Exempt Entity’s Purchase of Hotel Rooms Not Subject to Sales Tax, May Be Subject to Hotel Occupancy Tax

Wednesday, August 21st, 2013

 
 
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A recent letter ruling from the Missouri Department of Revenue held that a nonprofit public corporation's purchase of hotel rooms was exempt as long as the purchases were made within the corporation's exempt functions and activities.

The taxpayer was a nonprofit public corporation created by an act of the United States Congress. The act creating the taxpayer provided that the corporation's activities, assets, and income were exempt from federal, state, and local taxes, but its real property was not. Missouri had granted the taxpayer a limited civic exemption under a statute permitting the exemption of sales made by or to not-for-profit civic organizations in their civic functions or activities. The taxpayer wanted to know whether it could purchase hotel rooms exempt from state sales tax and local hotel occupancy taxes.

The Department of Revenue held that as long as the corporation made the purchases of the hotel rooms in an exempt function or activity, the purchases were exempt from state sales tax. The Department declined to answer whether local hotel occupancy taxes applied. Local jurisdictions administer their own hotel occupancy taxes. Each local jurisdiction will have to determine whether its own hotel occupancy tax applies to this situation.

http://dor.mo.gov/rulings/show.php?num=7315


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