Are mandatory housekeeping charges billed to fractional owners during their assigned resort-villa weeks taxable as additional guest charges?

Plain-English summary

The South Carolina Department of Revenue ruled that housekeeping and similar service charges billed to fractional villa owners during their assigned ownership weeks were not taxable as additional guest charges. The owners held a real-property interest and were using their own villa, not renting sleeping accommodations as transients.

An additional guest charge had to be added to a room-rental charge imposed on a transient. Because these owners paid no room rent for their assigned weeks, the mandatory housekeeping fee stood alone and did not fit that category.

The ruling warned that other charges could still be taxable under separate provisions. It also reached the opposite result when the villa was rented to a transient: the room and mandatory housekeeping connected with the rental were subject to the accommodations tax, while optional housekeeping could be taxed as an additional guest charge under the historical rates described.

What this means for you

Fractional and timeshare-style owners

Actual real-property ownership was the key fact. The ruling involved owners holding a one-fifth fee-simple interest as tenants in common and using the villa during weeks allocated by that ownership.

Resort operators and property managers

Separate owner stays from transient rentals. A housekeeping fee billed to an owner using an owned week was treated differently from the same service billed in connection with a guest's rental.

Accountants and tax professionals

The Department applied the "additional guest charge" rule, not a broad exemption for every owner fee. Meals, rented linens, communications, laundry, and other charges could remain taxable under their own statutes even during an owner stay.

Common questions

Q: Why was the owner's housekeeping fee not an additional guest charge?
A: It was not added to room rent paid by a transient. The owners were using their own real-property interest during assigned weeks.

Q: What if the owner rents the week to someone else?
A: The ruling said the transient rental and mandatory housekeeping were subject to accommodations tax, and optional housekeeping could be taxable as an additional guest charge.

Q: Were linens part of a taxable rental here?
A: No separately stated linen charge existed, and the ruling treated linens and towels as consumed in providing the housekeeping service. A separate rental of tangible property could be taxable.

Q: Can another resort owner rely on this PLR?
A: No. It binds the Department only for the requesting taxpayers and stated facts.

Citations and references

• S.C. Code § 12-36-920(A)-(B) (accommodations and additional guest charges)
• S.C. Regulations 117-307 and 117-307.1 (charges connected with transient accommodations)
• S.C. Code §§ 12-36-910(B), 12-36-1310(B), and 12-36-2645 (separately taxable transactions noted in the ruling)

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/PLR10-1.pdf

Original ruling text

State of South Carolina

Department of Revenue
301 Gervais Street, P. O. Box 125, Columbia, South Carolina 29214
Website Address: http://www.sctax.org

SC PRIVATE LETTER RULING #10-1

SUBJECT:

Housekeeping and Similar Service Charges to Property Owner
(Sales and Use Tax)

REFERENCES: S. C. Code Ann. Section 12-36-920 (2000, Supp. 2008)
S. C. Code Ann. Section 12-36-1110 (Supp. 2008)
SC Regulation 117-307 (Supp. 2008)
AUTHORITY:

S. C. Code Ann. Section 12-4-320 (2000)
S. C. Code Ann. Section 1-23-10(4) (2008)
SC Revenue Procedure #09-3

SCOPE:

A Private Letter Ruling is an advisory opinion issued to a specific
taxpayer by the Department to apply principles of law to a specific set
of facts or a particular tax situation. It is the Department’s opinion
limited to the specific facts set forth, and is binding on agency
personnel only with respect to the person to whom it was issued and
only until superseded or modified by a change in statute, regulation,
court decision, or another Departmental advisory opinion, providing
the representations made in the request reflect an accurate statement of
the material facts and the transaction was carried out as proposed.

Question:
Are charges for housekeeping and similar services by ABC Resort and Spa to Mr. X and
Mrs. X, co-owners with a real property ownership interest in a villa 1 at the resort for
specific weeks during the year, subject to the sales tax as “additional guest charges?”
Conclusion:
Charges for housekeeping and similar services by ABC Resort and Spa to Mr. X and
Mrs. X, co-owners with a real property ownership interest in a villa at the resort for
specific weeks during the year, are not subject to the sales tax as “additional guest
charges” during the specific weeks allocated to them by virtue of their real property
ownership interest in the villa.

1

See the “Facts for more details concerning the real property ownership interest of Mr. X and Mrs. X in a
villa at the ABC Resort and Spa.

