Reporting and Paying the Meals and Rooms Taxes
To report meals and rooms sales, use the accrual basis. The accrual basis recognizes income as earned at the time of the sale, even if the cash associated with the sale has not yet been received. Thus, all sales made in a month are reported even though not all the receipts from the sales may have been received.
Example:
Quality Hotel rented out 26 rooms in February at $95 each. Sales for the month of February are $2,470. Two of the guests paid by credit card at the end of the month and the payment not yet been received from the credit card company. Quality Hotel reports $2,470 in sales and $222 rooms tax ($2,470 X 9%).
The Department sends you returns once a year preprinted with your name, address, Business Tax Account Number, the reporting period, and the due date. The meals and rooms return booklets have returns to report from July to the following June.
Filing Frequency
The Department determines your filing frequency (how often you report and pay the taxes) based on the amount of your tax obligation. The Department reviews its records annually and may change your filing frequency based either on a change in the amount of your tax obligation or based on your tax compliance history. You will receive at least 30 days notification of any change. You can request, in writing, a different filing frequency, but any change will not take effect until the beginning of a quarter (January, April, July, or October). Do not change your filing frequency until you receive written notification from the Department.
The due dates for filing returns are:
Monthly $501 in annual tax:
Due the 25th of the following month (except Jan: due Feb 23)
Quarterly $500 or less in annual tax:
Due the 25th of the month following the end of the quarter.
Personal Liability for the Tax
Liability for meals and rooms tax falls not only on the business required to collect the tax, but also on any officer or agent of the business who is responsible for collecting and remitting the tax for the business. The Department of Taxes can hold such individual personally liable for any tax that is not timely reported and remitted by the business
ROOMS TAX
is a tax on the receipts received for the right to occupy any room in a hotel.
What Is a Hotel?
Vermont law provides a broad definition of what constitutes a hotel for purposes of the rooms tax. A hotel is an establishment that holds itself out to the public by offering sleeping accommodations for a charge. The definition includes not only what are commonly thought of as hotels, but also inns, motels, tourist homes and cabins, ski dormitories, ski lodges, lodging homes, rooming houses, furnished-room houses, boarding houses, private clubs, bed and breakfasts, and rentals of condominiums, rooms or houses. If you rent accommodations for 15 days or more in a calendar year – even if the property is your own home, and even if the occupant uses the accommodations for something other than sleeping (for example, as a temporary office space) – your property qualifies as a hotel
Taxable Room Charges
Any charge by a hotel that gives a person the right to use rooms, furnishings or services of the hotel is subject to the rooms tax, as long as the establishment meets the definition of “hotel” under Vermont law. The tax applies whether or not the room contains sleeping accommodations, and even if the person did not exercise the right to use or occupy the property.
Examples:
- Best Conference rents a room to a salesperson to display sales samples. The salesperson uses the room only during the day and does not stay overnight. The charge for the room is subject to the rooms tax. The rental entitled the salesperson to the use of the room even though the room was not used for sleeping accommodation.
- Best Conference rents out a conference room for a training seminar. The charge for the room is subject to the rooms tax. The rental provided use of a room in the hotel even though the room was not used for sleeping accommodation.
- Tammy Beech owns a cottage on the lake. She rents the cottage out during the months of June and August to help pay for the expenses of the cottage. Renting more than 15 days in a calendar year means the cottage meets the definition of a hotel. Tammy must collect the rooms tax on the rentals.
Separately Stating the Rooms Tax
You need not separately state the rooms tax, however, you must prominently place a notice in the hotel whether the room charge is “plus tax,” “exclusive of tax,” or “tax included.” If requested, you must provide your customer with a written invoice separately showing the charges for the room and the charge for the tax. You may not, directly or indirectly, indicate that you will pay the rooms tax for the customer, refund the rooms tax to the customer, or that rooms tax is not a part of the entire rental cost.
been without the coupon.
Non-Taxable Rooms Charge
1. Rentals for less than a total of 15 days a calendar year.
Example:
Sue Skier owns a condo at Downhill Ski Resort. She rents it once a year to a neighbor for two weeks and at no other time during the year. Because the total amount of time rented in the calendar year is less than 15 days, the rent is not subject to the rooms tax. Note: If Sue uses a real estate broker or rental agency to rent the condo for her, the rental charge is subject to the rooms tax even if the condo is rented less than 15 days a year.
2. Rentals by a “permanent resident”. The renter of a hotel room for more than 30 consecutive days becomes a “permanent resident” of the hotel after the 30th day, and charges for his or her continual and uninterrupted occupancy from the 31st day forward are not subject to the tax. The occupancy does not have to be for the same room, but must be in the same hotel.
Example:
Martha Seaward is having her house redecorated. During the redecoration, she rents a room at Fine Rooms. The redecoration takes two months. For the first ten days Martha stays in a suite on the third floor but moves to the fifth floor where it is quieter for her remaining stay. The first 30 days of the rental are subject to the rooms tax. The remaining rental is not subject to the tax.
3. Lease of room for more than 30 days. A lease is a type of contract that establishes a landlord/tenant relationship between the parties. If a renter has the right to occupy a room for more than 30 days pursuant to a pre-existing lease, the entire rental is exempt.
Examples:
- Wings R Us Airlines has a one-year lease with Stop Over Inns to provide rooms for its pilots and staff. The inn is to provide a room to the staff but the lease does not rent specific rooms. The price is the same whether the staff stays in the room or not. Wings R Us has a lease with the inn for more than 30 days. The entire lease charge is exempt from rooms tax.
- Jim is in Vermont for business for eight weeks and checks into Homelike Suites, an extended stay hotel. Jim indicates at check-in that he will occupy a suite for the full eight weeks because Homelike offers a discounted price for customers who agree to, and actually stay, 45 days or more. Should customers shorten their lengths of stay to less than 45 days, they agree that they will be charged a higher daily rate, plus a $5 per day penalty. Whether or not Jim agrees to stay, and actually stays, the full eight weeks, the charge for the first 30 days is subject to the rooms tax. Jim becomes a permanent resident on day 31. See # 2, above. In this example, Jim is not subject to a pre-existing lease and is considered a lodger, rather than a tenant; accordingly, the first 30 days of his stay is not exempt from rooms tax.
Collecting the Rooms Tax
Rooms tax charts showing the amount of tax to collect are available on the Department’s website or you can order a supply by fax at (802) 828-5787 or by calling (802) 828-2551.
If you receive payment in a foreign currency, you must convert the foreign currency into U.S. dollars at the current exchange rate and collect the tax based on that amount.
The rooms tax is on the full amount of the charge for the right to occupy the room. If another charge is included in the room price but is not separately stated, the entire cost is subject to the rooms tax.
Personal Liability for the Tax
Liability for rooms tax falls not only on the business required to collect the tax, but also on any officer or agent of the business who is responsible for collecting and remitting the tax for the business. The Department of Taxes can hold such individual personally liable for any tax that is not timely reported and remitted by the business.