Is renting out a banquet/meeting room (not a hotel room) for weddings, business meetings, or temporary merchandise sales subject to Tennessee sales tax?

Plain-English summary

A city-affiliated nonprofit runs a facility with meeting and banquet rooms rented by the day or hour -- for weddings, receptions, business meetings and seminars, and occasionally to businesses that temporarily sell merchandise to the public on-site. The facility has no overnight accommodations and no hotel or motel affiliation. It asked the Department to sort out the sales tax treatment across five scenarios: renting to in-state businesses for meetings, out-of-state businesses for meetings, individuals for personal events, in-state vendors selling merchandise, and out-of-state vendors selling merchandise.

Meetings, seminars, weddings, and similar events (Questions 1-3): NOT taxable, regardless of who rents. Tennessee's hotel-occupancy sales tax reaches "rooms, lodgings, or accommodations" furnished by a "hotel, inn, tourist court, tourist camp, tourist cabin, motel, or any place" providing lodging for consideration. The Department did a careful statutory-construction analysis of the word "room" in this context: read in isolation, "room" could mean any interior space; but read in the context of a phrase repeated with "lodgings" and "accommodations," and alongside a list of overnight-stay enterprises, the legislature clearly meant lodging space -- not just any rentable room. Since the facility offers no overnight stays and isn't hotel/motel-affiliated, it falls outside this tax entirely, and it makes no difference whether the renter is in-state, out-of-state, or an individual (the statute draws no such distinction, and even if it did, the Department noted any ambiguity in a tax statute must be resolved in the taxpayer's favor).

Temporary merchandise-sales rentals (Questions 4-5): generally taxable, with an out. A different statute specifically taxes renting space to "a dealer or vendor without a permanent location" or to someone registered elsewhere but selling at this location on a less-than-permanent basis. So when the facility rents a room to a business that's actually there to sell merchandise to the public -- not just to hold a meeting -- that rental IS generally taxable, whether the vendor is in-state or out-of-state. The exception: if the vendor can show it's already registered to collect Tennessee sales tax at that specific location, the room rental itself isn't taxed (though the vendor still must collect and remit tax on whatever it actually sells there). A handful of narrow statutory carve-outs also exist -- certain trade shows/conventions that don't open the sales floor to the general public, nonprofit-sponsored craft/antique/book fairs and gun shows, and flea markets.

What this means for you

Event and meeting-space venues (convention centers, community facilities, banquet halls)

The taxability line for your room rentals isn't about who's renting, but WHY. Pure meeting/event use (weddings, seminars, conferences) is untaxed if you're not a hotel/motel-type lodging enterprise. But the moment a renter is using your space to sell merchandise directly to the public, a different, vendor-focused tax provision kicks in -- ask temporary sellers whether they're already registered to collect sales tax at your location, since that flips the room rental itself back to nontaxable.

Accountants and tax professionals

This ruling's statutory-construction reasoning on "room" (context within a taxing statute, canon of resolving tax-statute ambiguity in the taxpayer's favor) is a useful template for similarly worded ambiguous terms in Tennessee tax law. Also flag the recordkeeping-adjacent point: separately, a temporary vendor must still collect/remit tax on ITS OWN retail sales at the location, regardless of whether the space rental itself is taxed.

Common questions

Q: Is renting a banquet hall for a wedding subject to Tennessee sales tax?
A: Not under this ruling -- because the facility isn't a hotel/motel-type lodging enterprise, room rentals for events like weddings fall outside Tennessee's hotel-occupancy sales tax, regardless of who rents the space.

Q: Does it matter if the renter is an out-of-state business?
A: No, for either category -- the hotel-occupancy tax makes no in-state/out-of-state distinction for event rentals, and the vendor-space tax applies to both in-state and out-of-state temporary sellers alike.

