Did a nonprofit Christian camp or retreat center avoid Illinois hotel tax by renting only to church groups and youth camps?

Plain-English summary

A nonprofit Christian camp offered dorm-style lodging for church retreats and youth camps and asked whether its restricted religious purpose kept it outside Hotel Operators' Occupation Tax (HOOT).

IDOR said facilities renting sleeping accommodations exclusively to their own members generally were not open to the public. But if a facility rented to members and the public, all rental receipts were subject to HOOT.

Nonprofit status or an Illinois sales-tax exemption number did not change HOOT because the tax was imposed on the hotel operator, not the occupant. There was no occupant tax to which the occupant's exemption could attach. IDOR said the described situations generally required registration and HOOT on all rentals.

What this means for you

Religious purpose and sales-tax exemption are not enough. Analyze who can rent the lodging and whether renters are truly limited to the organization's own members.

Common questions

Does an E-number exempt room rentals? No.

What if rooms are rented only to members? 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-16-0057-gil.pdf

Original ruling text

ST 16-0057-GIL 11/01/2016

HOTEL OPERATORS’ TAX

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

November 1, 2016

Dear Xxxxx:
This letter is in response to your letter dated August 8, 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? Typically local churches rent the campground for the purpose
of a retreat for their congregation members. Aside from renting to
churches, the campground also hosts youth camps lasting up to
one week in duration. At some camps, local area children are
encouraged to take part in performing arts, while other camps
simply break away from the everyday world, all to explore and
further their understanding of Christianity. All endeavors for this

ST 16-0057-GIL
campground include Christianity as its focus, in a nondenominational capacity. This facility on the grounds does contain
rooms similar to dorm rooms; i.e. not just areas for tents. The
grounds do not allow campers or recreational vehicles. Individuals
cannot rent out a room, whether by night or week or month, etc. A
group of individuals wanting to use the space would be permitted
provided they are representing a church i.e. a youth group or an
adult retreat for the weekend. It appears the determination for
whether this camp would be subject to this tax lies upon the
definition of “open to the public.”
II.

If nonprofits are not subject to other sales taxes and other types of
tax, would they be subject to this tax if operated solely for a
purpose of being a place for (a) youth or (b) Christian church group
excursions?

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
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ST 16-0057-GIL
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 their members and to the general public that all
their 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

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