Did a nonprofit campground owe Illinois Hotel Operators' Occupation Tax on cabins rented for camps and public events?

Plain-English summary

A nonprofit campground hosted weeklong youth camps but also rented for weddings, retreats, college orientations, and individual cabin stays when camps were not in session.

IDOR said a lodging facility renting only to its own members generally would not be open to the public. But a facility renting to members and the public was open to the public, and all rental receipts were subject to Hotel Operators' Occupation Tax (HOOT), not only rentals occurring outside youth-camp periods.

Nonprofit status or an Illinois exemption number did not exempt the operator. HOOT was imposed on the operator rather than the occupant, so the occupant's sales-tax exemption had nothing to attach to.

What this means for you

Once a camp or retreat facility offers sleeping accommodations to public renters, Illinois can treat the entire lodging operation as subject to HOOT. Program purpose and nonprofit status do not create the sales-tax-style exemption.

Common questions

Was tax limited to public-rental weeks? No. IDOR's general rule treated all rental receipts as taxable once the facility rented to members and the public.

Did nonprofit status exempt the operator? No.

Citations and references

• 35 ILCS 145/2(1), (3), and (6).
• 86 Ill. Adm. Code 480.101(b)(3).
• Compliance Alert CA-2016-15.

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2016.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2016/st-16-0058-gil.pdf

Original ruling text

ST 16-0058-GIL 11/01/2016

HOTEL OPERATORS’ TAX

This letter discusses the Hotel Operators’ Tax Act.
480.101(b)(3). (This is a GIL.)

See 86 Ill. Adm. Code

November 1, 2016
Dear Xxxxx:
This letter is in response to your letter dated August 8, 2016, in which you requested
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:
I have been advised to write to this department, by the tax helpline on the
Illinois’ website, to get a legal clarification on hotel operator’s occupation tax, for
campgrounds. The law states anyone who is in the business of renting hotel
rooms (any building with living quarters) to the public is subject to this tax.
However, the law never defines the word public and has not issued rulings for
campgrounds. This leads to the following instance I am requesting clarification:
I.

A nonprofit campground is open to the public for rental for many
different events such as weddings, retreats, college orientations
and campground rental. However, their main focus is weeklong
youth camp events where they supply all lodging. When there are
no youth camps being held the cabins can be rented by people
wanting to stay on the property. Would this campground be subject
to the hotel tax at all times or only when the public rents out the
property when youth camps are not in session?

Please advise and give a legal understanding to these more complex tax issues.
We invite you to open up conversation for more information or questions you
need answered.

ST 16-0058-GIL
DEPARTMENT’S RESPONSE:
The Hotel Operators' Occupation Tax Act (“HOOT”) imposes a tax upon persons
engaged in the business of renting, leasing or letting rooms in a hotel, as defined in the Act.
HOOT defines “hotel” to include any building or buildings in which the public may, for
consideration, obtain living quarters, sleeping or housekeeping accommodations. See 35
ILCS 145/2(1). HOOT defines “rent” as “the consideration received for occupancy, valued in
money, whether received in money or otherwise, including all receipts, cash, credits and
property or services of any kind or nature.” See 35 ILCS 145/2(6). The definition of “rent”
must be read in conjunction with the term “occupancy.” HOOT defines “occupancy” as “the
use or possession, or the right to the use or possession, of any room or rooms in a hotel for
any purpose, or the right to the use or possession of the furnishings or to the services and
accommodations accompanying the use and possession of the room or rooms.” See 35 ILCS
145/2(3).
If a person engaged in the business of renting, leasing or letting sleeping
accommodations does not rent rooms to the public but, rather, rents exclusively to its
members, the Department would generally not consider the facilities open to the public. In
contrast, if a person engaged in the business of renting, leasing or letting sleeping
accommodations rents rooms to its members, as well as to the public, the Department would
consider the facilities open to the public and, thus, all rental receipts would be subject to
HOOT.
HOOT operates very differently from what is commonly referred to as “sales taxes” in
Illinois. In Illinois, sales tax consists of two separate but complementary taxes. The Retailers’
Occupation Tax (ROT) is imposed on the retailer and the Use Tax (UT) is imposed on the
purchaser. Since the UT is imposed on the purchaser, there is a tax to which an exempt
purchaser’s exempt status can attach and, because these taxes are complementary, if the
purchaser is exempt from paying UT, then the retailer is generally exempt from paying ROT.
As a result, when an exempt entity purchases tangible personal property and presents its
exemption identification number (“E” number) to a retailer, its purchases are exempt from UT
and the retailer is exempt from ROT.
However, that is not the result with HOOT. Under HOOT, tax is imposed only upon the
hotel operator. There is no complementary tax imposed upon the room occupant. Since there
is no tax liability imposed upon the room occupant, there is nothing to which an occupant’s
sales tax exempt status can attach. A hotel operator is not exempt from HOOT when renting
rooms to entities holding “E” numbers issued by the Department.
HOOT authorizes hotel operators to collect an amount from their customers that
represents reimbursement for the hotel operators’ tax liability. The fact that room occupants
hold an exemption identification number issued by the Department does not exempt them from
paying this reimbursement charge, if imposed by the hotel operator.
The Department recently issued a Compliance Alert to educate and remind taxpayers
who rent sleeping accommodations both to their members and to the general public that all
their rental receipts are subject to HOOT. See CA-2016-15. After issuing the Compliance
2

ST 16-0058-GIL
Alert, the Department followed-up with several examples of “frequently asked questions and
answers” (FAQs). Many of the questions you have asked can be answered by reviewing these
documents, as well as other materials found on the Department’s website. Specifically, you
may wish to review General Information Letter ST 08-0167, dated December 5, 2008, which
discusses liability for HOOT and Retailers’ Occupation Tax in regard to a religious
organization’s summer camp lodging provided to members and nonmembers. Generally, the
situations you have described will require the camp to be registered and to remit HOOT on all
rentals.
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:bkl

3