Is a company providing temporary housing to students and interns in a former dorm operating a taxable 'hotel' for NY sales tax?

Plain-English summary

The Petitioner, an LLC, offers temporary housing to international students and interns in a former college residence hall it operates under contract with a NYC-area college. To stay, an occupant must be an enrolled student or a bona fide intern (a student ID is generally needed to enter). Rooms have a bed and basic furnishings (no phone/TV, no private bath or kitchen -- bathrooms and a kitchen are shared). Each room gets sheets, towels, a blanket, and a pillow at the start, but no linen, laundry, or housekeeping services. There's a common area with computers but no organized entertainment, and a main desk (security, mail, messages) but no concierge. Booking is online; rent is calculated weekly but no stay under 30 days is allowed; occupants agree to house rules but don't sign a lease.

The Office of Counsel concluded it is not a hotel:

• The hotel tax applies only to a "hotel." Section 1105(e)(1) taxes the rent for occupancy of a room in a hotel (excepting permanent residents and very low rents). The regulation (20 NYCRR 527.9(b)(1)) lists factors for what's a hotel, including whether (iii) housekeeping, linen, or other customary hotel services are provided.
• No customary hotel services here. The Petitioner gives bedding once at arrival, but occupants handle their own laundry and cleaning; there's no restaurant/food service and none of the other customary services (planned activities, concierge, valet). It fails that element (citing TSB-A-91(44)S, where efficiency units with no maid, food, or common hotel services weren't taxable).
• Result: taking the factors together, the Petitioner is not operating a hotel, so the rentals are not subject to New York State or local sales and use taxes.

What this means for you

Student / intern / extended-stay housing

Providing rooms without the customary hotel services -- no housekeeping, no linen service, no food, no concierge/activities -- generally means you're not a "hotel," so your room charges aren't subject to sales tax. Supplying bedding once at check-in doesn't, by itself, make you a hotel.

It's the services, not just the building

A former dorm, shared baths, a front desk, and a 30-day minimum all pointed the same way, but the decisive factor was the absence of customary hotel services. If you add maid service, linen changes, food service, or concierge-type amenities, you can cross into "hotel" and taxable occupancy.

Local occupancy tax is separate

This opinion addresses State and local sales tax only. A separate local hotel/occupancy tax can have its own rules -- check the locality.

Common questions

Q: Is my student/intern housing a taxable hotel?
A: Not if you don't provide customary hotel services -- no housekeeping, linen service, food, or concierge. Then the room charges aren't subject to sales tax.

Q: We hand out sheets and towels at move-in -- does that make us a hotel?
A: No. Providing bedding once at arrival, while occupants do their own laundry and cleaning, isn't "customary hotel services."

Q: What would make us a hotel?
A: Adding maid/housekeeping, linen changes, food service, or concierge-type amenities can tip you into "hotel" status and taxable occupancy.

Q: Can I rely on this opinion?
A: It binds the Department only as to the petitioner. Use it as guidance and confirm your own facts.

Citations and references

• Tax Law section 1105(e)(1) (sales tax on hotel room occupancy)
• 20 NYCRR section 527.9(b)(1) (definition of hotel)
• 20 NYCRR section 527.9 (hotel occupancy)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2015.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a15_11s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-15(11)S
Sales Tax
March 12, 2015

Office of Counsel
Advisory Opinion Unit

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S130903B

The Department of Taxation and Finance received a Petition for Advisory Opinion from
REDACTEDREDACTED “Petitioner”. Petitioner asks whether its service of providing
temporary accommodations to students and interns constitutes operating a “hotel” for the
purposes of New York State and local sales and use taxes.
We conclude that the accommodations in this case do not qualify as a hotel and are not
subject to State and local sales and use taxes.
Facts

