Are gross receipts from renting hotel rooms to a 'permanent resident' (someone who stays or has the right to stay at least 30 consecutive days) subject to Illinois Hotel Operators' Occupation Tax, and can the guest get a refund of tax already collected?

Plain-English summary

The Illinois Department of Revenue confirmed that gross receipts from renting hotel rooms to a "permanent resident" are excluded from the Hotel Operators' Occupation Tax. Under the Hotel Operators' Occupation Tax Act, a "permanent resident" is any person who has occupied, or has the right to occupy, any room or rooms in a hotel -- not necessarily the same room -- for at least 30 consecutive days. It does not matter whether the guest agreed to a 30-day stay up front at check-in; what matters is whether the person actually stayed (or had the right to stay) 30 consecutive days.

In the underlying request, a guest had booked a string of reservations at the same hotel, some directly and some through third-party travel sites, totaling more than 30 consecutive days across two tax periods. The hotel had told the guest that multiple check-ins/check-outs and third-party bookings forfeited any right to a tax refund. The Department disagreed with that reasoning: if a hotel operator charges hotel tax on a room for a 30-consecutive-day period, the guest has a legal right to claim a refund of that tax from the hotel operator, regardless of how the stay was booked or whether the room changed.

Importantly, the Department clarified it has no authority to force the hotel operator to file a claim for credit for the tax it already remitted. Getting the refund is a matter between the guest and the hotel operator, enforced like any other debt; the hotel operator is not legally required to file the claim, but any tax collected and not refunded to the guest must still be remitted to the Department.

What this means for you

Hotel operators

If a guest occupies (or has the contractual right to occupy) a room, or rooms, for at least 30 consecutive days, the gross receipts from that rental are excluded from Hotel Operators' Occupation Tax -- no matter whether the guest changed rooms, booked directly or through a third party, or paid in multiple installments. If you mistakenly collected tax on such a stay, you may file a claim for credit only after unconditionally refunding the tax to the guest. Any tax collected that you do not refund must still be remitted to the Department.

Hotel guests seeking a refund

If you stayed, or had the right to stay, at least 30 consecutive days at one hotel, you may be a "permanent resident" for tax purposes even if you booked in separate stints, switched rooms, or used a third-party booking site. You have a legal right to ask the hotel operator for a refund of any Hotel Operators' Occupation Tax charged for that period. However, the Department cannot compel the hotel to pay the refund -- you would need to pursue it as you would any other debt owed to you.

Accountants and tax professionals

The 30-consecutive-day threshold in 35 ILCS 145/2(5) and 86 Ill. Adm. Code 480.105 is a bright-line factual test, not tied to a single contiguous room, a single booking channel, or a single method of payment. Note the procedural point in this GIL: the Department will decline to issue a Private Letter Ruling when existing case law or regulations are dispositive of the request, issuing a GIL instead -- which is not binding on the Department.

Local/municipal hotel tax questions

This GIL only addresses the state Hotel Operators' Occupation Tax Act. The underlying request also involved a municipal hotel tax ordinance with its own "permanent resident" exception; municipalities administer and interpret their own local hotel taxes separately from the Department.

Common questions

Q: What counts as a "permanent resident" for hotel tax purposes?
A: Any person who has occupied, or has the right to occupy, any room or rooms (not necessarily the same room) in a hotel for at least 30 consecutive days. 35 ILCS 145/2(5); 86 Ill. Adm. Code 480.105.

Q: Does it matter if the guest booked through a third-party travel site instead of directly with the hotel?
A: No. The statute does not require the same entity to pay for the room for all 30 consecutive days, only that a person occupy or have the right to occupy a room for at least 30 consecutive days.

Q: If I was overcharged hotel tax as a permanent resident, can the Department make the hotel refund me?
A: No. The Department has no authority to compel a hotel operator to file a claim for credit. It is a matter of business between the guest and the hotel operator, and the guest must enforce the right to collect as with any other debt. 35 ILCS 145/7; 35 ILCS 120/6-6c; 86 Ill. Adm. Code 480.125.

Q: Can a hotel operator get its own credit back from the Department after refunding a guest?
A: Yes, but only after unconditionally refunding the tax to the permanent resident; the operator may then file a claim for credit for the hotel tax it paid. 86 Ill. Adm. Code 480.125(a)-(b).