Q: If I rent event space to sell merchandise to the public, do I owe tax on the room rental?
A: Generally yes, under the temporary-vendor-space provision -- unless you can show you're already registered to collect Tennessee sales tax at that specific location, or your event fits a narrow exception (certain trade shows, nonprofit-sponsored fairs, flea markets).

Q: Can another venue operator rely on this ruling?
A: No. A Tennessee letter ruling binds the Department only as to the specific taxpayer and facts it was issued to, and it can be revoked or modified by the Commissioner. Confirm your own facility's characteristics and rental patterns with a tax professional.

Citations and references

Tennessee statutes and rules (Tenn. Code Ann. unless noted):

• § 67-6-205(c)(1) (Supp. 2010) (sales tax on rooms/lodgings/accommodations from hotels, inns, tourist courts/camps/cabins, motels, or similar; 90-day-plus exclusion)
• § 67-6-205(c)(8) (sales tax on renting space to a dealer/vendor without a permanent location, or registered elsewhere but selling here temporarily; exceptions for certain conventions/trade shows, craft/antique/book fairs, nonprofit gun shows, flea markets)
• § 67-6-102(9)(B) (occasional and isolated sales exemption)
• Tenn. Comp. R. & Regs. 1320-5-1-.63(4) (2000) (small dealers may pay tax to suppliers instead of registering)
• Tenn. Comp. R. & Regs. 1320-5-1-.09(4) (1990) (definition of "temporary sales period")
• § 67-6-101 et seq. (Retailers' Sales Tax Act)

Tennessee cases cited by the ruling:

• Home Builders Ass'n of Middle Tennessee v. Williamson County, 304 S.W.3d 812 (Tenn. 2010) (statutes construed by natural/ordinary meaning in context; ambiguity in tax statutes resolved for the taxpayer)
• Memphis Peabody Corp. v. MacFarland, 365 S.W.2d 40 (1963); Commercial Standard Ins. Co. v. Hixson, 133 S.W.2d 493 (1939) (tax statutes strictly construed against the taxing authority)
• American Airlines, Inc. v. Johnson, 56 S.W.3d 502 (Tenn. Ct. App. 2000); Rogers Group, Inc. v. Huddleston, 900 S.W.2d 34 (Tenn. Ct. App. 1995); Tibbals Flooring Co. v. Huddleston, 891 S.W.2d 196 (Tenn. 1994); United Canners, Inc. v. King, 696 S.W.2d 525 (Tenn. 1985) (taxpayer bears burden of proving an exemption)

Source

• Landing page: https://www.tn.gov/revenue/tax-resources/legal-resources/tax-rulings.html
• Original PDF: https://www.tn.gov/content/dam/tn/revenue/documents/rulings/sales/11-41.pdf

Original ruling text

TENNESSEE DEPARTMENT OF REVENUE
LETTER RULING # 11-41
WARNING
Letter rulings are binding on the Department only with respect to the individual taxpayer
being addressed in the ruling. This presentation of the ruling in a redacted form is
informational only. Rulings are made in response to particular facts presented and are not
intended necessarily as statements of Department policy.

SUBJECT
The application of the Tennessee sales and use tax to the rental of banquet and meeting rooms.
SCOPE
This letter ruling is an interpretation and application of the tax law as it relates to a specific set of
existing facts furnished to the Department by the taxpayer. The rulings herein are binding upon
the Department, and are applicable only to the individual taxpayer being addressed.
This letter ruling may be revoked or modified by the Commissioner at any time. Such revocation
or modification shall be effective retroactively unless the following conditions are met, in which
case the revocation shall be prospective only:
(A) The taxpayer must not have misstated or omitted material facts involved in
the transaction;
(B) Facts that develop later must not be materially different from the facts upon
which the ruling was based;
(C) The applicable law must not have been changed or amended;
(D) The ruling must have been issued originally with respect to a prospective or
proposed transaction; and
(E) The taxpayer directly involved must have acted in good faith in relying upon
the ruling; and a retroactive revocation of the ruling must inure to the taxpayer’s
detriment.
FACTS
The [TAXPAYER] is a Tennessee nonprofit corporation and an instrumentality of the [CITY],
Tennessee. The Taxpayer operates and manages the [FACILITY], a facility that contains several
meeting and banquet rooms available for rent on a daily or hourly basis. The [FACILITY] does
not offer accommodations for overnight stay, and neither it nor the Taxpayer are associated with
a hotel or motel.

