Is a program enrollment fee for an overnight immersive role-play experience subject to Illinois's Hotel Operators' Occupation Tax?

Plain-English summary

The operator of a private event facility running scheduled, staff-supervised "immersive" role-play programs -- participants take on assigned roles and are given sleeping accommodations inside the building to support their continued participation -- asked whether its single program-enrollment fee triggers Illinois's Hotel Operators' Occupation Tax, even though the facility isn't open to the public for lodging, doesn't advertise or rent rooms independently of the program, and doesn't itemize a lodging charge.

The Department said yes, it's a "hotel" for tax purposes. Illinois defines a hotel very broadly: any building where the public can, for a fee, obtain living quarters, sleeping, or housekeeping accommodations -- expressly including things well beyond a traditional hotel, like retreat centers, conference centers, and hunting lodges. The key legal test isn't whether you call yourself a hotel, advertise rooms publicly, or let people book lodging on its own; it's simply whether you provide sleeping/living accommodations for a consideration. Even a hunting outfitter that bundles overnight stays into a hunting package is a "hotel operator" under this test, and the same logic covers a program that assigns overnight accommodations to support participants' continued involvement.

The bigger practical point is about ALL-OR-NOTHING taxation: hotel operators must keep separate books showing which receipts are taxable (lodging) versus not (meeting rooms, food, merchandise, unrelated services), and if they don't separate them, the ENTIRE bundled charge becomes taxable at the hotel rate. Because this facility's enrollment fee wasn't broken out into a lodging component and a program-service component, the Department concluded the whole fee is subject to Hotel Operators' Occupation Tax (5% + an additional 1%, both on 94% of gross rental receipts) unless and until the operator separately states the accommodations portion and keeps records to support the split.

The letter also flags that OTHER Illinois taxes can layer on top: any tangible personal property genuinely transferred as part of the program (analogized to seminar materials -- meals, clothing, supplies) is separately subject to Service Occupation Tax, while merchandise sold independently of the program (like souvenir items) is ordinary taxable retail sales subject to Retailers' Occupation Tax.

What this means for you

Experience, retreat, and program operators who include overnight stays

If your program bundles overnight accommodations into a single enrollment or program fee, that fee is presumptively subject to Hotel Operators' Occupation Tax on its ENTIRE amount -- not just an implied "room" portion -- unless you separately state the lodging charge on your invoices/records and can document the split. "We're not a hotel, we don't advertise rooms, and guests can't book lodging separately" does NOT get you out of the tax; providing sleeping accommodations for a fee is enough by itself.

Retreat centers, conference centers, hunting lodges, and similar venues

The Department's own examples make clear this reaches far beyond traditional hotels/motels. If overnight sleeping accommodations are part of what you sell -- packaged with programming, hunting, conferences, or anything else -- you likely need to analyze your billing the same way: separate the lodging piece, keep records, and expect the full charge to be taxed if you don't.

Accountants and tax professionals structuring bundled event pricing

Advise clients to separately state and document any lodging component of a bundled fee from day one (86 Ill. Adm. Code 480.115) -- retroactively splitting an already-collected lump-sum fee is far harder than pricing it correctly from the start. Also flag the Service Occupation Tax layer for materials/supplies genuinely transferred as part of a program (analogized here to seminar materials under 86 Ill. Adm. Code 140.129), separate from the hotel-tax analysis on the lodging piece.

Common questions

Q: Does a facility have to look or operate like a traditional hotel to owe Hotel Operators' Occupation Tax?
A: No. Illinois defines "hotel" broadly as any building where the public can obtain living quarters or sleeping accommodations for a fee -- explicitly including retreat centers, conference centers, and hunting lodges, and (per this letter) a private immersive-program facility that assigns overnight stays to participants.

Q: If lodging is just one part of a bundled program fee, is only that part taxed?
A: Only if you separately state the lodging portion and keep proper books/records showing the split. If you don't, the Department taxes the ENTIRE bundled fee at the hotel rate.

