Must a federal instrumentality pay Georgia's $5-per-night State Hotel-Motel Fee when it rents hotel rooms?

Plain-English summary

The requesting taxpayer was a federal instrumentality of the United States. Although its tangible-personal-property and service purchases were already described as exempt from Georgia sales and use tax, it asked separately whether innkeepers had to charge Georgia's $5-per-night State Hotel-Motel Fee on rooms it rented.

The Department ruled that the instrumentality was exempt to the same extent as the federal government. Its room purchases were not subject to the fee when it paid by:

• check drawn on its account;
• wire drawn on its account; or
• credit card billed to and paid by the instrumentality.

The ruling rests on the taxpayer's status as a federal instrumentality and the constitutional immunity of federal operations from state taxation absent consent.

What this means for you

Federal instrumentalities arranging Georgia lodging

The payment trail matters. The ruling expressly covers checks and wires from the instrumentality's own account and credit cards billed to and paid by it. Preserve invoices and payment records showing the exempt entity was the purchaser and payer.

Hotels and lodging providers

Verify both the federal status of the customer and the stated payment method before omitting the fee. This ruling does not announce a general exemption for anyone traveling on federal business; it addresses the particular federal instrumentality and direct payment methods described above.

Common questions

Q: How much was the State Hotel-Motel Fee discussed in the ruling?

A: The ruling describes a $5 fee per room night, unless a specific exclusion applies or the rental becomes an extended stay.

Q: Does the exemption cover a credit card?

A: Yes, on the facts ruled upon, when the card is billed to and paid by the federal instrumentality.

Q: Does a check or wire qualify?

A: Yes, when it is drawn on the instrumentality's own account.

Q: Why is the taxpayer exempt?

A: The Department said it is a federal instrumentality exempt to the same extent as the United States, whose operations are protected from unconsented state taxation under the Supremacy Clause.

Q: Can another organization rely on this ruling?

A: No. The ruling is limited to the named taxpayer's status, payment methods, and facts, and later legal or factual changes may produce a different result.

Citations and references

Authorities:

• O.C.G.A. § 48-13-50.3(b) -- State Hotel-Motel Fee
• Ga. Comp. R. & Regs. r. 560-13-2-.01(3) -- fee imposition
• Ga. Comp. R. & Regs. r. 560-13-2(7)(b) -- federal-government room rentals
• U.S. Const. art. VI, cl. 2 -- Supremacy Clause
• McCulloch v. Maryland, 17 U.S. 316 (1819) -- federal immunity authority cited by the Department

Source

• Landing page: Georgia Sales & Use Tax Letter Rulings
• Original PDF: LR SUT-2018-02

Original ruling text

Georgia Letter Ruling Number: LR SUT-2018-02
Topic: State Hotel-Motel Fee
Dated: March 12, 2018
This letter is in response to your letter ruling request regarding State Hotel-Motel Fee on purchases of accommodations
in Georgia.
Facts as Presented by Taxpayer
[Redacted], (“Taxpayer”) is a federal instrumentality of the United States. 1 Taxpayer’s purchases of tangible personal
property and services are not subject to Georgia sales and use tax. 2 Taxpayer rents hotel rooms from innkeepers that
are required to charge the State Hotel-Motel Fee. Taxpayer now asks whether it is exempt from the State Hotel-Motel
Fee.
Issue
Are Taxpayer’s purchases of accommodations exempt from the State Hotel-Motel Fee?
Analysis
Innkeepers must charge a fee (the “State Hotel-Motel Fee”) of $5.00 per night to hotel customers for each night a hotel
room is rented unless the rental is specifically excluded from the fee or until the rental becomes an extended stay
rental. 3 The State Hotel-Motel Fee does not apply to hotel rooms rented by the federal government by a check drawn
on a federal government account, by a credit card centrally billed to the federal government, or by a federal government
purchase order. 4
The Supremacy Clause of the U.S. Constitution precludes states from taxing the federal government without its
consent. 5 Taxpayer is an instrumentality of the United States, for purposes of immunity from state taxation levied on
its operations, and such immunity has not been waived by congressional enactment. 6
Ruling
As an instrumentality of the United States, Taxpayer is exempt from taxation to the same extent as the federal
government. For this reason, purchases of accommodations made by Taxpayer are not subject to Georgia’s State
Hotel-Motel Fee when payment for such accommodations is made by a check or wire drawn on Taxpayer’s account,
or by a credit card billed to and paid by Taxpayer.
The opinions expressed in this ruling are based upon the information contained in your request and limited to the
specific transactions, facts, circumstances and taxpayer in question. The facts herein are those presented by the
taxpayer and the Department accepts them as true for this ruling. If the facts presented herein change, are not true, are
different, or material facts have been omitted, the conclusions reached in this ruling may change. In addition,
subsequent statutory or administrative rule changes or judicial interpretations of the statutes or rules upon which this
advice is based may subject similar future transactions to a different tax treatment than that expressed in this ruling.

[Redacted], et seq.
Ga. Comp. R. & Regs. r. 560-12-2-.05.
3
O.C.G.A. § 48-13-50.3(b); Ga. Comp. R. & Regs. r. 560-13-2-.01(3).
4
Ga. Comp. R. & Regs. r. 560-13-2(7)(b).
5
U.S. Const. art. VI, cl. 2; McCulloch v. Maryland, 17 U.S. 316 (1819).
6
[Redacted]
1
2