1

Housekeeping fees and similar fees charged to a person with a real property ownership
interest in a villa at the resort for specific weeks during the year are not additional guest
charges. In order to be taxable, the charge must be in addition to a room rental charge
imposed upon a transient. These charges are not in addition to another charge since these
persons have a real property ownership interest in a villa at the resort for these specific
weeks during the year. As real property owners of the villa (not transients), they are not
charged to use their own villa, but only charged for specific services and their share of
expenses.
However, while the housekeeping charge described in the facts is not otherwise subject to
the sales and use tax, 2 other charges imposed on the owners of the villa may be otherwise
subject to the sales and use tax. If a charge is otherwise taxed under the sales and use tax
law, the charge is subject to the sales tax even if charged to the owner of the villa. For
example, sales or rentals of tangible personal property at retail (e.g., sales of meals or the
rental of bed linens, towels, and other items), charges for communications services (fax
transmission services, cable television service, etc. 3) and drycleaning and laundering
services, 4 are subject to the sales and use tax. 5
Note: If the villa is not occupied by the owner of that villa and is being rented by the
owner or some other third party to a transient who does not have a real property
ownership interest in the villa for that time period, charges for the rental and charges for
mandatory housekeeping and similar services with respect to the rental of the villa are
subject to the 7% sales tax on accommodations and charges for optional housekeeping
and similar services with respect to the rental of the villa are subject to the 6% sales tax
as an “additional guest charge” unless otherwise exempt under the law (e.g., charges to
the federal government).
For additional information on the application of the sales tax to “additional guest
charges” and when a charge for a service is taxed at 7% as part of the accommodations
and when it is taxed at 6% as an “additional guest charge,” see SC Regulation 117-307.1.
For information on local sales and use taxes administered and collected by the
Department of Revenue on behalf of local jurisdictions, visit the Department’s website at
www.sctax.org.

2

Based on the facts presented by the taxpayer, the “true object” of the charge for housekeeping is the
housekeeping service. Since there is not a separately stated charge to the owners for the linens and towels,
the charge is not for the rental of the linens and towels that are owned by the third party housekeeping
company. It is a charge by the resort for housekeeping services and the linens and towels are not being
rented to the owners, but are being used and consumed in providing the housekeeping service.
3
For additional examples of communications services subject to the sales and use tax, see SC Regulation
117-329.
4
For example, charges to dryclean or launder clothing of the owner would be subject to the sales and use
tax. For additional examples of drycleaning and laundering services subject to the sales and use tax, see SC
Regulation 117-303.
5
See also Code Sections 12-36-910(B), 12-36-1310(B) and 12-36-2645.

2

Facts:
Mr. X and Mrs. X (“owners”) have a real property ownership interest in the XYZ
Property Regime at the ABC Resort and Spa at the XYZ Resort (“resort”).
The XYZ Property Regime is not owned by the resort. However, the resort has been
contracted by the Board of Directors of the XYZ Property Regime to act as property
managers for the villa units.
The owners own one-fifth of a specific villa in the XYZ Property Regime in fee simple
absolute as tenants in common with others who own the remaining four-fifths of that villa
in fee simple absolute as tenants in common. For purposes of this document, any
reference to a real property ownership interest means the ownership of one-fifth of a
specific villa in the XYZ Property Regime in fee simple absolute as tenants in common.
When the owners stay at the villa during the specific weeks allocated to them by virtue of
their real property ownership interest, they are not charged a “rental” fee. However, they
are charged for housekeeping and similar services. Housekeeping includes:
(1) changing of bed linens,
(2) replacement of towels,
(3) cleaning of bathrooms, kitchen surfaces and all appliances,
(4) vacuuming, and
(5) all other services needed to provide the next owners a clean villa.
The resort sub-contracts all housekeeping services provided to the villas to a third party
housekeeping company. The third party housekeeping company bills the resort for the
cleaning services and the resort in turn bills the owner or rental guest for the
housekeeping services. The owners of the villas and the resort do not own the bed linens
and towels provided in the villas. The bed linens and towels are owned by the third party
housekeeping company.
The housekeeping fee charged the owners by the resort is the same as the housekeeping
fee charged by the resort to rental guests who stay at the villas. The housekeeping fee is a
single charge that is based on the size of the villa and there are no other options as to the
level of the housekeeping services that are provided.
The owners are also charged certain administrative fees by the resort for other services,
such as the concierge service.

