Can an employer rent motel rooms for its employees free of Nebraska sales and use tax when it just pays a daily rate with no 30-day contract?

Plain-English summary

Nebraska exempts long-term lodging from sales and use tax, but the exemption has a paperwork condition. An employer that simply books motel rooms for its workers night by night does not get the exemption just because the stay ends up being long.

The core holding: an employer's motel room rental for employee use "is not exempt from sales and use tax if there is no oral or written contract guaranteeing minimum room rental for a period of at least 30 days."

The Department's reasoning:

• Nebraska Sales and Use Tax Regulation 1-46(2) says sales and use tax does not apply to rooms, lodging, or accommodations supplied to the same tenant for 30 continuous days or more.
• But the exemption applies only if an oral or written contract guaranteeing a minimum room rental per night for at least 30 days exists in advance of occupancy.
• Without such a contract, the accommodations are subject to sales and use tax.
• Here, the employer rented rooms for employee use and paid a daily rate, with no specific contract guaranteeing a minimum period. So the employer must pay sales and use tax on the room rent.

The 30-day exemption turns on the advance commitment, not on how long guests happen to stay.

What this means for you

Employers housing workers in motels

If you want the long-term-lodging exemption, put a contract in place before occupancy that guarantees a minimum room rental for at least 30 days. Booking rooms at a daily rate and hoping the total stay exceeds 30 days will not qualify -- the Department will treat those rooms as taxable.

Hotels and motels

When a business customer books rooms for staff, the rooms are taxable unless there is an advance oral or written contract guaranteeing at least a 30-day minimum. Do not treat a long actual stay as automatically exempt; look for the up-front contract before you stop charging tax.

Accountants and tax professionals

The exemption in Regulation 1-46(2) is conditioned on an advance guarantee, not merely on 30 continuous days of occupancy after the fact. Because this ruling dates to 1976, confirm the current lodging regulation and its wording before relying on it.

Common questions

Q: Are employer-rented motel rooms exempt from Nebraska sales tax?
A: Only if there is an oral or written contract, made in advance of occupancy, guaranteeing a minimum room rental for at least 30 days. Paying a daily rate with no such contract is taxable.

Q: We ended up staying more than 30 days -- is it exempt?
A: Not under this ruling. The exemption depends on an advance contract guaranteeing the 30-day minimum, not on how long the stay actually lasts.

Q: What kind of contract is required?
A: An oral or written contract guaranteeing a minimum room rental per night for at least 30 days, existing before occupancy.

Q: Can I rely on this 1976 ruling today?
A: It states the Department's position and is "binding on the Nebraska Department of Revenue until amended," but it is decades old. Verify the current lodging regulation and consult a Nebraska tax professional.

Citations and references

• Nebraska Revenue Ruling 01-76-25, "Sales and Use Tax -- Motel Room Rental by an Employer for Employee Use" (Nebraska Department of Revenue, issued November 1976; approved by the State Tax Commissioner).
• Nebraska Sales and Use Tax Regulation 1-46(2) -- lodging supplied to the same tenant for 30 continuous days or more is exempt only if an oral or written contract guaranteeing minimum room rental for at least 30 days exists in advance of occupancy.

Source

• Landing page: https://revenue.nebraska.gov/about/legal-information/revenue-rulings-issued-tax-commissioner
• Original PDF: https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/legal/rulings/rr017625_motel_room.pdf

Source-quality note: This ruling survives only as a low-quality scan, and the machine-extracted text below has OCR artifacts (garbled heading and signature block; the regulation is cited in the scan as "L-46 (2"). The holding, the 30-day advance-contract condition, and the daily-rate facts are legible and are the basis for this summary.

Original ruling text

Revenue Ruling L-76-25

Sales and Use Tax - Motel Room Rental
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ÏS NOT EXEMPT FROM SALES AND USE TAX IF THERE
IS NO ORAL OR WRITTEN CONTRACT GUARANTEEING MTNIMUM ROOM
RENTAL FOR A PERIOD OF AT LEAST 30 DAYS.
Advice has been requested as to whether an employer may rent
motel rooms for employee use without payment of sales and
use tax. The employer rented motel rooms for employee use
and paid for the rooms at a d.aity rate. There wàs ño specific contract for room rentar for a guaranteed minimum period
of time.
Nebraska sares and use Tax Regulation L-46 (21 states that
sales and use tax does not apply to rooms, lodging, or
accommodations supplied the same tenant for a period of 30
continuous days or more. Lodging will be exemþt from sales
and use tax onry if an oral or written contract guaranteeing
minimum room rent,al per night for at reast 30 days exists in
advance of occupancy. withouÈ such a contract, the accommodations will be subject Èo sales and use tax.

An employer is required to pay the sales and use tax on the
room rent where no contract existed guaranteeÍng minimum
room rental for at least 30 continuous days.
APPROVED:

rs
State Tax Commissioner
November

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