STAR: State Automated Tax Research for the State of Texas

200207378L [Tax Type: Sales] [Document Type: Letter/Memo]

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Texas Comptroller of Public Accounts STAR System

200207378L

DATE: July 25, 2002 TO: David Somerville FROM: Donald S. Dillard VIA: Kirk Davenport SUBJECT: Audio/Visual Equipment Charges by Hotels Charges for audio/visual equipment when renting a meeting or banquet room in a hotel is not the rental of tangible personal property. Like beds, televisions, and other furnishings, there is no transfer of control or possession. While customers may use these items, they do not remove them from the premises [FOOTNOTE: Hearing No. 35,086 - "The fact that some of Petitioner's customers may use the tangible personal property does not transform the item into a rental. A rental requires that possession and operational control be transferred, which is not the case with Petitioner's customers since they are unable to remove the tangible personal property from the event or control it in any other manner."]. Hotels, therefore, owe sales taxes on the purchase or rental of audio/visual equipment. Whether state hotel occupancy tax or sales taxes are due on audio/visual equipment charges is determined by whether or not the hotel is acting as a caterer and if the charges are separately stated. 1. Separately stated charges for audio/visual equipment in conjunction with the rental of hotel meeting or banquet rooms is subject to: a. Sales taxes when the hotel provides food. This concurs with Rule 3.293 and a number of hearings decisions and letter rulings on equipment used at catered events [FOOTNOTE: Hearing No. 35,086 - "The Comptroller's Office interprets the phrase 'all equipment used to provide the food service' to mean any and all equipment used at the catered event, and not limited to just the equipment used to serve the food products."]. See STAR documents 9609L1428G01, 9606983P, 9411L1327D13, 9210L1200F09, 9107H1122G07, and 8807H0887C01. b. State hotel occupancy tax when the hotel does not provide food. Similar to the rental of rollaway beds or extra televisions, this position agrees with Rule 3.162 [FOOTNOTE: Rule 3.162(a)(2) - "All charges for items or services, other than personal services or charges for the use of a telephone, which are furnished in connection with the actual occupancy of the room are subject to the hotel occupancy tax. The taxable charges include charges for the use of a television and charges for the furnishing of additional beds or cots. These charges are includable within the tax base whether or not separately stated."]. 2. Lump-sum charges on the rental of hotel meeting or banquet rooms that includes audio/visual equipment is subject to state hotel occupancy tax, whether the hotel provides food or not. This policy concurs with Rules 3.298 and 3.162, as well as several letter rulings. See STAR documents 200103106L, 200102031L, and 9601472L. In summary, sales taxes are due on separately stated charges for audio/visual equipment when renting meeting or banquet rooms in hotels and the hotel is also the caterer. If the hotel is not providing food, equipment charges, whether lump sum or separated, are subject to state hotel occupancy tax.

ACCESSION NUMBER: 200207378L
SUPERSEDED: N
DOCUMENT TYPE: L
DATE: 2002-07-25
TAX TYPE: SALES