Tax Type
Retail Sales and Use Tax
Description
Hotel accommodations; Exemption criteria for diplomats, federal government
Topic
Exemptions
Date Issued
09-10-1992
September 10, 1992
Re: Request for Ruling: Sales and Use Tax
Dear***************
This will reply to your letter of December 18, 1991 in which you request a ruling as to the sales and use tax application to certain situations encountered by******************(the Taxpayer).
I will set forth the questions and answers in the same order as presented in your letter.
Question 1: What documents must a member of an exempt organization or a diplomat present to the desk clerk in order to perfect the exemption?
Answer: In order for a member of an exempt governmental organization to enjoy the sales tax exemption on. hotel room occupancy, the exempt organization's credit must be bound by the transaction, i.e. Governmental I.M.P.A.C. credit cards, and not the credit of the individual member, i.e. personal credit cards. As a general rule, members of exempt nonprofit organizations do not enjoy an exemption for lodging, regardless of whether the paid for by the individual or the organization.
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- Diplomats must present Diplomatic Tax Exemption Cards issued by the United States Department of State. The exemption card will clearly state whether the diplomat may acquire lodging tax free.
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Question 2: What form of documentation or records of exempt sales must be kept by the hotel?
Answer: A Xerox copy of the exempt credit card or diplomatic exemption card must be kept in hotel files.
Question 3: Does the state have a list of approved exempt organizations?
Answer: The department does not publish a list of approved exempt organizations. However, exemption certificates Form ST-12 and ST-13 provide for governmental exemptions and nonprofit exemptions, respectively. Copies of these exemption certificates are enclosed.
Question 4: Does the federal government exemption apply to Armed Forces personnel on official travel orders?
Answer: Yes, provided the government's credit is bound by the transaction. (See Answer to 1).
Question 5: VR 630-10-45 indicates that payment by "government credit card" is acceptable as a form of direct billing to the government. (a) Are there specific acceptable, or unacceptable, cards? (b) What are these cards? (c) How may employees recognize acceptable cards?
Answer: This issue is currently being researched by the Department of Taxation to determine which cards enjoy the exemption. As set forth above, I.M.P.A.C. credit cards are the only identifiable approved cards at this time. Personal credit cards should never be accepted as exempt cards.
Question 6: Are independent contractors employed by the federal government eligible for a tax exemption if their hotel charges are paid directly by the contracting agency?
Answer: Yes, provided the credit of the federal government is bound by the transaction, i.e., by direct billing to the government or use of a government credit card.
Question 7: When a government agency pays the hotel charges, can it do so by electronic funds transfer, rather than by check, and still meet the requirement of direct payment?
Answer: Yes.
Question 8: (a) When an organization such as an airline enters into a binding written contract for a block of rooms for 90 days or more, are there specific conditions, requirements or wording required in the contract? (b) May the rooms be sold as tax exempt from the first day? (c) Must the occupancy be in the same room for the entire period? (d) Must the same individual occupy the room for the entire period?
Answer: (a) No. (b) Yes, provided there is at least a 90 continuous day obligation which is bound by the contract. (c) No. It is only necessary that the hotel provide a specified number of rooms for the duration of the entire contract period. (d) No. The occupant of the room may vary as need be.
I have enclosed copies of VR 630-10-45 and VR 630-10-48, dealing with Governments and Hotels, respectively. If you should have any further questions, please feel free to contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/5856K
Rulings of the Tax Commissioner