Q: Is a General Information Letter like this binding on the Department?
A: No. A GIL merely directs the taxpayer to relevant regulations or other sources of information; it is not a statement of Department policy and is not binding, unlike a Private Letter Ruling. 2 Ill. Adm. Code 1200.120.

Citations and references

Statutes and regulations:

• 35 ILCS 145/2(5) (definition of "permanent resident")
• 35 ILCS 145/3 (imposition of tax; exclusion for permanent residents' gross receipts)
• 35 ILCS 145/3(f) (right to refund for 30-consecutive-day stays)
• 35 ILCS 145/7; 35 ILCS 120/6-6c (Department's lack of authority to compel a hotel operator's refund claim)
• 86 Ill. Adm. Code 480.101 (imposition/exclusion)
• 86 Ill. Adm. Code 480.105 (definition of "permanent resident")
• 86 Ill. Adm. Code 480.125 (hotel operator's claim for credit)
• 2 Ill. Adm. Code 1200.110 (Private Letter Ruling procedures)
• 2 Ill. Adm. Code 1200.120 (General Information Letters not binding on the Department)

Related prior ruling referenced in the request: ST 18-0009-PLR (08/20/2018), addressing the same permanent-resident refund question.

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2023.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2023/ST-23-0003-GIL.pdf

Original ruling text

ST-23-0003-GIL 02/08/2023 HOTEL OPERATORS’ OCCUPATION TAX
Gross receipts from the rentals of rooms to "permanent residents" are not subject
to Hotel Operators' Occupation Tax liability. A "permanent resident" is any person
who has occupied or has the right to occupy any room or rooms in a hotel for at
least 30 consecutive days. 35 ILCS 145/2(5), 3(f); 86 Ill. Adm. Code 480.101,

105. (This is a GIL.)
     February 8, 2023

NAME/ADDRESS
Dear Mrs. XXX:
This letter is in response to your letter dated November 11, 2022, 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 Department’s regulation “Public Information, Rulemaking and Organization”
provides that “[w]hether to issue a private letter ruling in response to a letter ruling
request is within the discretion of the Department. The Department will respond to all
requests for private letter rulings either by issuance of a ruling or by a letter explaining
that the request for ruling will not be honored.” 2 Ill. Adm. Code 1200.110(a)(4). Further,
the Department’s regulations regarding Private Letter Rulings provide that “[i]f there is
case law or there are regulations dispositive of the subject of the request, the
Department will decline to issue a letter ruling on the subject.” 2 Ill. Adm. Code
1200.110(a)(3)(D). The Department recently met and determined that it is declining to
issue a Private Letter Ruling in response to your request. We hope, however, the
following General Information Letter will be helpful in addressing your questions. In your
letter you have stated and made inquiry as follows:
Illinois Department of Revenue Private Letter Ruling Request

Taxpayer: NAME
Request: Private Letter Ruling

NAME
Page 2
February 8, 2023
PLR Requestor: NAME
Taxpayer Inquiry: Hotel Occupancy Operator Tax (HOOT)
Tax Period(s): DATE1 – DATE2 & DATE2 – DATE3
Subject of Request: Tax Refund - 30 Consecutive Days Hotel Stay / 3rd
Party Bookings Hotel Stay / Permanent Residents
Tax Exemptions
Relevant Documents: These documents are labeled by exhibits A-1 / F-2
and includes the following:
•
•
•
•
•
•

Third Party Booking Receipts (Al - A12)
Hotel Registry (B)
Hotel Folio's Gross Receipts (C)
Proof of Debit Card Authorizations & Payments (D1-D7)
Statements of Authorities (E)
Relevant Authorities (F-1/F-2)

Involved parties:
Taxpayer - NAME
Hotel Operator – COMPANY1 DBA COMPANY1
Managing Members: NAME2
NAME3
NAME4
NAME5
NAME6
NAME7
Hotel General Manager: NAME8
The following statements summarize the material facts concerning the
taxpayer inquiries in regards [sic] to Illinois Hotel Occupancy Operator
Tax, in addition to other possible applicable rules pertaining to the
taxpayer issues.

