A new commercial hunting lodge will charge guests for overnight rooms, meals, guided hunts, and gear rental/sales. Which parts are hotel occupancy tax, which are sales tax, and which aren't taxed at all?

Plain-English summary

Someone planning to open a commercial game-bird hunting lodge in Texas — offering overnight accommodations, meals, guided hunts, and dressed/frozen birds for guests to take home — asked what tax registrations and liabilities applied. The Comptroller broke the answer into several pieces:

• Lodging is subject to state hotel occupancy tax (6%), since the lodge fits Tax Code § 156.001's definition of a "hotel" (a building where the public gets sleeping accommodations for a fee).
• Lump-sum packages — one price covering lodging, meals, hunts, and guide services together — are taxed entirely as hotel occupancy tax, full stop.
• Itemized billing changes the result: if the lodge separately states its lodging and meal charges, hotel tax applies only to the lodging portion, while regular sales tax applies to the meals portion.
• Guide services and hunting itself are NOT taxable, regardless of billing structure — and hunting licenses aren't taxable either.
• Hunting gear — separately stated rentals or sales of guns, ammunition, and similar equipment — IS subject to sales tax.
• Promotional/souvenir items (t-shirts, key chains, photos) given to guests as part of a lump-sum package aren't separately taxed to the guest, but the lodge itself owes sales/use tax on whatever it paid to purchase those items in the first place.

Practically, the operator needs to register for state hotel occupancy tax (Form AP-102) at minimum, and additionally for sales and use tax (Form AP-201) if it separately states any taxable charges like meals or gear. Local hotel tax is handled separately by the county, and a city under 35,000 population can even extend its hotel tax into its extraterritorial jurisdiction under § 351.0025.

What this means for you

Hunting lodges, dude ranches, and similar outdoor lodging operators

How you STRUCTURE your billing changes your tax exposure: bundling everything into one package price means the whole thing is taxed as hotel occupancy tax (often simpler to administer, but potentially a different effective rate than splitting it out), while itemizing lodging separately from meals splits the tax between hotel tax and sales tax. Guide/hunting-activity charges themselves stay untaxed either way.

Lodges giving away souvenirs or promotional items

Don't assume a "free" t-shirt or photo bundled into a guest's package is untaxed to you — you owe sales/use tax on what you paid to acquire those items, even though the guest doesn't see a separate charge.

Lodges renting or selling hunting equipment

Track equipment rental/sale charges separately from lodging and activity charges — they're independently subject to sales tax under the standard tangible-personal-property rental/sale rules.

Common questions

Q: Is a package price covering lodging, meals, and a guided hunt taxed as hotel tax or sales tax?
A: Per this ruling, if it's one lump sum, the WHOLE package is taxed as hotel occupancy tax; only itemizing the meals separately shifts that portion to sales tax.

Q: Are hunting guide fees or hunting licenses taxable?
A: No, per this ruling — hunts/hunting guide services and hunting licenses are not taxable.

Q: What about renting or selling guns and ammunition to guests?
A: Per this ruling, separately stated charges for hunting accessories/equipment rental or sales are subject to sales tax.

Citations and references

Statutes and rules:

• Tex. Tax Code § 156.001 (hotel definition)
• Tex. Tax Code § 351.0025 (municipal hotel tax in extraterritorial jurisdiction, population under 35,000)
• 34 Tex. Admin. Code Rule 3.162 (Hotel Occupancy Tax)
• 34 Tex. Admin. Code Rule 3.293 (Food and Beverage Services)
• 34 Tex. Admin. Code Rule 3.298 (Amusement Services)
• 34 Tex. Admin. Code Rule 3.294 (Rentals and Leases of Tangible Personal Property)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200807120L

Original ruling text

July 17, 2008

Dear **:

Thank you for your question concerning operating a commercial hunting lodge.

Hotel occupancy tax is due on charges for lodging at a hunting lodge, unless an
exemption applies. Hotel tax law defines a hotel as a building in which members
of the public obtain sleeping accommodations for consideration. See Tax Code
Section 156.001.

Hotel occupancy tax is also due on a lump-sum package that includes lodging,
meals, hunts and hunting guide services. If the bill separately states the
charges for the lodging and meals to the customer, hotel tax is due on the
charge for lodging and sales tax is due on the charge for meals. See Rule 3.162
relating to hotel tax and sales tax Rule 3.293 relating to food.

Lodge operators are also responsible for paying or accruing sales and use tax
on any items purchased to provide the lodge packages, including promotional or
souvenir items such as t-shirts, key chains, and photographs transferred to
guests as part of a lump-sum charge hunting package. No tax is due on a
separate charge for hunts or hunting guide services. Hunting licenses are also
not taxable.

Separately stated charges for hunting accessories and equipment rental or
sales, including guns, ammunition or similar items, are subject to sales tax.
See Rule 3.298 relating to sales tax on amusement services and Rule 3.294
relating to rentals and leases of tangible personal property.

You will need to submit a completed Texas Hotel Occupancy Tax Questionnaire
(form AP-102) to register to collect the 6% state hotel occupancy tax. If you
separately state charges for meals or other taxable items, such as hunting
accessories, you will also need to register for sales and use tax (form
AP-201).

Since local taxing jurisdictions administer local hotel occupancy tax, you will
need to contact ** County to determine local hotel tax
responsibilities. Also, if it applies, municipal hotel tax law authorizes a
city with a population of less than 35,000 to impose hotel tax within the
city’s extraterritorial jurisdiction. See Tax Code Section 351.0025.

Laws, rules, publications and other tax information, including links to
individual tax pages (e.g., “Hotel” and “Sales and Use”), can be accessed from
our “Texas Taxes” Web page at http://window.state.tx.us/taxes/index.html.

This opinion is based on the facts presented. Other facts, though similar, may
result in different answers.

Our goal is to provide you with prompt, professional service. Please take a
moment to complete our on-line survey at
http://aixtcp.cpa.state.tx.us/surveys/tpsurv2/index.html.

If you have further questions or need more information, please contact me.

Sincerely,

Donald S. Dillard
Oil & Gas, Fuels & Miscellaneous Taxes Section
Tax Policy Division

From: **
Sent: Wednesday, July 16, 2008 1:30 PM
To: Tax Help
Subject: ATTN. TAX POLICY

I’m looking for tax information regarding operating a commercial hunting lodge.

Our operation will consist of the following:

Current plans are to locate the lodge in ** County, Texas. Guests
will arrive at the lodge and will be provided with meals and overnight
accommodations. Some local guests will not be staying overnight at the lodge
and will be hunting only.

Game birds will be placed in the field and the hunters will pursue. We have
already obtained the necessary forms and licenses from Texas Parks and Wildlife
to raise the birds and operate a hunting facility. Harvested birds will be
dressed and frozen for the guests to take home.

I need to know what forms/permits/licenses are required and the tax liability.

Thanks for your help. If you need additional information please call me at
**.

Best Regards