Q: What's the actual Hotel Operators' Occupation Tax rate?
A: 5% of 94% of gross rental receipts, plus an additional 1% of 94% of the same receipts -- i.e., two layered state-level rates on the taxable lodging receipts.

Q: Are meals, materials, or merchandise provided during the program taxed too?
A: Potentially, but under a DIFFERENT tax: tangible items genuinely transferred as part of the program (analogized to seminar materials) fall under Service Occupation Tax, while items sold independently of the program are ordinary Retailers' Occupation Tax retail sales.

Q: Can I rely on this letter for my own event or retreat business?
A: No. This is a General Information Letter -- it's not binding on the Department and doesn't apply directly to different facts. Get your own billing structure reviewed, especially before you launch bundled pricing.

Citations and references

Statutes:

• 35 ILCS 145 (Hotel Operators' Occupation Tax Act)

Regulations:

• 86 Ill. Adm. Code 480.101 (imposition; exclusion for receipts unconnected to room rental)
• 86 Ill. Adm. Code 480.105 (broad definition of "hotel" and "room")
• 86 Ill. Adm. Code 480.115 (recordkeeping to support nontaxable receipts; all-or-nothing consequence)
• 86 Ill. Adm. Code 130.101; 150.101 (Retailers' Occupation Tax and Use Tax imposition)
• 86 Ill. Adm. Code 140.101; 140.129(b)(1), (d)(1) (Service Occupation Tax; program-materials vs. independent retail sales)
• 86 Ill. Adm. Code 130.701 (retailer registration)

Source

• Landing page: Illinois 2026 Sales Tax Letter Rulings
• Original PDF: ST26-0022-GIL.pdf

Original ruling text

ST 26-0022-GIL 06/04/2026 HOTEL OPERATORS’ OCCUPATION TAX
Overnight camps and similar businesses that provide overnight accommodations
are subject to Hotel Operators’ Occupation Tax. 86 Ill. Adm. Code 480.101. They
may also be subject to Retailers’ Occupation Tax, Use Tax, Service Occupation Tax,
or Service Use Tax on transfers of tangible personal property incident to the sale of
programmatic services or sales of tangible personal property at retail that are
unconnected to sales of programmatic services. 86 Ill. Adm. Code 140.129. (This is
a GIL).
June 4, 2026
NAME
COMPANY
ADDRESS
EMAIL
Dear NAME:
This letter is in response to your letter dated March 10, 2026, 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
https://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). The Department recently met
and determined that it would decline to issue a Private Letter Ruling in response to your
request. Based on the information you provided in your letter, we hope the following General
Information Letter will be helpful in addressing your questions.

COMPANY/NAME
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June 4, 2026
INQUIRY:
I am writing on behalf of COMPANY, the operator of a private event facility
known as FACILITY, located in CITY, Illinois. We respectfully request a Private
Letter Ruling regarding the application of the Illinois Hotel Operators’
Occupation Tax Act (35 ILCS 145) and any other applicable Illinois sales taxes
to fees charged for participation in our structured immersive program.
FACILITY operates scheduled immersive role-play programs conducted
within a BUILDING. The facility is not open to the public for lodging and does
not operate as a hotel, motel, or short-term rental. Access to the facility is
limited exclusively to individuals who register to participate in a scheduled
program event.
Participants enroll in the FACILITY EXPERIENCE, a structured immersive
program in which participants assume roles (such as ROLE 1 or ROLE 2) and
take part in organized scenarios conducted within the facility. Programs
include scheduled activities, staff supervision, participant rules and
procedures, and defined program start and end times.
During the program period, participants are assigned sleeping
accommodations within the facility to support continued participation in the
program. These accommodations are provided solely to facilitate
participation in the immersive program and are not available independently of
program enrollment. Participants cannot reserve or rent accommodations
separately, and the facility does not advertise or offer lodging to the public.
Participants pay a single program enrollment fee to attend the program. This
fee covers participation in the immersive program and operational costs
associated with conducting the event. The fee is not itemized or marketed as
lodging or room rental.
We respectfully request guidance regarding whether the program enrollment
fees described above are subject to:

