It is easy to get confused about which taxes to collect on the rental of a meeting room or banquet room. Unfortunately, the law on point is itself confusing:

For example, did you realize that state hotel taxes are due on the rental of a meeting room, but local city and county hotel taxes are not due on the rental? And, did you know that if that meeting room is located in a building that is physically separate from the hotel, no hotel taxes are due at all? But, if food is served at the meeting, sales taxes may be due.  

Confused yet?

THLA can help. Here is a simple explanation on which taxes need to be collected in which scenario:

The meeting room/banquet room is located in the same building as hotel sleeping rooms:

  • If the meeting room/banquet room rental has a separate line-item on the guest’s bill:  
    • Collect the State of Texas 6% hotel occupancy tax.
    • Do not collect local city or county hotel occupancy taxes.
    • Collect sales tax on any food sold.  You may also need to collect mixed beverage sales tax.
  • If the meeting room/banquet room is lump-sum billed with other F&B charges:
    • Collect the State of Texas 6% hotel occupancy tax on the lump-sum charge.
    • Do not collect local city or county hotel occupancy taxes.

The meeting room/banquet room is located in a building that is physically separate from hotel sleeping rooms:

  • Do not collect state, city, or county hotel occupancy taxes (unless the meeting room charges are lump-sum billed with sleeping room charges; see above as if the banquet room were connected to the hotel).
  • If food and beverages are served, collect sales tax on the entire charge, even when the banquet/meeting room rental charges and food charges are separately stated.  A charge for the facility is an expense connected with the sale of the meal.

If you have questions, do not hesitate to contact THLA:  512-474-2996 or news@texaslodging.com.

 

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