NAME
Page 3
February 8, 2023
The taxpayer booked a hotel reservation through COMPANY2 which
operates on behalf of its parent company COMPANY3., a third party travel
technology company.
The taxpayer was attempting to acquire a temporary permanent residency
with the COMPANY1 while qualifying for the purchasing of a property,
utilizing the hotel as proof of consistent rent payments and proof of
temporary residency.
On DATE1 the taxpayer booked the first initial reservation and checked
into the COMPANY1, located at ADDRESS2.
The reservation was for a five-day stay with the departure date of DATE4.
The taxpayer then rebooked a second reservation with a check-in of
DATE4, and a departure date of DATE5.
From DATE5, through DATE2, the taxpayer booked ten separate
reservations over the course of thirty-five consecutive days, with a
grossed rental receipt amount of $,$$$.$$, which included $$$.$$ of
COMPANY2 taxes and fees.
By the end of the 12th, reservation, checking in on DATE6 with a departure
date of DATE2 the taxpayer contacted the hotels general manager
NAME8 and requested a tax refund.
The request was forwarded to NAME2, a managing member of
COMPANY1 which operates under COMPANY1.
NAME7 responded advising the taxpayer that she was not entitled to any
tax refund due to booking indirectly with COMPANY2.
NAME7 went on to explain that multiple reservations, that check guests in
and out, in addition to third party bookings would cause the taxpayer to
forfeit their rights to tax refunds.
There were no taxes refunded or adjusted for the tax period of DATE1 to
DATE2.
The taxpayer began booking directly with the COMPANY1 on DATE2 with
a daily rate of $$ the taxpayer was assessed a daily Hotel Occupancy
Operator tax of 6% which was equivalent to $.$$ and a local municipal
hotel tax of 6% which was also equivalent to $.$$.

NAME
Page 4
February 8, 2023
All of these payments made by the taxpayer included taxes.
On DATE3 a balance dispute arose due to multiple issues but primarily as
a result of tax refund discrepancies.
NAME7 advised the taxpayer that the city of CITY is unincorporated and
does not exempt taxes for hotel guests regardless of the length of their
stay.
The first issue pertaining to the tax period of DATE1 through DATE2
supersedes 30 consecutive days.
The second issue pertaining to the tax period of DATE2 through DATE3
also supersedes 30 consecutive days.
These issues are specifically pertaining to Illinois hotel operators tax laws
and rules. The facts of the issues within this request are accurate, and
directly relate to the laws that govern permanent residents.
The total gross receipts from the first tax period is $,$$$.$$ & $,$$$.$$ for
the second tax period. The rental gross proceeds for 73 consecutive days,
DATE1 through DATE3 total $,$$$.$$.
The taxpayer has not received any tax refunds for the first tax period and
only partial taxes for the second tax period of approximately $$$.$$.
The following authorities support the taxpayer views by defining
permanent residents, and explaining the grounds in which the taxing rules
are applicable to a permanent resident per Illinois Compiled Statutes:
(35 ILCS 145/2) (5) Definitions.
The Illinois Hotel Operator's Occupancy Tax Act defines a permanent
resident as "any person who occupied or has the right to occupy any room
or rooms, regardless of whether or not it is the same room or rooms, in a
hotel for at least 30 consecutive days"
(35 ILCS 145/3) Rate; exemptions.
(a)

A tax is imposed upon persons engaged in the business of
renting, leasing or letting rooms in a hotel at the rate of 5%
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

NAME
Page 5
February 8, 2023
under subsection (c) of Section 13 of the Metropolitan Pier
and Exposition Authority Act.(b) There shall be imposed an
additional tax
(b)

upon persons engaged in the business of renting, leasing or
letting rooms in a hotel at the rate of 1% 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.

The CITY municipal ordinance codes below, further reiterates [sic] the
Illinois department of revenue tax authorities by implementing similar
exceptions for permanent residents with a hotel stay of 30 consecutive
days.
§ 35.021 TAX IMPOSED, RATE; PERMANENT RESIDENTS
EXCEPTED. A tax is hereby levied and imposed upon the use and
privilege of renting, leasing or letting of rooms in a hotel in the city at a rate
of 6% of the gross rental receipts from such rental, leasing or letting. The
ultimate incidence of and liability for payment of said tax shall be borne by
the user, lessee or tenant of said rooms. The tax herein levied shall be in
addition to any and all other taxes. Gross rentals shall not include
proceeds from renting, leasing or letting to permanent residents of the
establishment
A 2018 Ruling from the Illinois Department of Revenue further supports
the conclusion of the taxpayer views which collectively addresses all of the
taxpayer's concerns and inquiries.
ST 18-0009-PLR 08/20/2018; Regardless of whether the person
contracted with the hotel operator to stay 30 consecutive days at check-in,
if a person qualifies as a permanent resident (stays at least 30
consecutive days at the hotel), the gross receipts received by the hotel
operator would not be subject to tax for that period.
If the hotel operator charges a person the hotel tax for a room (whether or
not it is the same room) for at least a 30-consecutive day period, the
person shall have a legal right to claim a refund of The amount of tax
collected for such room from the hotel operator.

