State and Local Tax Attorneys in Dallas, TX – Hotel and Lodging Taxes
Texas law defines a “hotel” broadly to include hotels, motels, tourist homes, tourist courts, lodging houses, inns, rooming houses, bed and breakfasts, and short-term room rentals like Airbnb and HomeAway. This definition applies only to rooms used for sleeping—not to food sales, meeting spaces, or banquet rooms.
Hotels and lodging establishments in Texas may be subject to multiple taxes such as hotel occupancy taxes, sales and use taxes, franchise taxes, and property taxes. Each tax carries its own reporting, remittance, and compliance requirements, with penalties for noncompliance.
Hotel Occupancy Taxes
Hotels are required to collect and remit hotel occupancy taxes on the cost of guest stays, including access to hotel amenities such as pools and exercise rooms. This applies to all lodging types, from traditional hotels to treehouses, boathouses, and tiny cabins.
The hotel occupancy tax is imposed at both state and local levels. The state tax rate is set by the Texas Tax Code, and local jurisdictions, such as cities and counties, may impose additional taxes. Hotels must remit these taxes to the appropriate taxing authorities, including the Texas Comptroller for state taxes and local authorities for local taxes. These taxes help promote tourism and support the convention and hotel industry. For this reason, municipalities may levy a tax on anyone who rents a hotel room in their city.
Sales and Use Taxes
Hotels and lodging establishments in Texas are also subject to sales and use taxes on taxable goods and services provided to guests, including consumables such as soap, shampoo, pens, notepads. These taxes are governed by the Texas Tax Code and the Texas Administrative Code. Some items provided to guests may qualify for exemptions; for example, hotel consumables may be eligible for a sale-for-resale exemption if they are included in the lodging fee rather than sold separately.
Hotels must collect and remit these sales taxes to the Texas Comptroller. Failure to do so can result in fines, interest, and Comptroller audits.
Franchise Taxes
Hotels operating in Texas are subject to the Texas franchise tax, which is based on the business’s taxable margin (revenue earned from operations within Texas). The franchise tax must be reported and paid annually to the Texas Comptroller. Noncompliance, such as failure to file franchise tax returns or pay the tax, can result in penalties, including interest on unpaid taxes and potential legal action to recover unpaid amounts.
Property Taxes
Hotel and lodging establishments are also subject to Texas property taxes. Understanding how these taxes are assessed and reported is essential for compliance and cost management.
Enforcement and Penalties
The Texas Comptroller of Public Accounts enforces the Texas Tax Code, which is both a civil statute and criminal statute. This means the Comptroller may impose civil fines, assess penalties, and even refer violators for criminal prosecution. Hotels have an obligation to keep contemporaneous records and must collect and remit taxes as prescribed by the Code. If adequate records are not available, the Comptroller has the authority to estimate the taxes owed.
Why Choose Coleman Jackson, P.C.?
Our experienced Dallas-based SALT attorneys assist hotels and lodging establishments with:
- Obtaining required sales/use tax, occupancy, and franchise permits and registration
- Compliance guidance and remediation for past violations, including negotiations with government officials
- Maintaining accurate records to meet reporting requirements
- Representation in administrative audits and hearings
- Representation in judicial forums
- Assistance with other regulatory and business law matters
Need an Experienced SALT Lawyer for Your Hotel or Lodging Business?
Contact the experienced State and Local Tax Attorneys at Coleman Jackson, P.C. at (214) 599-0431 for help with audits, compliance, and litigation related to hotel and lodging taxes.
