provided as
informational guidelines for performing tax audits and are intended to be used as internal
management memoranda. They are not rules, orders, or policy statements of general
applicability, and as such, do not represent the formal position of the Florida Department
of Revenue. No representation is made regarding the Department’s opinion of the
precedential value of the court cases cited herein. They are provided for informational
purposes only. Statutes, rules, court cases, or other technical documents subject to
change are current as of the publication date of this document. Refer to the Tax Law
Library for an updated listing of such documents. The Tax Law Library can be accessed
through the Department of Revenue web site:
http://www.myflorida.com/dor/
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OVERVIEW OF METHODS OF OPERATION
Hotels and motels generally cater to the traveling public, providing rooms and, in some
instances, a restaurant and/or a cocktail lounge. They may range in size from small onestory establishments to multi-storied complexes, and they may be family owned and
operated or part of a regional or national chain.
Usually, separate records are maintained for the room rentals, restaurant, and cocktail
lounge operations. In some locations, the restaurant and lounge operations are leased to a
separate business enterprise. Vending machines are common at hotels and motels and the
ownership of the machines and the servicing arrangements may vary between locations.
Another convenience that may be found at a hotel or motel is a retail outlet, either owned
or operated by the hotel or motel management or operated by another party under a lease
arrangement.
A hotel or motel may be operated by the owner or lessee or the owner or lessee may
choose to employ a manager to oversee the operation. In some instances, the manager
may be a management company that specializes in managing hotels and motels for
others.
Hotels and motels are primarily in the business of renting, leasing, letting, or granting
licenses to use accommodations to overnight or short-term guests. However, they may
also offer accommodations for longer periods of times, such as for six months or less, or
for longer than six months, with or without entering into a bona fide lease agreement.
Some hotels and motels may have permanent residents or guests who have resided in the
hotel or motel for longer than six months. Accommodations may be part of a hotel or
motel employee’s agreed-upon consideration paid for employment.
For the benefit of the guests, a hotel or motel operator may sell tangible personal property
and offer other services and conveniences. These may include food and beverage sales at
one or more fixed locations; portable mini-bars; round-the-clock room service; pay-perview movies and electronic games via television; telecommunication services; facilities
for the transmission of information by computers; facsimile transmissions and
photocopying; rentals of roll-a-way beds and baby cribs; parking for free, or for a charge,
or valet parking services; specific accommodations and meeting rooms for conventions,
banquets, and parties; transportation to and from an airport, train depot, bus station, or
other local sites; ice available at no charge; gift, barber, flower shops and beauty salons;
and one or more swimming pools, spas, saunas, and exercise rooms. A hotel or motel
may operate or lease space for others to operate businesses in the hotel or motel lobby
such as vehicle rentals; ticket sales to local attractions, parks, or tours; or sales of airline,
bus, or railroad tickets.
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ACCOUNTING SYSTEMS
For recording transactions and reservations, a hotel or motel operator may maintain a
manual, computerized, or combination system. Nevertheless, certain books and records
are useful only to this industry. Sales and charges for accommodations are listed in an
account set up for each guest by room number on a summary called a “Folio” or “Guest
Ledger Card.” Basic transactions, such as daily room rental charges, are posted daily.
The basic charge is listed prior to the application of taxes, with one or more line entries
used to apply Florida sales tax and any other taxes that may be imposed on the
transaction.
Other transactions, such as charges made by the restaurant, flower shop, or the charge for
telecommunications, may be listed. These charges may include the applicable taxes due.
For each taxable charge, tax is due on each transaction at the moment each transaction
takes place. For example, if a guest orders room service food or beverages each day for
three days and charges the orders to the room account (folio), sales tax must be added to
each food order when the order is recorded on the charge slip signed by the customer.
The folio must be presented in such detail that the proper tax rate charged on each
transaction can be determined.
The books and records of hotels and motels are similar to most other businesses. Each is
composed of subsidiary ledgers that are summarized and posted to the general ledger.
Many hotels or motels use a “City Ledger” that functions as a subsidiary to the general
ledger. It lists and summarizes transactions that do not appear on the daily cash report.
Most hotels or motels keep each of the separate ledgers together in a separate binder by
month.
Hotels and motels also use general ledger cost centers to facilitate the tracking of revenue
and expenses. These ledgers are classified into categories such as Rooms, Utilities, Food,
Beverages, Catering/Banquet, or Administrative.
