Texas Hotel Occupancy Tax Exemption

 

There are often questions about whether the permanent resident exemption to the state and local hotel occupancy tax applies to a given situation, and at what point in time the guest becomes tax exempt.  This FAQ provides hoteliers with answers to their most frequent questions on the 30-Day “Permanent Resident” exemption.

What is the hotel occupancy tax “permanent resident exemption?”

When the hotel occupancy tax was first adopted in 1959, the Texas Legislature recognized the need to exempt long-term guests from paying hotel occupancy taxes.  This exemption ensures that hotel guests staying over 30 days are taxed the same as residents staying at extended-stay properties, apartments, corporate rental facilities, and rental houses.  The Texas Legislature continues to recognize the importance of this principle, and provides for permanent resident exemptions from both state and local hotel occupancy taxes for guests, regardless of the type of accommodation the guest selects.

Who qualifies as a “permanent resident?”

The Texas Tax Code states that any “person” who has the right to use or possess a lodging room for at least 30 consecutive days is exempt from state and local hotel occupancy taxes, provided there is no interruption in payment for the room during this period.  In Texas, a “person” also includes a corporation or business.  Therefore, one should look to whether the same person or corporate entity or business paid for the room for that entire period.

When does a guest qualify for the permanent resident exemption?

If, in advance or upon check-in, the guest provides written notice of intent to occupy a guest room for 30 days or longer, no tax is due for any part of a guest’s stay.  A signed registration card indicating a guest’s intent to occupy a room for 30 days or longer is sufficient evidence.  A written reservation or confirmation of a reservation that indicates the stay will be more than 30 days is also sufficient notice.

If a guest does not provide notice of intent to stay 30 days or longer, when does the guest become exempt from hotel occupancy taxes?

If no notice is provided upon check-in that can be documented by a written agreement (guest reservation, confirmation, registration, or folio or separate agreement), the first 30 days of the guest’s stay are not tax-exempt.  However, the guest becomes automatically tax exempt on the 31st day of their stay—regardless of whether there was prior notice of the guest’s intent to stay for 30 days or more, as long as there has been no interruption in payment for the room.

If a guest has a reservation for over 30 days, may the hotel choose to continue to collect hotel occupancy tax during the guest’s stay?

THLA recommends hoteliers collect hotel occupancy taxes from the guest for the first 30 days of the guest’s stay.  On the 31st day of the guest’s stay, provided there is no interruption of payment for the room and there was written notice or a reservation indicating the guest’s intent to stay 30 days or longer, the hotel should refund the collected hotel occupancy taxes for the first thirty days.  This protects the hotel from incurring a tax liability should the guest check out before staying at least 30 days.  An exception would be possible if the guest paid in advance for the entire 30 days and there was no allowance for a refund if the guests checks out early.

What if the guest checks out before he or she has stayed 30 days?

If the guest checks out prior to staying 30 consecutive days, hotel occupancy taxes are due for the guest’s entire stay, regardless of whether there was written notice or agreement that the guest would stay 30 days or longer.  Again, THLA recommends hoteliers collect occupancy taxes for the first 30 days of the guest’s stay to avoid the hotel being liable for the tax should the guest check out early.

A few days after checking in, a guest provides written notice of her intent to stay 30 days or longer.  When does the guest become exempt from hotel occupancy taxes?

In this situation, the guest would not be tax exempt for the days this room was occupied prior to notifying the property of her intent to stay 30 days or more.  The guest will likely become tax-exempt beginning the day notification was given to the hotel, although the hotel should continue to collect hotel occupancy tax for the next 30 days.  Thirty-one days after the guest notifies the hotel that the guest intends to stay 30 days or longer, the hotel should refund the collected tax from the date the guest provided notice to present.

If the guest checks out for a day or fails to make payment on the occupied room, would this affect his/her tax exempt status?  

The Texas Tax Code requires uninterrupted payment for thirty consecutive days for an individual or company to qualify for the permanent resident exemption.  If the guest fails to make payment or checks out prior to completing a 30-day stay, they would not qualify for the permanent resident exemption.

Note, however, that permanent residents are not required to physically occupy a hotel room.  The guest can leave the room for extended periods of time, provided the guest is still paying for the room and the guest still has the right to occupy the room.

Is a company eligible for a permanent resident exemption if the company rents a room for more than 30 days but houses different employees in the rented room?

Texas statutes treat the term “person” to include more than just individuals.  In this case, entities such as companies, corporations, and other organizations are treated as “persons” under Texas law.  If a company pays for the rental of a hotel room the company is eligible for a permanent resident exemption, this is permissible.  The company may allow different employees to occupy the room, provided the company meets the requirements of the exemption—renting the room for at least 30 consecutive days with no interruption of payment.  The company renting the room qualifies for the hotel occupancy tax exemption—not the individual who is occupying the room.  The right to the exemption is not impacted by different individuals checking in and out of the room, or individuals switching which room they occupy, as long as the company paying for the room pays for an uninterrupted 30 day period.

Where can I get more information on hotel occupancy tax exemptions?

For more information on hotel occupancy tax exemptions, contact a THLA attorney at 512.474.2996 or via email at .

8 comments on “Texas Hotel Occupancy Tax Exemption

  1. Joyce Carter on

    Is there anything in the Texas codes indicating when the guest has to present the tax exempt forms? My understanding is they must be presented at check in. We have had individuals who do not present the forms while at the hotel and want us to remove the tax after they have left.

    • Monica Whitlock on

      Guests claiming an exemption from hotel occupancy tax should present the required documentation, including a properly completed exemption certificate, at the time of check-in. It may be possible to honor a request for tax exemption at a later time, but best practice is to have the guest claim their exemption at the time of registration. Please feel free to contact our office with any further questions.

  2. Pamela on

    Do you get the tax back for the first 30 days you paid tax ?? I sighned for tax exempt but the hotel said i dont get the tax back.

    • Monica Whitlock on

      Hi Pamela, we would like to assist you in this matter. It is true that guests who provide advance notice of their intent to stay at a hotel for more than 30 days–and in fact do so without any interruption in payment or right to occupy the room–should be rebated hotel occupancy taxes collected for the first 30 days of their stay. Generally, hotels collect occupancy taxes for the initial 30 days in case a guest decides to check out early or there is some interruption in the guest’s occupancy of the room.

      Please call our office at (512) 474-2996 so that our THLA staff can take down the details of your specific situation, including the exact property address and contact information. We look forward to helping you. Thank you.

  3. Danielle on

    Does the hotel guest have to present the form themselves? or Can a hotel print this out FOR THEM and have them fill it out?

    • Justin Bragiel on

      Either is fine, Danielle. The guest can present a tax exemption certificate, or the hotel can provide a copy of the certificate for the guest to complete. This form, referred to by the Texas Comptroller as “Form # 12-302,” is available on the Texas Comptroller’s website here.

  4. Russell on

    I checked in a hotel because my house was being worked on but I had no idea how long it would take to finish the repairs so I stayed at hotel and paid daily rate for over a month, which at time of check in I didn’t know I’d be there that long. However I was there over a month and I’m wondering if I’m eligible to get taxes back without the prior notice. Daily rates fluctuated the whole month I was there.

    • Justin Bragiel on

      Russell, if you did not give the hotel written notice of your intent to stay more than 30 days at or before check-in, hotel taxes must be paid on the first 30 days of your stay. However, after staying for 30 days, you will be exempt from hotel taxes starting on day 31 and beyond, provided your right to stay in a room continued uninterrupted. The tax exemption rules apply whether the rate was a daily rate, weekly, rate, or monthly rate.

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