Would IDOR decide which lodging businesses owed a county accommodations tax and the Illinois hotel tax?

Plain-English summary

A county official identified lodging and outfitter businesses believed to be violating both a county accommodations-tax ordinance and Illinois's Hotel Operators' Occupation Tax Act. The official asked IDOR to decide which listed entities had to comply.

IDOR said it did not administer the local accommodations tax. Questions about that county ordinance were therefore outside the Department's jurisdiction, and IDOR gave no opinion on the local tax.

For the state-administered Hotel Operators' Occupation Tax, the letter stated the general rule: Illinois taxed persons in the business of renting, leasing, or letting hotel rooms at 6% of 94% of gross rental receipts. Gross rental receipts excluded proceeds from permanent residents and proceeds from the tax described in Section 13(c) of the Metropolitan Pier and Exposition Authority Act.

IDOR did not decide whether each listed establishment was liable. It said an auditor was best positioned to evaluate the state-tax compliance claims and forwarded the request to the Department's Audit Bureau.

What this means for you

A local government could not obtain an IDOR ruling about a tax the Department did not administer. Alleged noncompliance with the state hotel tax required factual audit work, not a business-by-business conclusion in a GIL.

Common questions

Did IDOR interpret the county accommodations tax? No.

Did IDOR rule that the listed businesses owed state hotel tax? No.

What happened to the state-tax allegations? IDOR forwarded them to its Audit Bureau.

Citations and references

• 35 ILCS 145/3(a).
• 86 Ill. Adm. Code 480.101(b)(3).

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2014.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2014/st-14-0045.pdf

Original ruling text

ST 14-0045-GIL 08/18/14 HOTEL OPERATORS’ TAX
This letter discusses the Hotel Operators’ Tax Act. See 86 Ill. Adm. Code 480.101(b)(3). (This is a
GIL.)

August 18, 2014
Dear Xxxx:
This letter is in response to your letter dated June 18, 2014, in which you request 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:
As a follow-up to our phone call earlier in May with NAME, I am enclosing a listing
of establishments that we had discussed that are, in our opinion, in violation of the
Hotel Operators' Occupation Tax. On February 25th, 2013, the COUNTY County Board
passed a Local Accommodations Tax Ordinance to be collected by all lodging
establishments within the County of COUNTY, with 100% of the funds to be used for
tourism related projects in COUNTY County. The local tax was set at 4%, which is to
be collected from rooms let, beginning with the second quarter of 2013. At the August
2013 County Board Meeting, an amendment to the ordinance was approved, moving
the first filing period to the fourth quarter of 2013 (October 1-December 31). The first
return filing was due on or before January 30 th, 2014, payable in the COUNTY County
Treasurer's Office. All entities were asked to file a return, regardless if any rooms are
let during that quarter to assure compliance at all levels. It was indicated that there
would be no exemption letters given for this ordinance, and there is a section that
allows business owners to note if they no longer own the property or there is only land
and no lodging accommodations on the property.
The local tax is in addition to the already required 6% state tax that lodging
establishments are required to collect, per the Illinois Department of Revenue (35 ILCS
145) Hotel Operators' Occupation Tax Act. We have researched the various entities
within the county's jurisdiction for the local Accommodations Tax Ordinance and have
sent out multiple letters, requesting compliance and explaining the penalties and fines
that entities are subject to should they fail to comply with the law as written. We have
several entities that have ignored the multiple requests and continue to do business in
violation of both the state and local statutes. We have documented websites of known
businesses that provide lodging and are not adhering to the state statute as indicated.
We have notified each business that appears to be doing business as a "hotel" as

defined by state statute of the penalties and fees on both the state and local level;
however, we still have businesses that we feel are not complying. As found through a
FOIA request, there are currently 16 registered lodging establishments within COUNTY
County that have filed with the State of Illinois and received a certificate of
registration. During the first reporting period of our local ordinance, 41 businesses
replied and during the second reporting period, nineteen businesses replied.
We are requesting the Illinois Department of Revenue to make a ruling on the
following entities as to which need to comply with the ordinance and state statute and
which do not. There are sixteen (16) entities which we deem as a priority list of
potential violators that are outfitters, which advertise as such and list lodging on their
websites as services offered. We have also included an additional listing of entities
which are a secondary group that we would like the Department to make a ruling on.
There are 50 other entities, which includes 14 outfitters that are licensed through the
DNR for Outfitting but do not indicate whether they provide lodging or not and 36 other
entities that are not registered with DNR or IDOR but are listed on various other sites as
providing lodging or hunting services. We have included a master list of all of the
entities in question for your reference.
The following entities are a priority list of potential violators that we ask the Department
of Revenue to rule on:

CHART
The following entities are a secondary list of potential violators that we ask the
Department of Revenue to rule on:

CHART
Our concern with this list is that these entities have an unfair advantage to
competitors and poor business management in this area, which directly affects those
who are following regulations and complying with state and local laws. Not only is the
integrity of the State Law in jeopardy, but the local ordinance is also affected by this
mismanagement of various entities.
We thank you in advance for your help on this matter. If there are any additional
questions, please do not hesitate to contact me at XXX-XXX-XXXX or XXX-XXXXXXX.
DEPARTMENT’S RESPONSE:
You indicated in your letter that you believe that a number of establishments are in violation of
the State’s Hotel Operators’ Occupation Tax Act and the Local Accommodations Tax Ordinance that
the Pike County Board passed on February 25, 2013. The Department does not administer the local
tax to which you refer. Thus, questions concerning the imposition and collection of taxes imposed by
local ordinances that are not administered by the Illinois Department of Revenue are outside the
jurisdiction of the Department. As a result, the Department cannot render any guidance or opinion
regarding your request concerning the tax imposed by that Ordinance. The Department does,

however, administer the tax imposed by the Hotel Operators’ Occupation Tax Act (“HOOT”) (35 ILCS
145) and can provide you with general information regarding that tax.
Pursuant to HOOT, Illinois imposes a tax upon persons engaged in the business of renting, leasing
or letting rooms in a hotel at the rate of 6% of 94% of the gross rental receipts from such renting, leasing
or letting, excluding, however, from gross rental receipts, the proceeds of such renting, leasing or letting to
permanent residents of that hotel and proceeds from the tax imposed under subsection (c) of Section 13
of the Metropolitan Pier and Exposition Authority Act. 35 ILCS 145/3(a). With respect to your claim that
certain establishments are not collecting HOOT, a Department auditor would be in the best position to
determine the validity of that claim. As a result, a copy of your letter is being forwarded to the
Department’s Audit Bureau.

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:lkm