These categories are then
further broken down into sub-accounts such as Sales, Labor, Payroll Taxes, or Supplies.
GENERAL TAX CONSIDERATIONS
Accommodation Rentals
Florida sales tax is imposed on the privilege of engaging in the business of providing
transient living accommodations. See Section 212.03(1), F.S. and Rule 12A-1.061,
F.A.C. Tax is due on the total rental charge, which includes any amounts required to be
paid as a condition of the use or occupancy of the accommodation.
Commercial Rentals
Hotels or motels may rent or grant a license to use real property to various tenants who
occupy the premises (lobby or otherwise) as retail establishments. These tenants may
offer such things as newsstand items, gift items, transportation, car rentals, business
services, game room, coin-operated laundry machines, and coin-operated vending and
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amusement machines. The consideration received by the hotel or motel for the use of, or
license to use, such real property is subject to tax.
Also, a hotel operator may be leasing the land and hotel from another party. For the
methodology used to calculate the taxable portion of the lease, see TAA 05A-014, and
Section 212.031(1)(a)2., F.S.
Ground Leases
Some hotels and motels may enter into lease agreements or licenses to use the real
property upon which the hotel or motel is situated. These transactions are defined as
commercial rentals and not leases of transient accommodations. However, when all or a
portion of this real property is used for transient rental purposes, that portion is not
defined as a commercial rental.
Ticket Sales
Tickets for admission to theme parks, shows, and sporting events may be sold by the
motel or hotel or by another person who maintains a sales location in or near the lobby.
Such sales are taxable.
Vacation Packages
For a single price, the hotel or motel may supply lodging for a certain number of nights,
certain meals during the stay, and admission to one or more theme parks, athletic/sporting
events, or cultural events. This single price may also include transportation to and from a
given location in or outside the United States. The sale of vacation packages is governed
by Rule 12A-1.005(6), F.A.C.
Management Companies
Many hotel and motel owners employ management companies to manage their
properties. If the terms of the employment contract designate the management company
as responsible for the collection and remittance of sales and use taxes, the management
company should be registered with the Department of Revenue under its own name with
a “doing business as” (d/b/a) in the name of the property.
TYPES OF EXEMPT TRANSACTIONS
Bona Fide Written Leases
When any person has entered into a written lease for longer than six months in duration
for continuous residence at the same transient accommodation to which the written lease
applies, the person is exempt from tax on the rental charges or room rates. The exemption
will be disallowed based on the number of days in the rental period if the rental period is
no lo nger than six months. See Rule 12A-1.061(15), F.A.C. and TAA 03A-030
(Airlines).
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Continuous Residence
When any person has continuously resided at any transient accommodation for a period
of longer than six months and has paid the applicable tax due on the rental charges or
room rates for the first six months, that person is exempt from tax on the rental charges or
rooms rates due for that transient accommodation after the first six months of the
continuous rental period. See Rule 12A-1.061(14)(b), F.A.C.
Federal Employees
A federal employee will be entitled to rent sleeping accommodations exempt from sales
tax upon submission to the dealer of either of the following documents:
1. A copy of the official Federal Government Travel Orders which specifically
authorize that individual to acquire sleeping accommodations at government
expense for that specific period, or
2. A written statement, to which the employee swears or affirms, showing:
a. His or her name,
b. The name and address of his or her employer,
c. The need for the purchase has arisen in pursuit of his or her employer’s
affairs, and
d. The government of the United States either will pay the bill directly, or
will be providing reimbursement to the employee for the actual cost of the
purchase. Suggested affidavit in Rule 12A-1.038(4), F.A.C. Also see Rule
12A-1.061(13), F.A.C., Chestnut Fleet Rentals, Inc. and American
International Rent-A-Car of Florida, Inc. v. State, Department of Revenue,
559 So.2d 264 (1st DCA, 1990) 1 , and Declaratory Statement of
Department of Navy, Case No. 90-011DS.
Governmental Units (Non-Federal) and Other Exempt Organizations
Transactions involving employees of governmental units other than federal government
(i.e., state, county, city, or any other political subdivision of the State) and authorized
representatives of organizations that hold a Consumer’s Certificate of Exemption issued
by the Department are exempt from tax on rental charges or room rates for transient
accommodations only when:
a. The rental charges or room rates are billed directly to and paid directly by the
governmental unit or the exempt organization;
b. The employee or representative does not use the transient accommodations for
personal purposes; and
c. The employee or representative provides the owner or the owner’s representative
of the transient accommodations with proper documentation. See Rule 12A1.038(4), F.A.C.
