Is a hotel relieved of its duty to collect sales tax on a New York State employee's room just because the employee pays with a credit card embossed 'tax exempt'?

Plain-English summary

Ramada Inn Syracuse regularly hosts New York State employees traveling on official business. Those employees carry American Express cards issued in their own names, some embossed with the words "tax exempt," for authorized purchases while on state duty. But when the card is swiped, the receipt shows only the employee's name — nothing indicates that the State of New York is the one actually paying, or that the stay is for official state business.

New York State itself is exempt from sales tax when it's the one paying for a hotel room. But the law puts the burden on the vendor (here, the hotel) to prove a transaction isn't taxable, and a receipt showing only an individual employee's name doesn't do that — regardless of what's embossed on the card. The Department held that the "tax exempt" embossing on the card is not, by itself, enough to excuse the hotel from collecting tax. What the hotel actually needs is a properly completed Form ST-129 (Exemption Certificate, Tax on Occupancy of Hotel Rooms), which the employee should provide when checking in. Once the hotel has that form on file, it has satisfied its burden of proving the stay was exempt and doesn't need to collect tax — regardless of which specific payment method or card was used.

What this means for you

Hotel operators serving government travelers

Don't rely on a credit card's markings, embossing, or appearance alone to treat a government employee's stay as tax-exempt. Get a properly completed Form ST-129 from the guest at check-in (or before) — that's what actually shifts the burden of proving nontaxability off of you and relieves you of the obligation to collect tax.

Government employees traveling on official business

If you want your hotel stay treated as tax-exempt because the state (not you) is really paying, be prepared to fill out Form ST-129 for the hotel, even if your travel card itself says "tax exempt." The card alone won't do it.

Accountants and tax professionals

This turns on the burden-shifting framework in Tax Law § 1132(c)(1) and 20 NYCRR § 532.4(b): a vendor who timely accepts a properly completed exemption certificate is relieved of liability, and that documentary requirement isn't satisfied by a payment instrument's appearance alone, even one specifically marked "tax exempt."

Common questions

Q: Is a hotel required to collect sales tax from a state employee using a "tax exempt" card?
A: Yes, unless the hotel also has a properly completed Form ST-129 exemption certificate from the employee — the card embossing alone isn't sufficient documentation.

Q: Why isn't the card enough on its own?
A: Because the receipt generated when the card is swiped shows only the employee's name, with no indication the State of New York is paying or that the stay is official business — so it doesn't prove the exemption.

Q: What should a state employee give the hotel to make the stay tax-exempt?
A: A properly completed Form ST-129, Exemption Certificate, Tax on Occupancy of Hotel Rooms.

Q: Does this apply no matter how the room is actually paid for?
A: Yes — once the hotel has a properly completed Form ST-129, it doesn't have to collect tax regardless of the payment method used.

Q: Can another hotel rely on this ruling for a similar situation?
A: No. It's binding only on this petitioner's specific facts and can't be relied on by any other taxpayer.

Citations and references

Statutes and regulations:

• Tax Law § 1116(a)(1) (New York State exempt as purchaser)
• Tax Law § 1132(c)(1) (presumption of taxability; burden of proof)
• 20 NYCRR § 529.2(b) (governmental entities as purchaser)
• 20 NYCRR § 532.4(b) (burden of proof; vendor relief)
• Form ST-129 (Exemption Certificate, Tax on Occupancy of Hotel Rooms)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2002.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a02_15s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-02(15)S
Sales Tax
June 25, 2002

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S000914B

On September 14, 2000, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Ramada Inn Syracuse, 1305 Buckley Road, N. Syracuse, NY 13212.
The issue raised by Petitioner, Ramada Inn Syracuse, is whether an American Express credit
card issued to a New York State governmental employee embossed with the words “tax exempt” is
sufficient, in and of itself, to relieve Petitioner from responsibility for collecting State and local sales
taxes from the employee.
Petitioner submits the following facts as the basis for this Advisory Opinion.
Petitioner operates a hotel in New York State. Periodically, employees of the State of
New York, who are on official business for the State, stay at the hotel. The employees of the State
of New York have been issued “American Express” credit cards for use in making authorized
purchases in the course of their official duties while on official business. The cards are issued in the
employee’s name and may be embossed with the words “tax exempt.” When the credit cards are
swiped through the card reader, cash register, etc., the receipt printed is solely in the employee’s
name and makes no mention that the State of New York, or a representative or employee of the State
of New York on official business, is paying for the hotel occupancy.
Applicable Law and Regulations
Section 1116 of the Tax Law provides, in part:
Exempt organizations. (a) Except as otherwise provided in this section, any
sale or amusement charge by or to any of the following or any use or occupancy by
any of the following shall not be subject to the sales and compensating use taxes
imposed under this article:
(1) The state of New York, or any of its agencies, instrumentalities, public
corporations (including a public corporation created pursuant to agreement or
compact with another state or Canada) or political subdivisions where it is the
purchaser, user or consumer, or where it is a vendor of services or property of a kind
not ordinarily sold by private persons. . . .
Section 1132(c)(1) of the Tax Law provides, in part:
For the purpose of the proper administration of this article and to prevent
evasion of the tax hereby imposed, it shall be presumed that all receipts for property

