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Hotel Occupancy Tax Exemptions

November 2003


The 6 percent state hotel tax applies to charges for sleeping accommodations, meeting rooms, and banquet rooms in a hotel or motel.

Local hotel taxes apply only to charges for rooms ordinarily used for sleeping. Cities and counties levy hotel taxes at varying rates.


Hotel Tax Exemptions

There are four types of guests who may claim exemption from state hotel tax: certain nonprofit organizations; government; specific nonprofit entities; and permanent residents.

Employees of nonprofit qualifying organizations are also exempt when traveling on official business of the organization. Representatives claiming an exemption who are not employees of the organization must pay with the organization's funds (check, credit card, or direct billing) to obtain the exemption.

Nonprofit Religious, Charitable, or Educational Organizations

Employees and representatives of nonprofit religious, charitable, or educational organizations are exempt from the state hotel tax when traveling on official business of the organization. The exemption does not cover local hotel taxes, which must be paid.

For purposes of hotel tax exemption, religious organizations are nonprofit churches and their guiding or governing bodies. Missionary organizations, Bible study groups, or churches that are made up of only family members do not qualify.

Charitable organizations are nonprofit organizations that devote all or substantially all of their activities to providing such things as food, clothing, drugs, shelter, or psychological counseling directly to indigent and similar individuals for little or no charge. Not included are fraternal organizations and social, professional, and business groups.

Educational organizations include independent school districts, public or nonprofit private elementary and secondary schools, and Texas institutions of higher education.

To take advantage of the exemption from hotel tax, a nonprofit organization must have an exemption letter from the Comptroller's office. Qualifying organizations must apply for and receive a specific exemption from hotel tax.

Generally, groups will have to submit a written description of the organization's activities and a copy of the articles of incorporation or constitution and bylaws. A statement of income, assets, and liabilities may also be required.

See Comptroller Rule 3.161 for definitions of exempt organizations. For more information on qualifying and applying for a letter of exemption, visit the Exemptions for Qualified Organizations section of our website.


Government

Employees of U.S. government agencies (including military personnel) traveling on official business are exempt from state and local hotel taxes.

With few exceptions, employees of state agencies, boards, commissions, and institutions are not exempt and must pay state and local hotel taxes. Texas state agencies may request a refund of the hotel tax paid. Designated Texas state employees - mostly judicial officials, heads of agencies, and members of state boards and commissions and the Texas Legislature - are issued a special hotel tax exemption photo ID or card and are exempt from the state, city, and county hotel taxes.

Contractors working for the State of Texas or the federal government are not exempt.

Diplomatic personnel with a tax exemption card issued by the U.S. Department of State are exempt from state, city, and county hotel taxes, unless the card specifically excludes hotel taxes.

Employees of city and county governments are not exempt from state and local hotel taxes.

Specific Nonprofit Entities

When traveling on official business, employees of some nonprofit entities are exempt from state and local hotel taxes. The qualifying entity must have a letter of hotel tax exemption issued by the Comptroller's office.

Based on our records, examples include certain nonprofit electric cooperatives, nonprofit telephone cooperatives, nonprofit housing authorities, housing finance corporations, public facility corporations, health facilities development corporations and cultural education facilities finance corporations.

The employee should write the reason for exemption on the certificate. For example, "exempt per Electric Cooperative Act, Utilities Code, Chapter 161" or "exempt per Telephone Cooperative Act, Utilities Code, Chapter 162."

Permanent Residents
(30-Day Rule)

Guests who occupy a hotel room for 30 or more consecutive days are considered permanent residents and are exempt from hotel tax. There can be no interruption of payment during that period.

Guests who notify the hotel in writing of their intention to stay 30 or more consecutive days will be exempt from the date of notification. Guests who do not notify the hotel must pay the tax for the first 30 days and thereafter will be exempt.

Exemption Certificates

Anyone claiming a hotel tax exemption must provide a Texas Hotel Occupancy Tax Exemption Certificate. Hotels must keep a copy of the signed certificate to show why tax was not collected. One exemption certificate can be used to claim exemption for more than one room. Exemption certificates can be accepted in good faith when presented with the following supporting documentation:

  • federal employees traveling on government business - a valid government identification card;
  • designated Texas state employees - a special hotel tax exemption photo ID or card that states holder is exempt from hotel occupancy taxes;
  • foreign diplomats - a tax exemption card issued by the US Department of State that exempts diplomat or mission from hotel occupancy tax, unless the card specifically excludes hotel tax;
  • employees and representatives of a specific nonprofit entity or a nonprofit charitable, educational, or religious organization traveling on organization business - a Comptroller's letter of hotel tax exemption or verification that the organization is on the Comptroller's list of exempted entities, such as a printed copy of the Comptroller's website listing the organization as exempt for hotel tax.

For the online list of organizations that have received a letter of hotel tax exemption, visit our Texas Tax-Exempt Entity Search.

Hotel rules, forms, and other information are available online.

96-224
(11/03)

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