1
Chestnut Fleet Rentals, Inc. and American International Rent-A-Car of Florida, Inc. v. State, Department
of Revenue, 559 So.2d 264 (1st DCA 1990), the court ruled that the rental of cars directly to Federal
Government and the rental car company was not subject to tax. The court held that the employees were
acting as instrumentalities of the U.S. Government when paying for their car rentals. The method of
payment used by the employee was immaterial.
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Military Personnel
Rental charges or room rated paid by military personnel currently on active duty and
present in the community under official orders are exempt. To qualify for the exemption,
the military personnel must present either of the following documents to the owner or
owner’s representative of the transient accommodations:
1. A copy of the official orders supporting the active duty status of the military
personnel and making it necessary to occupy the transient accommodation; or
2. A copy of an overflow certificate issued to military personnel on active duty
status by any unit of the U.S. Armed Services.
See Declaratory Statement, Department of Navy 90-11.
SPECIAL CONSIDERATIONS
Conference Facilities
Conference services offered might include banquet rooms, food, beverages, meeting
rooms, rooms for lodging, transportation services, etc. The guests may use all or only a
portion of these. When the total charge does not separately itemize items that are not
subject to taxation, such as transportation charges, from items subject to tax, the entire
charge is subject to tax. However, when the charge for each type service is itemized, tax
is calculated on each sale or service transaction subject to tax.
Audio and Visual Services
Large screen television sets, digital video recorders, video cassette recorders,
microphones, slide and movie projectors, etc., are often maintained and made available
for use as part of the charge for banquet or conference rooms. As such, the total charge
for these rooms including special equipment is subject to tax. When such equipment is
provided or rented for a separately stated charge, tax is due on that charge.
Catering
Food and beverage catering is part of the banquet department. The food or beverages
served may be purchased already prepared, or prepared and served on site by the
motel/hotel, or the preparation process may be subcontracted to a person in the business
of providing such services. The charges made for catered food or beverages are subject
to tax.
Telephone Calls
Effective October 1, 2001, the sale of local and long distance telephone calls by a hotel or
motel is subject to Communication Services Tax under Chapter 202, F.S. The receipts
from these charges are subject to gross receipts tax under Chapter 203, F.S. The amount
of sales tax due is based on the total charge made to the guest, including the amount of
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gross receipts tax due at the time the payment is received. See TIP 01BER-01 and TIP
02A19-01.
Purchases
The following transactions are subject to sales or use tax except as noted.
Barter transactions, such as transient accommodations for advertising are taxable. See
Rule 12A-1.061(3)(f), F.A.C.
Designers/purchasing agents who design room and common area refurbishment are
usually paid a percentage of the refurbishment purchased. If they act as consultants, the
transaction is exempt from sales tax. If they act as purchasing agents, the transaction
may be either taxable or exempt from sales tax, depending on whether tangible personal
property was purchased and resold.
Materials and supplies used by the repairman in performing real property repairs, and
which do not become a component part of the real property repaired, are taxable to the
repairman as overhead items. The overhead items may include tools, flux, sand paper,
detergents, paint cleaners, brushes, pails, etc.
Rewards Points Programs
Hotel chains may offer guests membership in a rewards point program where members
can earn points by staying at participating hotels. Members accumulate points and then
redeem them for a room or upgrade at no charge. Points may be earned from Florida
hotels, as well as from hotel rentals in other states and outside the United States.
Members may also earn points by purchasing other items or services, such as air travel or
car rentals. Points may also be purchased with cash. Many programs allow members to
earn points and redeem them for other items and services, such as airline miles, rental car
discounts, or merchandise.
Generally, most participating hotels are contractually obligated to contribute a percentage
of revenues to the reward point program each time a member stays at the hotel and earns
program points. Contributions to the program are generally made on a monthly basis at a
rate of between 2 and 6 percent of the participating hotel’s nightly room rate. The
programs are generally administered by the hotel chain or a related business entity, but
they may be administered by a separate unrelated business entity. Administrative fees
may also be assessed against the participating hotel.
