1. HOTEL TAXES Accommodating Balanced Reporting Dec 9th, 2014
Brenda Teter
Corporate Tax Manager
direct
(Click to advance each screen.)

2. Committed to DOING IT RIGHT & Minimizing Exposure

3. “Why?”
Not collecting and remitting tax correctly creates substantial audit exposure with taxing authorities down the road.

4. “How?”
Collect tax on taxable revenues & apply tax to taxable purchases
Retain documentation to support exempt sales and tax compliance
Correctly report and pay tax to the tax authorities

5. that help achieve tax compliance...
“Methods”
that help achieve tax compliance...
Tax decisions & assistance
Proper exempt documentation
Comply with 3 general philosophies...

6. 3 General Philosophies... When in doubt, apply tax!
(tax refunds can be issued later to guests –
or requested from vendors on purchases)
If you collect it…you must remit it!
Document, document, document!

7. Tax Exempt Documentation Exempt Organizations ~ (General Rules)
Charitable or educational organizations are typically only exempt from State collected taxes.
Most states require the purchase to be made
directly by the Exempt Organization.
Credit Card (organization name printed on card)
Direct Bill to Educational or Charitable Organization
Check from the School or Organization

8. Tax Exempt Documentation
TEXAS:
Verify your guests claiming State Hotel Tax exemption by accessing the online database of Texas exempt organizations (link below).  It shows the level of exemption granted, such as ‘Sales’ tax exempt or ‘Franchise’ tax exempt, or ‘NOT EXEMPT’ from Hotel Tax - as shown in the example below…

9. U.S. Government Exemptions – General Rule
U.S. Gov’t Agencies are exempt from State & Local taxes.
The BLUE GSA SmartPay2 Card is typically presented at hotels for travel costs and should be accepted if verified guest is on official U.S. Gov’t business and the card’s 6th digit proves it to be a Centrally Billed Account (CBA).
(NEVER ACCEPT THE GREEN VEHICLE CARD)

10. U.S. Government Exemptions
Centrally Billed Travel cards (CBA’s) are exempt from tax in ALL States, 2 require a form.
Individually Billed Travel cards (IBA’s) are exempt in 11 States (in yellow), 6 require a form.

11. U.S. Government Exemptions
GSA SmartPay2 Cards have a 6th digit identifier that proves whether the card is Centrally Billed (CBA) or Individually Billed (IBA). Individually Billed Travel cards (IBAs) are only exempt in 11 States, plus Puerto Rico and the US Virgin Islands.

12. Food & Beverage Tax Exemptions
“Group Event” Contract Language
TAX EXEMPTION:
Tax exemption status, if any, must be established prior to your function. To request state, city, and/or county exemption, please provide a copy of your tax exemption certificate with the signed copy of this agreement. Following receipt of the tax exemption certificate, the hotel will obtain verification of tax exempt status. Please note that state tax exemption will not necessarily invoke city and/or county exemption. In order to validate tax exemption, payment must be made directly from the organization requesting exemption. Any other form of payment will render tax exemption invalid.

13. Exempt Documentation Responsibilities
Front Desk* - Register guest, obtain completed exemption certificate, make a copy of the proof of exempt payment (if credit card – the front only).
Controller/GM - Review daily if the following were retained:
Folio
Tax Exemption Certificate / or applicable document
Proof of Payment
(*For groups & banquets, the Sales group shares responsibility,
or is primarily responsible for obtaining tax exempt documentation.)

14. Exemption Documentation Responsibilities
Controller/GM -
Balance taxes on a daily basis.
Verify exempt documentation is in order while keying tax exempt revenues on tax balancing spreadsheets. If documentation is incomplete, take steps to obtain required documentation, or - do not include in tax exempt totals.
Submit balanced tax exempt documentation to the Home Office at month end (with month end reports).

15. Exemption Documentation Responsibilities
Home Office:
Verify submitted tax documentation is in order
Dissallow tax exemptions with missing documentation. This results in paying tax that wasn’t collected. (An expense is charged against the hotel to cover tax shortage.)
Report and pay tax authorities

16. Long Term Stay Exemptions
Prism SOP calls for tax to be collected from 1st day of guest’s stay - regardless if tax authority allows “intentional” long term stay exemptions from day 1. The guest can have their tax refunded once the required length of stay has been met – where applicable.
Also, a letter of “Intent to Stay Long Term” must be signed by the guest upon check in.
(required in several States)

17. USE TAX Someone Has To Pay

18. Use Tax Taxability Decisions
Use tax applies to the use, consumption or storage of tangible personal property when applicable state sales tax was not paid at the time of purchase.
Tax Rates
The use tax rate is generally the same as the sales tax rate (except in AZ & NM).

19. Use Tax Reporting Responsibilities - HOTEL
Each property is responsible for reviewing their purchase invoices (on expenses) & accruing use tax if applicable sales tax was not charged by the vendor.
In general, supplies purchased for use by the hotel (not being resold) must have sales tax on the invoice. Some services and labor may not be taxable. (When in doubt, please call the Prism office.)
Accrue use tax on food & beverage that was purchased without tax and used in a “complimentary” manner for hotel guests (where applicable).

20. Sample

21. Use Tax Reporting Responsibilities - HOME OFFICE
Periodically review expense invoices to confirm use tax is being accrued properly where needed.
Accrue tax on capital purchases and renovations.

22. Is it Hotel Tax, or Sales Tax, or Use Tax?
Questions...