§ 38.1. Imposition and computation of tax.
(a) Tax imposed upon occupants. An excise tax of 6% of the rent is imposed upon every occupancy by an occupant of a room in a hotel in this Commonwealth. The terms rent and occupancy are defined in § 38.3 (relating to definitions). The tax shall be collected by the operator of the hotel from the occupant at the time the rent is due, whether on a daily, weekly or biweekly rental period basis. In the absence of evidence to the contrary, it is presumed that the rent is due at the expiration of a rental period.
(b) Tax not imposed upon permanent residents. The tax is imposed upon occupants, and not upon permanent residents. Reference shall be made to § 38.3. A hotel operator may not collect tax upon the rent for a rental period during or at the expiration of which the lessee becomes a permanent resident. If a hotel operator collects tax in advance for a rental period which is or becomes exempt from tax by reason of the lessee’s becoming a permanent resident, the operator shall refund the tax so collected to the ‘‘permanent resident,’’ and may not report or remit each erroneously collected tax to the Department.
(c) Taxable rooms and facilities. The occupancy of a room in a hotel is subject to tax, including but not limited to sleeping rooms, living quarters, housekeeping accomodations, sample rooms, display rooms, function rooms, meeting rooms, banquet and dining rooms, ballrooms, theaters, auditoriums, kitchens, offices, lobby space, garage facilities and commercial establishments. The use or possession, or right to use or possess, furnishings, services and accommodations which accompany the use or possession of a room, is also considered occupancy and is subject to tax. Reference should be made to § 38.3.
Example. G rents facilities of the H Hotel for a party. In connection therewith, the hotel renders the following bill:
Rental of ballroom… $500 Food and soft drinks… 200 Liquor… 100 Party favors… 25 Services of hotel orchestra… 200 Service charge… 200
(1) The service charge item includes the furnishing by the hotel of waiters, kitchen help, barmen, checkroom girls and janitors, and the use of the hotel kitchen, checkroom, bar equipment, furniture, janitorial, facilities, glassware and the like.
(2) Hotel Occupancy Tax is due upon the following items: Rental of Ballroom…$500. Service charge… 200.
(3) Although the hotel separately itemizes the service charge for the services of hotel employes and the use of hotel facilities and property other than the ballroom itself, the furnishings, services and accommodations are deemed to accompany the use or possession of the ballroom, and the charge therefor is considered part of the rent. Reference should be made to § 38.3.
(4) With respect to the food, drinks, other than liquor, and party favors, the provisions of the sales and use tax portion of the TRC are applicable and the hotel is required to collect and remit sales tax upon 6% of the purchase price of these items.
(5) The services of the hotel orchestra are not deemed to accompany the use of the ballroom, since services are available to persons other than lessees of the ballroom and the charge made therefor is not less than that made to persons other than hotel occupants or residents. Reference should be made to § 38.3.
(d) Property sold or leased. Tangible personal property which is sold by a hotel operator may be subject to tax under the provisions of the sales and use tax portion of the TRC. Property which is furnished by a hotel operator for use by hotel occupants and residents or other persons, the use of which is not deemed to accompany the use of a room or rooms, so that the charge therefor is not considered part of the rent, may also be subject to sales and use tax. In such case, the operator is required to collect and remit the tax in accordance with the provisions of the sales and use tax portion of the act and to otherwise comply with the provisions of that act and of the regulations promulgated thereunder. Reference should be made to § 38.3.
Example. H hotel rents beach chairs to persons using its swimming pool, charging the same rate to hotel occupants and residents as to other persons. The furnishing of such beach chairs is not deemed to accompany the use of hotel rooms, and the charge made therefor is not rent. Reference should be made to § 38.3. Therefore, Hotel Occupancy Tax is not due upon such charges. However, the rental is subject to sales and use tax under the act, and H must collect the tax, remit it, and otherwise comply with the sales and use tax requirements.
(e) Tax upon meals. The sale of meals by a hotel for consumption upon hotel premises, is subject to tax when the price of the meal exceeds 10¢. This is imposed as a sales and use tax under the act and not as a Hotel Occupancy Tax, and should be so reported to the Department. The tax is due upon meals sold both to hotel occupants and residents and to other persons.
(1) Price of meals included in rental charges. Where the amount charged by a hotel operator or rent includes the price of any meals, the tax upon the meals shall be separately reported. The charges for meals, when not separately stated and itemized by the operator, shall be presumed to be distributed as follows, unless, upon application of a hotel operator, the Department approves a different basis:
Table 1—Meals included with room rent Allocation of charges for
rooms and mealsRoom Meals Breakfast only … 90% 10% Lunch or dinner only … 75% 25% Breakfast and dinner, or lunch & dinner 65% 35% Breakfast, lunch and dinner 50% 50% (2) Exemptions from tax upon sale of meals. The sales and use tax portion of the TRC makes provision for certain exemptions from the sales and use tax upon the sale of meals. Note that the exemptions do not apply to room rentals. Reference should be made to § 38.2. Those persons who under § 38.2 (relating to exemptions) are exempt from the Hotel Occupancy Tax under § 38.2 are exempt from tax upon their purchase of meals. However, the sale of meals to permanent residents, as that term is defined in § 38.2 is subject to tax even though the permanent resident may be excluded from tax on his room rentals. In addition, the sale of meals to a ‘‘religious organization,’’ ‘‘charitable organization,’’ or ‘‘nonprofit educational institution,’’ as those terms are defined in § 32.1 (relating to definitions) may be exempt from tax provided that the following requirements are met:
(i) The organization or institution shall meet the terms of the definitions of ‘‘religious organization,’’ ‘‘charitable organizations,’’ or ‘‘nonprofit educational institutions,’’ as provided in § 32.1.
(ii) The meals shall be sold to the organization or institution itself, and not to individual members of the organization or institution. The sale of meals to individual members of an organization or institution is subject to tax, even though the organization or institution to which they belong may be entitled to exemption from tax.
(iii) The organization or institution shall furnish the hotel operator a properly executed exemption certificate. In the case of a charitable organization, the form shall contain a charitable exemption number. Provided that all of the foregoing requirements are met, a hotel operator may sell meals to an organization or institution without collection of sales tax. Note, however, that the exemption granted by the sales and use tax portion of the TRC is not applicable to rentals of hotel rooms and facilities by such organizations and institutions. Thus, where a charge is made by the hotel operator for the use of dining or banquet rooms, meeting rooms, auditoriums, ballrooms, and the like, the rental charges are subject to hotel occupancy tax, even though the organization or institution renting the rooms or facilities is exempt from sales tax upon its purchase of meals.
(f) Presumption of taxability. For the purpose of proper administration of the tax, it is presumed that all rents are subject to tax until the contrary is established, and the burden of proving that a rent or occupancy is not taxable is upon the operator.
Source The provisions of this § 38.1 amended October 24, 1975, effective October 25, 1975, 5 Pa.B. 2844.
Cross References This section cited in 61 Pa. Code § 38.3 (relating to definitions); and 61 Pa. Code § 38a.1 (relating to scope and application of Chapter 38—Hotel Occupancy Tax—statement of policy).
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