1. The Illinois Hotel Operators’ Occupation Tax (35 ILCS 145), or
2. Any Illinois Retailers’ Occupation Tax or other Illinois sales tax
   provisions.
   Specifically, we seek clarification as to whether fees for participation in a
   structured immersive program-where sleeping accommodations are

COMPANY/NAME
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June 4, 2026
assigned solely to support participation and are not rented or marketed
independently---constitute taxable receipts under Illinois tax law.
If helpful to the Department’s review, we would be happy to provide
supporting materials such as sample program descriptions, participant
agreements, schedules of activities, or registration materials.
Thank you for your time and consideration. Please feel free to contact us if
additional information is required.
DEPARTMENT’S RESPONSE:
Hotel Operators’ Occupation Tax
The Hotel Operators’ Occupation Tax Act imposes a tax upon persons engaged in the
business of renting, leasing or letting rooms in a hotel. See 35 ILCS 145. 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.
Proceeds from the renting, leasing or letting to permanent residents of a hotel are excluded
from the gross receipts upon which the tax is imposed. A permanent resident is a person
who occupies or has the right to occupy a room for at least 30 consecutive days. See 86 Ill.
Adm. Code 480.101 and 480.105.
The Hotel Operators’ Occupation Tax is imposed on receipts from renting rooms for
living quarters or for sleeping or housekeeping accommodations. A hotel is any building or
buildings in which the public may, for a consideration, obtain living quarters, sleeping, or
housekeeping accommodations. This includes, but is not limited to, inns, motels, tourist
homes or courts, lodging houses, rooming houses and apartment houses, retreat centers,
conference centers, and hunting lodges. See 86 Ill. Adm. Code 480.105. A room or rooms
includes any living quarters, sleeping our housekeeping accommodations. See 86 Ill. Adm.
Code 480.105.
Other receipts which are not in any way reasonably connected with or attributable to
the renting, leasing or letting of rooms for use as living quarters or for sleeping or
housekeeping accommodations are not subject to the Hotel Operators’ Occupation Tax.
See 86 Ill. Adm. Code 480.101(b)(6) and 480.105. The tax does not apply to receipts from the
renting of rooms for other purposes, such as meeting rooms or banquet rooms. See 86 Ill.
Adm. Code 480.101(b)(1). Properly kept books and records, however, must support the
exemption for such nontaxable receipts. See 86 Ill. Adm. Code 480.115. Every hotel operator
must keep separate books or records showing rents and occupancies taxable under the
Hotel Operators’ Occupation Tax Act separate from his transactions that are not taxable

COMPANY/NAME
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June 4, 2026
under the Act. If an operator fails to keep separate books or records, the operator will be
liable for Hotel Operators’ Occupation Tax imposed on the entire proceeds from the hotel.
See 86 Ill. Adm. Code 480.115(a).
As noted above, the definition of hotels subject to the tax includes much more than
just traditional hotels. For example, hunting establishments qualify as hotels if they provide
overnight stay accommodations as part of the hunting packages they sell. The gross receipts
from the rental of these sleeping accommodations are taxable under the Hotel Operators’
Occupation Tax Act. The type of buildings or rooms being provided for overnight
accommodations is irrelevant to whether a person is engaged in the business of renting,
leasing, or letting rooms in a hotel. The key factor is whether living quarters, sleeping, or
housekeeping accommodations are provided for a consideration. Therefore, a person that
operates a packaged experience which includes overnight sleeping accommodations as
part of the package is a hotel operator and is subject to the Hotel Operators’ Occupation
Tax.
If a business subject to Hotel Operators’ Occupation Tax fails to separate its taxable
transactions under the Act from the non-taxable transactions, then the business will be
liable for Hotel Operators’ Occupation Tax on the entire proceeds from the transactions. A
program enrollment fee that does not separately state the portion of the transaction
accounting for overnight stay accommodations from the rest of the fee is subject to Hotel
Operators’ Occupation Tax on the entire fee.
Sales Tax
Hotel Operators’ Occupation Tax does not apply to receipts from selling food,
beverages, or other tangible personal property, nor to other receipts that are not in any way
reasonably connected with or attributable to the renting, leasing, or letting of hotel rooms,
as long as such nontaxable receipts are supported by proper books and records. See 86 Ill.
Adm. Code 480.101(b)(6). However, other taxes may apply to such sales.
The Illinois Retailers’ Occupation Tax Act imposes a tax upon persons engaged in this
State in the business of selling or leasing tangible personal property to purchasers for use or
consumption. See 35 ILCS 120/2; 86 Ill. Adm. Code 130.101. The Use Tax Act imposes a tax
upon the privilege of using in this State tangible personal property purchased at retail from
a retailer. See 35 ILCS 105/3; 86 Ill. Adm. Code 150.101. These taxes comprise what is
commonly known as “sales” tax in Illinois.
Retailers’ Occupation Tax and Use Tax do not apply to sales of service. The Service
Occupation Tax Act imposes a tax upon persons engaged in this State in the business of
making sales of service. Under the Service Occupation Tax Act, businesses providing
services (i.e., servicemen) are taxed on tangible personal property transferred as an incident

