Could a hotel-site-selection company buy Georgia rooms tax-free for resale, and when could federal-government rooms avoid the $5 state hotel-motel fee?

Plain-English summary

The hotel-site-selection company could buy Georgia hotel rooms tax-free for resale, but it was generally liable for the separate $5 state hotel-motel fee unless a narrow federal-government payment test was met.

The company did not own or operate hotels. It contracted with clients for room blocks, contracted separately with Georgia hotels, paid the hotels, and billed its clients at a rate that could be higher, lower, or equal to its hotel cost. The hotels also paid the company a commission.

Sales tax: resale treatment applied

The company was registered for Georgia sales tax and sold hotel accommodations. Its purchases from hotel operators were purchases for resale rather than retail purchases.

It could give the hotel a properly executed resale certificate and buy the rooms without sales tax. As the ultimate seller, it had to remit tax on the price it charged the end user unless that sale qualified for an exemption.

State hotel-motel fee: resale alone did not exempt the rooms

Georgia's separate state hotel-motel fee was $5 for each calendar night a room was rented or leased, subject to specific exemptions.

The reseller did not generally fit an exemption merely because it bought rooms for resale. It could avoid the fee on both purchase and sale only when:

• it knew in advance the rooms were being acquired for resale to the federal government;
• the rooms were actually resold to the federal government; and
• the federal government paid the reseller directly by warrant on appropriated government funds.

The ruling instructed the company to maintain documentation supporting each transaction's treatment.

What this means for you

Hotel-room resellers and site-selection companies

Use a resale certificate for the room purchase, then collect tax on your own room selling price unless the end-user sale is exempt.

Federal contractors

A federal client name alone was not enough for the hotel-fee exception. Document the advance purpose, actual federal resale, and direct government payment from appropriated funds.

Hotels

Keep the reseller's certificate and hotel-fee documentation. Sales tax and the state hotel-motel fee follow different exemption rules.

Common questions

Q: Could the reseller buy rooms without sales tax?
A: Yes, with a properly executed resale certificate.

Q: Which amount was taxed on the resale?
A: The price the reseller charged the end user, unless an exemption applied.

Q: Did resale status eliminate the $5 hotel-motel fee?
A: No, not generally.

Q: When did the federal-government fee exception apply?
A: When the federal resale was known in advance, actually occurred, and the government paid directly by warrant on appropriated funds.

Citations and references

• O.C.G.A. §§ 48-8-1, 48-8-2(31)(B), and 48-8-30
• O.C.G.A. § 48-8-38(a) — exemption certificates
• O.C.G.A. § 48-13-50.3 — state hotel-motel fee
• Ga. Comp. R. & Regs. r. 560-13-2-.01 — hotel-motel fee rules

Source

• Landing page: https://dor.georgia.gov/taxes/tax-rules-and-policies/sales-use-tax-letter-rulings
• Original PDF: https://dor.georgia.gov/document/sut-lr/lr-sut-2020-01/download

Original ruling text

Georgia Letter Ruling: LR SUT-2020-01
Topic: Accommodations, Exempt Transactions
Date Issued: January 28, 2020
This letter is in response to your letter ruling request dated December 17, 2018, regarding the application of Georgia’s
sales tax to certain purchases.
Facts as Presented by Taxpayer
Taxpayer provides hotel site selection services for clients needing guest rooms for meetings and group travel. Taxpayer
does not own or operate a hotel and does not provide accommodations directly. In a typical transaction, Taxpayer
will enter into an agreement with a client to provide hotel rooms in a certain area, for a specific number of days, during
a particular period, at a contractually agreed upon daily room rate. Currently, all of Taxpayer’s Georgia hotel room
transactions are for federal government clients, and these federal government transactions were Taxpayer’s primary
concern in seeking this ruling.
Taxpayer will locate a suitable hotel and contract with the hotel for the rooms to be provided to the client. The hotel
bills Taxpayer for all hotel rooms provided and receives payment directly from Taxpayer. Taxpayer then bills the
client for the number of hotel rooms at the contracted rate. Taxpayer may sell rooms to the client at the same rate, a
higher rate, or a lower rate than was paid by Taxpayer to the hotel. As compensation, Taxpayer receives directly from
the hotel a commission, which is a percentage of the sale. Taxpayer does not come to Georgia at any time; all services
are provided remotely. If there is a problem with the accommodations provided, the client will contact Taxpayer who
acts as the liaison to the hotel. In most contracts, the client is prohibited from contacting the hotel directly.
Given the transaction’s fact pattern, Taxpayer believes its purchases of hotel room accommodations are purchases
made for resale and, thus, tax free.
Issues
1.