1

The [FACILITY]’s meeting and banquet rooms are rented for weddings, receptions, and business
conferences and meetings. The rental is always for a period of fewer than ninety days. On
occasion, the rooms are rented to in-state and out-of-state businesses that use the rooms on a
temporary basis for the purpose of selling merchandise to the public.
QUESTIONS
1.

When the Taxpayer rents a meeting or banquet room to an in-state business for the
purpose of conducting a meeting or seminar, are the rental charges subject to the
Tennessee sales and use tax?

2.

When the Taxpayer rents a meeting or banquet room to an out-of-state business for the
purpose of conducting a meeting or seminar, are the rental charges subject to the
Tennessee sales and use tax?

3.

When the Taxpayer rents a banquet room to an individual for a wedding reception,
birthday party, or other similar event, are the rental charges subject to the Tennessee sales
and use tax?

4.

When the Taxpayer rents a meeting or banquet room to an in-state business that is selling
merchandise to the public, are the rental charges subject to the Tennessee sales and use
tax?

5.

When the Taxpayer rents a meeting or banquet room to an out-of-state business that is
selling merchandise to the public, are the rental charges subject to the Tennessee sales
and use tax?
RULINGS

1.

No. When the Taxpayer rents a meeting or banquet room to an in-state business for the
purpose of conducting a meeting or seminar, the rental charges are not subject to the
Tennessee sales and use tax.

2.

No. When the Taxpayer rents a meeting or banquet room to an out-of-state business for
the purpose of conducting a meeting or seminar, the rental charges are not subject to the
Tennessee sales and use tax.

3.

No. When the Taxpayer rents a banquet room to an individual for a wedding reception,
birthday party, or other similar event, the rental charges are not subject to the Tennessee
sales and use tax.

4.

When the Taxpayer rents a [FACILITY] meeting or banquet room to an in-state business
that sells merchandise to the public on a temporary basis, the rental charges are generally
subject to the Tennessee sales and use tax. However, the rental charges will not be
subject to the sales and use tax if the business renting the space in order to sell
merchandise to the public on a temporary basis presents evidence that it has registered to
collect sales tax at the [FACILITY] location.

2

5.

When the Taxpayer rents a [FACILITY] meeting or banquet room to an out-of-state
business that sells merchandise to the public on a temporary basis, the rental charges are
generally subject to the Tennessee sales and use tax. However, the rental charges will not
be subject to the sales and use tax if the business renting the space in order to sell
merchandise to the public on a temporary basis presents evidence that it has registered to
collect sales tax at the [FACILITY] location.
ANALYSIS