When a member accumulates a sufficient number of points to redeem for a room or
upgrade at a participating hotel, the points are redeemed through the program’s
redemption center. The redemption center makes reservations for the room or upgrade at
a participating hotel. The member is provided a certificate or confirmation number that is
presented to the hotel when the guest checks in at the hotel.
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The reward point program reimburses the participating hotel when a member uses
accumulated points for a room or upgrade. A credit may be issued against the hotel’s
monthly obligation to the program or the program may issue a payment to the hotel.
The following outlines the application of tax when a member of a hotel reward point
program uses a certificate or confirmation number entitling the member to transient
accommodations at a participating hotel:
1. When a member of a hotel reward point program uses a certificate or
confirmation number entitling the member to transient accommodations at a
participating hotel a no additional charge, the hotel is not required to collect
transient rental taxes from the member.
2. When a member of a hotel reward program uses a certificate or confirmation
number entitling the member to upgrade transient accommodations at a
participating hotel at no additional charge, the hotel is not required to collect
transient rental taxes on the room upgrade; however, the hotel is required to
collect transient rental taxes on the room rate or rental charges that are paid by the
member.
3. When a member of a hotel reward program uses a certificate or confirmation
number entitling the member to transient accommodations and pays the hotel an
additional room rate or rental charges, the member is required to pay the hotel the
transient rental taxes due on the amount of the additional room rate or rental
charge.
Transient rental taxes are due when a hotel receives more in reimbursements from the
program than the hotel contributed to the program. This calculation is determined by
comparing the total reimbursements and total contributions during the previous calendar
year. If the hotel received more in reimbursements than it paid in contributions during
the previous calendar year, the hotel must determine a percentage to be applied to all
reimbursements received during the current reporting period.
This percentage is
calculated as follows:
Total Reimbursements Received in Prior Calendar Year – Total Contributions Paid in
Prior Calendar Year
÷ Total Reimbursements Received in Prior Calendar Year
= Percentage to be Applied to Reimbursements Received in Current Calendar Year
This percentage must be recalculated each January.
If the hotel receives less in reimbursements than it paid in contributions during the
previous calendar year, no transient rental tax is due on any reimbursements received
during the current reporting period. See Rule 12A-1.0615, F.A.C.
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GLOSSARY OF TERMS
Bedding:
Means a mattress, box spring, bed frame, pillows and bed linens as well as sleeper type
couches, futons, and day beds. It also includes roll-a-way beds, baby cribs, and portable
baby cribs.
Block Selling: The practice of selling multiple rooms, usually to a tour operator at a discounted price per
room.
City Ledger:
A subsidiary ledger that lists and summarizes charges that do not appear on the Daily
Cash Report.
Consumables: Means tangible personal property that is used, consumed, or expended by guests or
tenants when occupying transient accommodations, such as soap, toilet paper, tissues,
shower caps, shaving kits, shoe mitts, shampoo, lotions, mouthwash, matches, laundry
bags, swimming suit wrappers, pens, stationery, calendars, toothpaste, toothbrushes,
newspapers, postcards, and guides for guests, books, mints, travel packets, and sewing
kits. This list is not intended to be an exhaustive list.
Cost Center:
The breakdown of the Profit and Loss Statement into various categories, (e.g., rooms
department, banquet department, etc.)
Daily Cash Report:
A summary of the daily front desk transactions that are posted to the general
ledger.
Display Room: A room to be shown to prospective guests and travel agents.
Fixtures:
Means and includes items that are an accessory to a building, other structures, or land and
that do not lose their identity as accessories when installed, but that do become
permanently attached to realty. An example of a "fixture" is an in-room safe that is
installed within a transient accommodation, whether in the wall or bolted to the floor.
Folio:
The term used for each guest’s bill. It lists each transaction charged to or by the guest.
Furnishings:
Means and includes any moveable article or piece of equipment that is provided as a
normal accessory to a particular transient accommodation. Some examples of items that
would constitute a "furnishing," if the item was a normal accessory to a particular
transient accommodation, are furniture, ironing boards, irons, hair dryers, televisions,
video cassette recorders (VCRs), remote controls for televisions or VCRs, microwave
ovens, toasters, or coffee makers. This list is not intended to be an exhaustive list.
Reward Points Programs: Guests membership offered by hotel chains where members can earn points by
staying at participating hotels. Members accumulate points and then redeem them for a
room or upgrade at no charge or other items or services such as airline miles, rental car
discounts, or merchandise..