Are Taxpayer’s purchases of hotel rooms tax-free purchases made for resale?

2.

Can Taxpayer purchase hotel rooms for resale without the payment of Georgia’s State Hotel-Motel Fee?

Analysis
Purchases Made for Resale
Georgia levies and imposes a tax (subject to certain exemptions) on the retail purchase, retail sale, rental, storage, use,
or consumption of tangible personal property and on certain enumerated services. 1
“Retail sale” means any sale, lease, or rental for any purpose other than for resale, sublease, or subrent. 2 The term
“retail sale” includes the sale or charges for any room, lodging, or accommodation furnished to transients by any hotel,
inn, tourist camp, tourist cabin, or any other place in which rooms, lodgings, or accommodations are regularly
furnished to transients for a consideration. 3 When a sale of tangible personal property or taxable service is made for
resale, it is not a retail sale and, accordingly, not subject to sales and use tax.
Every person purchasing or receiving any service within this state, the purchase of which is a retail sale, shall be liable
for tax on the purchase at the rate of 4 percent (plus applicable local tax) of the sales price of the purchase. The tax
shall be paid by the person purchasing or receiving the service to the person furnishing the service. The person
furnishing the service, as a dealer, shall remit the tax to the Department. Every person furnishing a service, the
purchase of which is a retail sale, shall be a dealer and shall be liable for a tax on the sale at the rate of 4 percent (plus
applicable local tax) of the sales price made for furnishing the service, or the amount of taxes collected by him from
the person to whom the service as furnished, whichever is greater. 4
O.C.G.A. §§ 48-8-1 and 48-8-30.
O.C.G.A. § 48-8-2(31).
3
O.C.G.A. § 48-8-2(31)(B).
4
O.C.G.A. § 48-8-30(f)(1).
1
2

Georgia Letter Ruling: LR SUT-2020-01
Topic: Accommodations, Exempt Transactions
Date Issued: January 28, 2020
Page 2 of 2
All gross sales of a retailer are subject to sales and use tax until the contrary is established. The burden of proving that
a sale of tangible personal property or a taxable service is not a retail sale is upon the seller unless the seller, in good
faith, accepts from the purchaser a certificate of exemption stating that the property or service is purchased for resale
or is otherwise tax exempt. 5
State Hotel-Motel Fee
The state hotel-motel fee is a $5.00 fee imposed pursuant to O.C.G.A. § 48-13-50.3 and Rule 560-13-2-.01 for each
calendar night a hotel room is rented or leased, subject to certain exemptions and exclusions, e.g., the federal
government, foreign diplomats, student housing, special care facilities, and certain rooms used by the hotel. 6
Innkeepers are required to collect the fee from the customer at the time of sale and then to pay such fee to the
Department on a monthly basis. 7
Rulings
1.

Taxpayer has a Georgia sales tax account and a hotel-motel fee account and is engaged in the sale of hotel room
accommodations. Taxpayer’s purchases of hotel rooms from hotel operators are not subject to sales tax as they
are purchases made for resale. As a business engaged in the sale of hotel room accommodations, Taxpayer may
purchase the hotel rooms for resale tax free by providing the hotel operator a properly executed resale certificate.
As the ultimate seller of the hotel rooms to end users, Taxpayer must remit tax on the sale price charged by
Taxpayer to the end users (unless an exemption applies).

2.

Taxpayer does not fall within the scope of one of the specific hotel-motel fee exemptions or exclusions. Thus,
Taxpayer is generally liable for payment of the state hotel-motel fee on all hotel rooms purchased for resale.
However, when Taxpayer knows ahead of time that it is acquiring rooms for resale to the federal government, the
rooms are in fact resold to the federal government, and the federal government pays Taxpayer directly by warrant
on appropriated government funds, Taxpayer does not have to pay the state hotel-motel fee on its purchase or sale
of the rooms.

Taxpayer should maintain documentation to support the tax treatment of all transactions.
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.

O.C.G.A. § 48-8-38(a).
Ga. Comp. R. & Regs. r. 560-13-2-.01(7)(a)-(f).
7
O.C.G.A. § 48-13-50.3(b).
5
6