NAME
Page 6
February 8, 2023
The statute does not require that the payment for a room be by the same
entity for at least 30 consecutive days, only that a person occupy or have
the right to occupy a room for at least 30 consecutive days.
In conclusion the taxpayer views have been previously addressed in
separate rulings issued by the department for similar matters, in that the
taxpayer, regardless of the method of payments, method of bookings,
frequency of payments, or changing of rooms, is entitled to a full tax
refund on all gross proceeds or rent payments for the 73 - consecutive
days during the tax period of DATE1 – DATE3 for both periods booked
directly and indirectly with the COMPANY1, including the City of CITY
hotel taxes based off the cities taxing ordinances.
This PLR Request has been prepared by Taxpayer NAME and humbly
presented to the Illinois Department of Revenue in hopes that the
department will issue a ruling which corresponds with the taxpayers [sic]
inquiries.
I NAME, have no knowledge of any pending litigations and or audits
for the tax period(s) of this request. ✔
I NAME, have not presented any request to the department prior to
the present one, and to the best of my knowledge, the department
has not ruled on any previous matters, or received any submissions
that were withdrawn before a ruling was issued on behalf of myself.
✔
I NAME, affirm with certainty that I have researched local municipal
authorities, county authorities, state authorities, and federal
authorities and have been unable to locate any authorities that
contradict the views within this request. ✔
DEPARTMENT’S RESPONSE:
The Hotel Operators’ Occupation Tax Act (35 ILCS 145/1 et seq.) imposes a tax
upon persons engaged in the business of renting, leasing or letting rooms in a hotel.
The tax is imposed at a rate of 5% of 94% of the gross rental receipts from the renting,
leasing or letting of such rooms. An additional tax is also imposed at a rate of 1% of
94% of such gross rental receipts. The gross proceeds from rental receipts for rentals
to “permanent residents” are excluded from Hotel Operator’s Occupation Tax liability.
86 Ill. Adm. Code 480.101(a)(1)-(2).
A permanent resident is any person who occupies or has the right to occupy any
room or

NAME
Page 7
February 8, 2023
rooms, regardless of whether it is the same room or rooms, in a hotel for at least 30
consecutive
days. 86 Ill. Adm. Code 480.105. Regardless of whether the customer contracted with
the hotel operator to stay 30 consecutive days at check-in, if a person qualifies as a
permanent resident (stays at least 30 consecutive days at the hotel), the gross receipts
received by the hotel operator would not be subject to tax for that period.
If the hotel operator charges the customer the hotel tax for a room (whether or
not it is the same room) for a 30 consecutive day period, the customer has a legal right
to claim a refund of the amount of tax collected for such room from the hotel operator.
35 ILCS 145/3(f). However, any taxes collected by the hotel operator that are not
refunded to the customer for any reason must be remitted to the Department. 35 ILCS
145/3(f). Upon an unconditional refund of the tax to the permanent resident, the hotel
operator may file a claim for credit for any hotel tax paid by the operator. 86 Ill. Adm.
Code 480.125(a)-(b).
Please note that the Department has no authority to compel the hotel operator to
file a claim for credit. See 35 ILCS 145/7; 35 ILCS 120/6-6c; 86 Ill. Adm. Code 480.125.
This procedure is a matter of business between the customer and the hotel operator.
The hotel operator is not required by the tax laws to file a claim for credit. See 35 ILCS
145/7; 35 ILCS 120/6-6c; 86 Ill. Adm. Code 480.125. If a hotel operator does not agree
to file a claim for credit on a given transaction, the customer must enforce his or her
right to collect the taxes as the customer would any other debt owed to the customer.
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,

Katarzyna Kowalska
Associate Counsel
KK: rkn