Rental charges: Means the total consideration received solely for the use or possession, or the right to use
or possession of any transient accommodation.
Sample Room: A room rented for the display of items that do not belong to the hotel/motel. The room is
usually used for samples displayed by salesmen.
Transient accommodation: Means each living quarter or sleeping or housekeeping accommodation in any
hotel, motel, apartment house, multiple unit structure (e.g., duplex, triplex, quadraplex,
condominium), rooming house, tourist or mobile home court (e.g., trailer court, motor
court, recreational vehicle camp, fish camp), single family dwelling, garage apartment,
beach house or cottage, cooperatively owned apartment, condominium parcel, timeshare
resort, mobile home, or any other house, boat that has a permanent, fixed location at a
dock and is not operated on the water away from the dock by the tenant (e.g., houseboat
permanently moored at a dock, but not including cruise liners used in their normal course
of business), vehicle, or other structure, place, or location held out to the public to be a
place where living quarters or sleeping or housekeeping
accommodations are
provided to transient guests for consideration. Each room or unit within a multiple unit
structure is an accommodation.
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TAX STATUTES AND RULES
Topic
Statute (F.S.)
Rule (F.A.C.)
Accommodation Rentals
212.03(1)
12A-1.061
Barter
12A-1.061(3)(f)
Commercial Rentals
212.031(1)(a)2.
Communications Services
202.12
Complimentary Meals Exemption
212.08(7)(oo)
Continuous Residence
Enforcement, Exemptions
12A-1.061(14)(b)
212.03
12A-1.061
Exempt Transactions
12A-1.061(15)
Federal Employees
12A-1.038(4)
12A-1.061(13)
Non-Federal Governmental Units/Other Exempt Organizations
12A-1.038(4)
Rewards Points Program
12A-1.0615
Tax on Gross Receipts
for Utility Services
Telephone Calls
203.01
202
203
Transient Rental Tax; Rate, Procedures,
Vacation Packages
12A-1.005(6)
COURT CASES IMPACTING THE INDUSTRY
Chestnut Fleet Rentals, Inc. and American International Rent-A-Car of Florida, Inc. v.
State, Department of Revenue, 559 So.2d 264 (1st DCA, 1990
Issue: The court ruled that the rental of cars directly to Federal Government and the
rental car company was not subject to tax. The court held that the employees were acting
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as instrumentalities of the U.S. Government when paying for their car rentals. The
method of payment used by the employee was immaterial.
Florida Hotel And Motel Association, Inc. v. State, Department Of Revenue, 635 So.2d
1044, (Fla. 1st DCA 1994).
Issue: The taxability of items that hotels and motels use in the guest rooms that are
incident to the business of the hotel or motel.
These items include towels, soaps,
mattresses, etc.. The items are not purchased for resale but are available to the guest for
their use. The rent charged for the rooms does not deem these items as having tax paid
on them.
DECLARATORY STATEMENTS
Case DOR 92-1, Florida Hotel and Motel Association, Inc., et al.
Case DOR 90-011, Department of the Navy
TECHNICAL ASSISTANCE ADVISEMENTS
TAA 10A-1008 Purchase of Accommodations for Resale – A registered dealer who
purchases accommodations for resale does not owe tax on the units that remain unsold.
TAA 06A-045 Reservation and Application Fees – Fees paid for the processing of an
application or that are not paid as a condition of the use of an accommodation are not
taxable rent.
TAA 05A-014 Commercial Rentals- methodology to calculate taxable portion of a lease
when the hotel operator is leasing from another party.
TAA 03A-030 – Bona Fide Written Leases – specifically addressing airlines.
TAA 02A-043 Bona Fide Written Leases – Date of rental payment does not affect the
finding of a bona fide written lease.
TAA 00A-008 Reservation Vouchers – No tax is due on the sale of a reservation voucher.
Tax is only due when the guest presents the voucher to the hotel.
TAA 94A-043 No-show and Late Cancellation Fees — Rental of tangible personal
property is not transient accommodations.
TAA 92A-066 Non-Performance Fee — Recording of a fee does not determine its
taxability.
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TAX INFORMATION PUBLICATIONS (TIP)
TIP 01BER-01 – Telephone Calls
TIP 02A19-01 – Telephone Calls
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