3

The owners are also responsible for their share of various operating expenses of the
building, such as property taxes, insurance, utilities, maintenance and repair, cost of
furnishings, etc. The owners must also pay other charges associated with the resort’s
amenities for golf, tennis, transportation and the use of other facilities 6 as well as “special
assessments” that might be required from time to time to repair the buildings.
Discussion:
Code Section 12-36-920 imposes the sales tax on accommodations and states:
(A) A sales tax equal to seven percent is imposed on the gross proceeds
derived from the rental or charges for any rooms, campground spaces,
lodgings, or sleeping accommodations furnished to transients by any hotel,
inn, tourist court, tourist camp, motel, campground, residence, or any
place in which rooms, lodgings, or sleeping accommodations are furnished
to transients for a consideration. This tax does not apply where the
facilities consist of less than six sleeping rooms, contained on the same
premises, which is used as the individual's place of abode. The gross
proceeds derived from the lease or rental of sleeping accommodations
supplied to the same person for a period of ninety continuous days are not
considered proceeds from transients. The tax imposed by this subsection
(A) does not apply to additional guest charges as defined in subsection
(B).
(B) A sales tax of [six] 7 percent is imposed on additional guest charges at
any place where rooms, lodgings, or accommodations are furnished to
transients for a consideration, unless otherwise taxed under this chapter.
The term additional guest charges includes, but is not limited to:
(1) room service;
6

Note: Charges to enter into or use a place of amusement are subject to the State admissions tax pursuant
to Code Section 12-21-2420. For additional information as to examples of places of amusement subject to
the admissions tax and as to an example of the application of the admissions tax to a homeowners’
association membership assessment, see SC Revenue Ruling #05-14 and SC Private Letter Ruling #09-2.

Note, as a private letter ruling, SC Private Letter Ruling #09-2 is binding on agency personnel only with
respect to the person to whom it was issued and only with respect to the specific facts set forth in it.
However, it is merely noted here as an example for admissions tax purposes.
7
Code Section 12-36-1110, which increased the state sales and use tax rate from 5% to 6% on June 1,
2007, states:
Beginning June 1, 2007, an additional sales, use, and casual excise tax equal to one
percent is imposed on amounts taxable pursuant to this chapter, except that this additional
one percent tax does not apply to amounts taxed pursuant to Section 12-36-920(A), the
tax on accommodations for transients, nor does this additional tax apply to items subject
to a maximum sales and use tax pursuant to Section 12-36-2110 nor to the sale of
unprepared food which may be lawfully purchased with United States Department of
Agriculture food coupons. (Emphasis added.)

4

(2) amenities;
(3) entertainment;
(4) special items in promotional tourist packages;
(5) laundering and dry cleaning services;
(6) in-room movies;
(7) telephone charges;
(8) rentals of meeting rooms; and
(9) other guest services.
(C) Real estate agents, brokers, corporations, or listing services required to
remit taxes under this section shall notify the department if rental property,
previously listed by them, is dropped from their listings.
(D) When any business is subject to the sales tax on accommodations and
the business has more than one place of business in the State, the licensee
shall report separately in his sales tax return the total gross proceeds
derived from business done within and without the corporate limits of
municipalities. A taxpayer who owns or manages rental units in more than
one county or municipality shall report separately in his sales tax return
the total gross proceeds from business done in each county or
municipality.
(E) The taxes imposed by this section are imposed on every person
engaged or continuing within this State in the business of furnishing
accommodations to transients for consideration.
SC Regulation 117-307 states in part:
Code Section 12-36-920 imposes a sales tax upon accommodations and
"additional guest charges." The term "additional guest charge" means an
amount which is added to the guest's room charge for a specific amenity or
service for the guest.
Therefore, charges for rooms, lodgings and accommodations are taxed at
7%, while other charges for other services provided at the hotel, when
over and above the services customarily provided with the room, are taxed
at 6% as an "additional guest charge." However, if an "additional guest
charge" would be taxed under other provisions of the sales and use tax law
(Chapter 36 of Title 12), then such charges are not taxed as an "additional
guest charge."
5

It should therefore be noted that the determination as to what services, if
any, are over and above the services customarily provided with the room
must be based on all of the facts and circumstances.
The burden of proof that a charge is an additional guest charge, and not
part of the price for the room, rests with the taxpayer. Failure to prove that
a particular charge is for a service that is over and above the services
customarily provided with the room will subject the charge to the 7% tax
rate.
Furthermore, in Commission Decision #95-27 it was held that "the term 'additional guest
charge' means an amount which is added to the guest's room charge for a specific amenity
or service for the guest."
Therefore, charges for rooms, lodgings and accommodations are taxed at 7%, while other
charges for other services provided at hotels, motels and other lodging facilities, when
over and above the services customarily provided with the room, are taxed at 6% as an
"additional guest charge." However, if an "additional guest charge" would be taxed
under other provisions of the sales and use tax law (Chapter 36 of Title 12), then such
charges are not taxed as an "additional guest charge."
In addition, SC Regulation 117-307.1, Questions #23 through #26, concerns analogous
situations and provides guidance to the issue at hand. It states in part:
23.Q. If a person is not a guest at a hotel, but is attending an event at the
hotel, is a $15.00 charge for valet parking subject to the tax as an
additional guest charge?
A. The $15.00 charge for valet parking is not subject to the sales tax. It is
not an additional guest charge since, in order to be taxable, the charge
must be in addition to a room rental charge. This charge is not in addition
to another charge.
Meeting Rooms
24.Q. If a hotel charges $80.00 for a guest room, and there is no additional
charge to the customer for the use of a meeting room, what tax rate applies
to the charge?
A. The $80.00 guest room charge is taxed at 7%.
25.Q. If a hotel charges $80.00 for a guest room, and the customer is also
charged $35.00 for the use of a meeting room, what tax rate applies to
each of the charges?