Petitioner is a limited liability company, organized in New York State, offering
temporary housing to international students and interns traveling in New York State and New
York City. Petitioner entered into a contract with a New York City-area college to operate and
rent out rooms in one of the college’s former residence halls. The housing is marketed
specifically to international students and interns moving to New York City. To obtain housing,
the occupant must either be enrolled at a New York State-accredited school or be enrolled in a
bona fide internship program. A valid student ID is generally necessary to gain access to the
building.
Accommodations consist of a room with one or two single bed(s) and some basic
furnishings, such as a chest of drawers, mirror, sink, refrigerator, and sometimes a desk. No
telephones or televisions are provided in the rooms. Individual rooms do not contain a bathroom
or cooking facilities. Shared bathrooms are available on each floor and there is a single
communal kitchen available for use in the building. Each room is supplied, at the beginning of
the stay, with sheets, towels, a blanket, and a pillow, but no linen, laundry, or housekeeping
services are provided. The occupants have access to a common area on the first floor with
internet-ready computers, but no organized entertainment is provided in this area. Main-desk
services, such as security, mail, and message retrieval at a lobby desk are provided, but no
concierge-type services are included.
All booking is done via the Petitioner’s website and accommodations can be booked on
an individual or group basis. Occupants pay an upfront deposit and non-refundable registration
fee to complete a booking. Rent for the first month is due prior to arrival and further charges are
due at the beginning of each subsequent month. Rent is expressed and calculated on a per-week
basis, but no stays of less than 30 days are permitted. Occupants do not sign a lease at any point,
but must agree upon booking to a set of terms and conditions, including two weeks written notice
before terminating a stay. Occupants are given a set of “House Rules and Regulations” before
arrival and violation of the rules can result in immediate dismissal from the housing. Occupants
are liable for any damage beyond normal wear and tear and also assume responsibility for any
loss or damage to their own property during their stays.

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TSB-A-15(11)S
Sales Tax
March 12, 2015

Analysis
Tax Law § 1105(e)(1) imposes a sales tax on “[t]he rent for every occupancy of a room or
rooms in a hotel in this state, except that the tax shall not be imposed upon (i) a permanent
resident, or (ii) where the rent is not more than at the rate of two dollars per day.” See also 20
NYCRR § 527.9.
The term “hotel” is defined in the sales tax regulations (20 NYCRR § 527.9(b)(1)) as:
[A] building, or portion of it, that is regularly used and kept open for the lodging of
guests. The term "hotel" includes, but is not limited to, an apartment hotel, a motel,
bungalow or cottage colony, boarding house, or club, whether or not meals are served. A
building, or portion of the building, falls within this definition if, among other factors:
(i) sleeping accommodations are provided for the lodging of paying occupants on a
regular basis;
(ii) typical occupants are transients or travelers;
(iii) housekeeping, linen, or other customary hotel services are provided for occupants;
and
(iv) the relationship between the operator of the establishment and the occupant is that of
an innkeeper and guest, not that of a landlord and tenant ("e.g.," the occupant does not
have an exclusive right or privilege with respect to any particular room or rooms, but
instead merely has an agreement for the use or possession of the room or rooms).
Petitioner’s accommodations do not meet the third element of this definition. Petitioner
is not offering housekeeping, linen or other customary hotel services. The occupants are
provided with bedding when they first arrive, but the occupants are responsible for laundry and
general cleanliness of the room. There is no restaurant or other food service provided, nor does
Petitioner offer any of the other customary hotel services (e.g., planned activities, concierge
service, valet parking). See TSB-A-91(44)S (rental of efficiency units was not subject to sales
tax if no maid, food, or other common hotel services are provided). Taking all these factors
together, we conclude that Petitioner is not operating a hotel within the meaning of the Sales and
Use Tax Regulations and the rentals are not subject to New York State local sales and use taxes.

DATE: March 12, 2015

NOTE:

/S/
DEBORAH R. LIEBMAN
Deputy Counsel

An Advisory Opinion is issued at the request of a person or entity. It is limited to the
facts set forth therein and is binding on the Department only with respect to the
person or entity to whom it is issued and only if the person or entity fully and
accurately describes all relevant facts. An Advisory Opinion is based on the law,

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TSB-A-15(11)S
Sales Tax
March 12, 2015

regulations, and Department policies in effect as of the date the Opinion is issued or
for the specific time period at issue in the Opinion. The information provided in this
document does not cover every situation and is not intended to replace the law or
change its meaning.