COMPANY/NAME
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June 4, 2026
to sales of service. See 86 Ill. Adm. Code 140.101. For Illinois servicemen, the transfer of
tangible personal property to service customers may result in either Service Occupation Tax
liability or Use Tax liability for servicemen, depending upon which tax base they choose to
calculate their liability. Servicemen who make retail sales that are sourced in Illinois, even
if those sales are a small part of their business, are required to register with the Department
and remit Retailers’ Occupation Tax. See 86 Ill. Adm. Code 130.701.
Tax on Tangible Personal Property Transferred Incident to Service
Overnight or day camps and similar programs are analogous to seminars for Illinois
sales tax purposes. Generally, a seminar provider incurs either Service Occupation Tax or
Use Tax on all seminar materials transferred during the presentation of a seminar for which
a fee or other charge is made for attendance. See 86 Ill. Adm. Code 140.129(b)(1). This
includes things such as meals, clothing, and all other items transferred to participants in a
seminar, camp, or program. A serviceperson’s liability may be calculated in one of four
ways: (1) Service Occupation Tax on the separately stated selling price of tangible personal
property transferred incident to the service; (2) Service Occupation Tax on 50% of the
serviceperson’s entire bill; (3) Service Occupation Tax on the serviceperson’s cost price of
tangible personal property transferred incident to service if the serviceperson is a registered
de minimis serviceperson; or (4) Use Tax on the serviceperson’s cost price of tangible
personal property transferred incident to service if the serviceperson is de minimis and is
not otherwise required to be registered under Section 2a of the Retailers’ Occupation Tax
Act. See 35 ILCS 115/3(g); 86 Ill Adm. Code 140.105-140.106.
Using the first method, servicepersons may separately state the selling price of each
item transferred as a result of sales of service. The tax is based on the separately stated
selling price of the tangible personal property transferred. If servicepersons do not wish to
separately state the selling price of the tangible personal property transferred, those
servicepersons must use the second method where they will use 50% of the entire bill to
their service customers as the tax base. Both of the above methods provide that in no event
may the tax base be less than the cost price of the tangible personal property transferred.
See 86 Ill. Adm. Code 140.106(a). Servicepersons who incur Service Occupation Tax on their
selling price should provide their suppliers with Certificates of Resale when purchasing the
tangible personal property to be transferred as a part of sales of service and are required to
collect the corresponding Service Use Tax from their customers. See 86 Ill. Adm. Code
140.106(b) and (e).
The third way servicepersons may account for their tax liability only applies to de
minimis servicepersons who have either chosen to be registered or are required to be
registered because they incur Retailers’ Occupation Tax liability with respect to a portion of
their business. Servicepersons must calculate their cost ration to determine whether they
are de minimis. The cost ratio is a measure of the amount of tangible personal property

