Did limited religious-group rentals or nonprofit status exempt a Christian camp from Illinois Hotel Operators' Occupation Tax?

Plain-English summary

A religious camp asked whether lodging limited to Christian retreats and youth programs, plus nonprofit status, avoided Hotel Operators' Occupation Tax (HOOT).

IDOR said a facility renting sleeping accommodations exclusively to its own members generally was not open to the public. A facility renting to members and the public was open to the public, making all rental receipts subject to HOOT.

Nonprofit or E-number status did not exempt the operator because HOOT was imposed on the hotel operator, not the room occupant. IDOR said the described camp generally had to register and remit HOOT on all rentals.

What this means for you

Mission restrictions do not necessarily equal members-only lodging. Document exactly who can rent and do not assume a sales-tax exemption number applies to operator-level hotel tax.

Common questions

Did nonprofit status exempt the camp? No.

What if lodging was truly members-only? IDOR said such a facility generally would not be considered open to the public.

Citations and references

• 35 ILCS 145/2(1), (3), and (6).
• 86 Ill. Adm. Code 480.101(b)(3).
• Compliance Alert CA-2016-15.

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2016.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2016/st-16-0052-gil.pdf

Original ruling text

ST 16-0052-GIL 09/30/2016

HOTEL OPERATORS’ TAX

This letter discusses the Hotel Operators’ Tax Act. See 86 Ill. Adm. Code 480.101(b)(3). (This
is a GIL.)

September 30, 2016

Dear Xxxxx:
This letter is in response to your letter dated July 25, 2016, in which you requested information.
The Department issues two types of letter rulings. Private Letter Rulings (“PLRs”) are issued by the
Department in response to specific taxpayer inquiries concerning the application of a tax statute or
rule to a particular fact situation. A PLR is binding on the Department, but only as to the taxpayer
who is the subject of the request for ruling and only to the extent the facts recited in the PLR are
correct and complete. Persons seeking PLRs must comply with the procedures for PLRs found in the
Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General Information Letter
(“GIL”) is to direct taxpayers to Department regulations or other sources of information regarding the
topic about which they have inquired. A GIL is not a statement of Department policy and is not
binding on the Department. See 2 Ill. Adm. Code 1200.120. You may access our website at
www.tax.illinois.gov to review regulations, letter rulings and other types of information relevant to your
inquiry.
The nature of your inquiry and the information you have provided require that we respond with
a GIL. In your letter you have stated and made inquiry as follows:
I have been advised to write to this department, by the tax helpline on the Illinois’
website, to get a legal clarification on hotel operator’s occupation tax, for summer
camps/religious church retreat centers. The law states that anyone who is in the
business of renting hotel rooms (any building with living quarters) to the public is subject
to this tax. However the law never defines the word public and has not issued rulings
for summer camps/church retreat centers. This leads to the following instances that I
am requesting clarification:
I.

Would a camp that is only for Christian groups to host overnight retreats
and camps be subject to the tax since they are only offering this to one
group of people. If another religion asked to rent this space they would be
denied. Would it prevent the tax if only groups within a certain distance
(mileage) were allowed to rent.

II.

Would children only summer camp be described as private since only
children are allowed?

III.

If non for profits are not subject to other Sales Taxes and other types of
tax, why are they subject to this tax?

Please advise and give a legal understanding to these more complex tax issues.
DEPARTMENT’S RESPONSE:
The Hotel Operators' Occupation Tax Act (“HOOT”) imposes a tax upon persons engaged in
the business of renting, leasing or letting rooms in a hotel, as defined in the Act. HOOT defines
“hotel” to include any building or buildings in which the public may, for consideration, obtain living
quarters, sleeping or housekeeping accommodations. See 35 ILCS 145/2(1). HOOT defines “rent”
as “the consideration received for occupancy, valued in money, whether received in money or
otherwise, including all receipts, cash, credits and property or services of any kind or nature.” See 35
ILCS 145/2(6). The definition of “rent” must be read in conjunction with the term “occupancy.” HOOT
defines “occupancy” as “the use or possession, or the right to the use or possession, of any room or
rooms in a hotel for any purpose, or the right to the use or possession of the furnishings or to the
services and accommodations accompanying the use and possession of the room or rooms.” See 35
ILCS 145/2(3).
If a person engaged in the business of renting, leasing or letting sleeping accommodations
does not rent rooms to the public but, rather, rents exclusively to its members, the Department would
generally not consider the facilities open to the public. In contrast, if a person engaged in the
business of renting, leasing or letting sleeping accommodations rents rooms to its members, as well
as to the public, the Department would consider the facilities open to the public and, thus, all rental
receipts would be subject to HOOT.
HOOT operates very differently from what is commonly referred to as “sales taxes” in Illinois.
In Illinois, sales tax consists of two separate but complementary taxes. The Retailers’ Occupation
Tax (ROT) is imposed on the retailer and the Use Tax (UT) is imposed on the purchaser. Since the
UT is imposed on the purchaser, there is a tax to which an exempt purchaser’s exempt status can
attach and, because these taxes are complementary, if the purchaser is exempt from paying UT, then
the retailer is generally exempt from paying ROT. As a result, when an exempt entity purchases
tangible personal property and presents its exemption identification number (“E” number) to a retailer,
its purchases are exempt from UT and the retailer is exempt from ROT.
However, that is not the result with HOOT. Under HOOT, tax is imposed only upon the hotel
operator. There is no complementary tax imposed upon the room occupant. Since there is no tax
liability imposed upon the room occupant, there is nothing to which an occupant’s sales tax exempt
status can attach. A hotel operator is not exempt from HOOT when renting rooms to entities holding
“E” numbers issued by the Department.
HOOT authorizes hotel operators to collect an amount from their customers that represents
reimbursement for the hotel operators’ tax liability. The fact that room occupants hold an exemption
identification number issued by the Department does not exempt them from paying this
reimbursement charge, if imposed by the hotel operator.
The Department recently issued a Compliance Alert to educate and remind taxpayers who rent
sleeping accommodations both to its members and to the general public that all its rental receipts are
subject to HOOT. See CA-2016-15. After issuing the Compliance Alert, the Department followed-up
with several examples of “frequently asked questions and answers” (FAQs). Many of the questions
you have asked can be answered by reviewing these documents, as well as other materials found on
the Department’s website. Specifically, you may wish to review General Information Letter ST 08-

0167, dated December 5, 2008, which discusses liability for HOOT and Retailers’ Occupation Tax in
regard to a religious organization’s summer camp lodging provided to members and nonmembers.
Generally, the situations you have described will require the camp to be registered and to remit
HOOT on all rentals.
I hope this information is helpful. If you require additional information, please visit our website
at www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at (217) 782-3336.
Very truly yours,

Debra M. Boggess
Associate Counsel
DMB:bkl