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TSB-A-02(15)S
Sales Tax
June 25, 2002

or services of any type mentioned in subdivisions (a), (b), (c) and (d) of section
eleven hundred five, all rents for occupancy of the type mentioned in subdivision (e)
of said section, and all amusement charges of any type mentioned in subdivision (f)
of said section, are subject to tax until the contrary is established, and the burden of
proving that any receipt, amusement charge or rent is not taxable hereunder shall be
upon the person required to collect tax or the customer. Except as provided in
subdivision (h) or (k) of this section, unless . . . the purchaser, not later than ninety
days after delivery of the property or the rendition of the service, furnishes to the
vendor: any affidavit, statement or additional evidence, documentary or otherwise,
which the commissioner may require demonstrating that the purchaser is an exempt
organization described in section eleven hundred sixteen, the sale shall be deemed
a taxable sale at retail. . . Where such a resale or exemption certificate or such an
affidavit, statement or additional evidence has been furnished to the vendor, the
burden of proving that the receipt, amusement charge or rent is not taxable hereunder
shall be solely upon the customer. . . .
Section 529.2(b) of the Sales and Use Tax Regulations provides, in part:
As purchaser. (1) New York State, or any of its agencies, instrumentalities,
public corporations or political subdivisions (hereinafter referred to as New York
State governmental entities) are not subject to sales or use tax when they are the
purchaser, user, or consumer of tangible personal property or services or when they
are the occupant of a hotel room or a patron at a place of amusement, club, roof
garden, cabaret or other similar places.
(2) New York State governmental entities as purchasers, users, consumers,
occupants or patrons must exercise their right to exemption through the issuance of
governmental purchase orders or the appropriate exemption document.
Section 532.4(b) of the Sales and Use Tax Regulations provides, in part:
(1) The burden of proving that any receipt, amusement charge, or rent is not
taxable shall be upon the person required to collect the tax and the customer.
(2) A vendor who in good faith accepts from a purchaser a properly
completed exemption certificate, or as authorized by the Department, other
documentation evidencing exemption from tax not later than 90 days after delivery
of the property or the rendition of the service is relieved of liability for failure to
collect the sales tax with respect to that transaction. The timely receipt of the
certificate or documentation itself will satisfy the vendor’s burden of proving the
nontaxability of the transaction and relieve the vendor of responsibility for collecting
tax from the customer.

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TSB-A-02(15)S
Sales Tax
June 25, 2002

Opinion
Petitioner is providing hotel occupancy to employees of the State of New York who are
engaged in official business for the State. The employees are paying for their occupancy using
credit cards embossed with the words “tax exempt.” When the credit cards are swiped through the
card reader, cash register, etc., the receipt printed is solely in the employee’s name. Thus, the record
of the transaction retained by the hotel makes no mention that the State of New York is paying for
the hotel occupancy or that a State employee is paying for the occupancy in the course of his or her
official duties.
Pursuant to Section 529.2(b)(1) of the Sales and Use Tax Regulations, the State of New York
is not subject to State and local sales taxes when it is the occupant of a hotel room. This would
include a State employee, on official business for the State. Petitioner must maintain records to
substantiate the exempt occupancy. Pursuant to Section 529.2(b)(2) of the Sales and Use Tax
Regulations, New York State governmental entities as purchasers, users, consumers, occupants or
patrons exercise their right to exemption through the issuance of governmental purchase orders or
the use of appropriate exemption documentation. Though the credit card issued to the State
employee may be embossed with the words “tax exempt,” the record generated by swiping the card
through a card reader or cash register does not substantiate that the hotel occupancy was paid for by
the State or by a State employee in the course of his or her official duties. Accordingly, the use of
this credit card by State employees is not sufficient, in and of itself, to relieve Petitioner of its burden
of proving the nontaxability of the transaction or its responsibility for collecting sales tax on the
transaction.
State employees should give Petitioner a properly completed Exemption Certificate, Tax on
occupancy of hotel rooms, Form ST-129 (10/00), when paying for hotel occupancy. Form ST-129
certifies that the person signing the form is a government employee or representative acting in the
course of his or her official duties and that such person’s hotel occupancy is paid for directly or
indirectly (including reimbursement) by the government. Thus, if Petitioner receives a properly
completed Form ST-129 from a State employee, regardless of the method of payment, Petitioner will
have satisfied its burden of proving the nontaxability of the transaction and will not have to collect
tax. See Section 532.4(b) of the Sales and Use Tax Regulations.

DATED: June 25, 2002

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.