COMPANY/NAME
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June 4, 2026
transferred incident to a sale of service. It is calculated by comparing the serviceperson’s
materials cost to the total income from services. The cost of materials that are not
transferred to customers incident to a service, such as those sold at retail, removed from
inventory for use, or incorporated into repairs of real estate, must be excluded when
determining the cost ratio. See 86 Ill. Adm. Code 140.105(c). Servicepersons may qualify as
de minimis if they determine that their annual aggregate cost price of tangible personal
property transferred incident to sales of service is less than 35% of their annual gross
receipts from service transactions (75% in the case of pharmacists and persons engaged in
graphic arts production). See 86 Ill. Adm. Code 140.109.
Registered de minimis servicepersons are authorized to pay Service Occupation Tax
based upon the cost price of tangible personal property transferred incident to sales of
service. Servicepersons that incur Service Occupation Tax based upon their cost price
collect the Service Use Tax from their customers. They remit tax to the Department by filing
returns and do not pay tax to their suppliers. They provide suppliers with Certificates of
Resale for the tangible personal property transferred to service customers. See 86 Ill. Adm.
Code 140.109(a)(1) and (a)(4).
The final method of determining tax liability may be used by de minimis
servicepersons that are not otherwise required to be registered under Section 2a of the
Retailers’ Occupation Tax Act and. See 35 ILCS 115/2(g). Such de minimis servicepersons
handle their tax liability by paying Use Tax to their suppliers. If their suppliers are not
registered to collect and remit tax, the servicepersons must register, self-assess, and remit
Use Tax to the Department. The servicepersons are considered to be the end-users of the
tangible personal property transferred incident to service. Consequently, they are not
authorized to collect a “tax” from the service customers. See 86 Ill. Adm. Code 140.108.
Servicepersons who incur and remit Service Occupation Tax to the Department have
a Service Use Tax collection obligation and shall collect Service Use Tax from users at the
time of purchase. The Service Use Tax shall be based on the selling price of the tangible
personal property transferred incident to the sale of service if stated separately on the
invoice from the serviceperson. If not stated separately, then the tax will be imposed on 50%
of the entire bill from the serviceperson. However, the Service Use Tax which is collected by
a registered de minimis serviceperson shall be based upon the serviceperson’s cost price
of tangible personal property transferred incident to the serviceperson’s sales of service.
See 86 Ill. Adm. Code 160.115.
Tax on Tangible Personal Property Sold Separately From a Service
Camps and similar programs that also sell tangible personal property that is not part
of the transaction for attending the program are treated the same as seminar providers who
transfer materials to a person which are not seminar materials, for example, t-shirts, coffee

COMPANY/NAME
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June 4, 2026
mugs, and other novelty items. When they sell tangible personal property that is not part of
the seminar, they are engaging in the business of selling tangible personal property at retail,
and are subject to Retailers’ Occupation Tax liability, including any applicable local tax, on
the selling price of those items. See 86 Ill. Adm. Code 140.129(d)(1). Every person engaged
in the business of selling tangible personal property at retail in Illinois must obtain a
certificate of registration from the Department. See 86 Ill. Adm. Code 130.701(b). If
purchases subject to Retailers’ Occupation Tax occur in Illinois, the purchasers must pay
the Use Tax to the retailer at the time of purchase. The retailers are then allowed to retain
the amount of Use Tax paid to reimburse themselves for their Retailers’ Occupation Tax
liability incurred on those sales. If the purchases occur outside Illinois, purchasers must
self-assess their Use Tax liability and remit it directly to the Department.
I hope this information is helpful. If you require additional information, please visit
our website at https://tax.illinois.gov/ or contact the Department’s Taxpayer Information
Division at 800-732-8866.
Very truly yours,

Edward Mroczkowski
Associate Counsel
(217) 782-7055
EM:slc

Printed by the authority of the State of Illinois
Electronic Only - One Copy
Issued 06/04/2026, Redacted 06/08/2026