6

A. The $80.00 guest room charge is taxed at 7%, while the $35.00 charge
for the meeting room, as an additional guest charge, is taxed at 6%.
26.Q. Is a $35.00 charge for the use of the meeting room by a person who
is not a guest at the hotel, subject to the tax as an additional guest charge?
A. The $35.00 charge for the meeting room is not subject to the sales tax.
It is not an additional guest charge since, in order to be taxable, the charge
must be in addition to a room rental charge.
This charge is not in addition to another charge.
Note: If the meeting room is being rented by an organization that is
conducting a seminar, workshop, conference, or similar meeting at the
hotel, the charge for the meeting room is taxed at 6% as an additional
guest charge if the organization is also renting guest rooms at the hotel for
officers or members of the organization, invited speakers, or others.
Based on the above, it is the opinion of the Department that charges for housekeeping and
similar services by ABC Resort and Spa to Mr. X and Mrs. X, co-owners with a real
property ownership interest in a villa at the resort for specific weeks during the year, are
not subject to the sales tax as “additional guest charges” during the specific weeks
allocated to them by virtue of their real property ownership interest in the villa.
Housekeeping fees and similar fees charged to a person with a real property ownership
interest in a villa at the resort for specific weeks during the year are not additional guest
charges. In order to be taxable, the charge must be in addition to a room rental charge
imposed upon a transient. These charges are not in addition to another charge since these
persons have a real property ownership interest in a villa at the resort for these specific
weeks during the year. As real property owners of the villa (not transients), they are not
charged to use their own villa, but only charged for specific services and their share of
expenses.
However, while the housekeeping charge described in the facts is not otherwise subject to
the sales and use tax, 8 other charges imposed on the owners of the villa may be otherwise
subject to the sales and use tax. If a charge is otherwise taxed under the sales and use tax
law, the charge is subject to the sales tax even if charged to the owner of the villa. For
example, sales or rentals of tangible personal property at retail (e.g., sales of meals or the
rental of bed linens, towels, and other items), charges for communications services (fax

8

Based on the facts presented by the taxpayer, the “true object” of the charge for housekeeping is the
housekeeping service. Since there is not a separately stated charge to the owners for the linens and towels,
the charge is not for the rental of the linens and towels that are owned by the third party housekeeping
company. It is a charge by the resort for housekeeping services and the linens and towels are not being
rented to the owners, but are being used and consumed in providing the housekeeping service.

7

transmission services, cable television service, etc. 9) and drycleaning and laundering
services, 10 are subject to the sales and use tax. 11
Note: If the villa is not occupied by the owner of that villa and is being rented by the
owner or some other third party to a transient who does not have a real property
ownership interest in the villa for that time period, charges for the rental and charges for
mandatory housekeeping and similar services with respect to the rental of the villa are
subject to the 7% sales tax on accommodations and charges for optional housekeeping
and similar services with respect to the rental of the villa are subject to the 6% sales tax
as an “additional guest charge” unless otherwise exempt under the law (e.g., charges to
the federal government).
For additional information on the application of the sales tax to “additional guest
charges” and when a charge for a service is taxed at 7% as part of the accommodations
and when it is taxed at 6% as an “additional guest charge,” see SC Regulation 117-307.1.
For information on local sales and use taxes administered and collected by the
Department of Revenue on behalf of local jurisdictions, visit the Department website at
www.sctax.org.

SOUTH CAROLINA DEPARTMENT OF REVENUE

s/Ray N. Stevens
Ray N. Stevens, Director
, 2010
January 12
Columbia, South Carolina

9

For additional example of communications services subject to the sales and use tax, see SC Regulation
117-329.
10
For example, charges to dryclean or launder clothing of the owner would be subject to the sales and use
tax. For additional examples of drycleaning and laundering services subject to the sales and use tax, see SC
Regulation 117-303.
11
See also Code Sections 12-36-910(B), 12-36-1310(B) and 12-36-2645.

8