Under the Retailers’ Sales Tax Act, TENN. CODE ANN. § 67-6-101 et seq., the retail sale in
Tennessee of tangible personal property and specifically enumerated services is subject to the
sales and use tax.
1-3. Rentals of meeting or banquet rooms for meetings, seminars, weddings, and similar
events
When the Taxpayer rents a meeting or banquet room for a meeting, seminar, wedding reception,
birthday party, or other similar event, the rental charges are not subject to the Tennessee sales
and use tax.
TENN. CODE ANN. § 67-6-205(c)(1) (Supp. 2010) imposes the sales tax on the “sale, rental or
charges for any rooms, lodgings, or accommodations furnished to persons by any hotel, inn,
tourist court, tourist camp, tourist cabin, motel, or any place in which rooms, lodgings or
accommodations are furnished to persons for a consideration.”1 Note that TENN. CODE ANN.
§ 67-6-205(c)(1) makes no distinction between in-state and out-of-state customers; accordingly,
the customer’s domicile has no bearing on the taxability of the transaction.
Thus, in order for the transaction to be subject to the sales tax under TENN. CODE ANN. § 67-6205(c)(1), the [FACILITY] must be a hotel, inn, tourist court, tourist camp, tourist cabin, motel,
or a place in which rooms, lodgings or accommodations are furnished. For the reasons discussed
below, the [FACILITY] is not properly characterized as any such enterprise.
The Taxpayer has stated that the [FACILITY] does not offer accommodations for overnight stay
and is not associated with a hotel or motel. Thus, the [FACILITY] cannot be characterized as a
hotel, inn, tourist court, tourist camp, tourist cabin, or motel. Likewise, the [FACILITY] cannot
be characterized as a place in which lodgings or accommodations are furnished. The taxability of
the transaction therefore depends on whether the [FACILITY] comes within the scope of TENN.
CODE ANN. § 67-6-205(c)(1) as a place in which rooms are furnished to persons for a
consideration.

1

However, the sales tax does not apply “to rooms, lodgings, or accommodations supplied to the same person for a
period of ninety (90) continuous days or more; charges for or the value of the use of any time-share estate or
perpetual interest in a trust, partnership, nonprofit corporation or limited liability company that has as its substantial
purpose the ownership and control of real property; or charges for or amounts paid as a standard fee for the service
of facilitating the exchange of one (1) time-share interval for another or the service of making a reservation for a
time-share interval via a reservation system.” TENN. CODE ANN. § 67-6-205(c)(1). None of these exceptions applies
in the Taxpayer’s case.

3

The essential issue is therefore whether the term “room” must be interpreted in the broadest
manner possible (i.e., as any interior space of a building) or more narrowly (i.e., as any space
used for lodging or accommodation).
In ascertaining the meaning of a statute, the Tennessee Supreme Court has stated that one must
examine “the natural and ordinary meaning of the statutory language within the context of the
entire statute without any forced or subtle construction that would extend or limit the statute’s
meaning.” Home Builders Ass’n of Middle Tennessee v. Williamson County, 304 S.W.3d 812,
817 (Tenn. 2010) (emphasis added). Additionally, a long-standing rule of statutory construction
provides that “[s]tatutes of taxation are to be strictly construed against the taxing authority and,
therefore, liberally construed in favor of the taxpayer.... Where there is doubt as to the
meaning of a taxing statute, the doubt must be resolved in favor of the taxpayer.” Id. (citing
Memphis Peabody Corp. v. MacFarland, 365 S.W.2d 40, 42-43 (1963) (citing Commercial
Standard Ins. Co. v. Hixson, 133 S.W.2d 493 (1939)) (emphasis added).
In the case of TENN. CODE ANN. § 67-6-205(c)(1), the context in which the term “room” appears
strongly indicates that the legislature intended to limit the application of the statute to a space
used for accommodation or lodging. First, the word “room” appears in TENN. CODE ANN. § 67-6205(c)(1) twice, both times as part of the phrase “rooms, lodgings, or accommodations.” The use
of this phrase, along with the listing of several types of enterprises that provide lodging and
accommodations, underscores that the legislature intended to refer to a space used for lodging.
Furthermore, the common meaning of the term “room” supports this interpretation. For example,
MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY 1082 (11th ed. 2007) defines the term “room” in
pertinent part as “a partitioned part of the inside of a building, esp. such a part used as a
lodging.” This definition, while indicating that a room may be any partitioned portion of a
building, also illustrates that a common meaning of the term “room” is a place of
accommodation.2
Thus, if one considers the phrase “place in which rooms are furnished” in isolation, it might
appear that the statute has a very broad scope and that any location that rents out a room for any
purpose would be subject to taxation. However, when the term “room” is read within the context
of TENN. CODE ANN. § 67-6-205(c)(1), it is apparent that the intent of the legislature was to limit
the imposition of the sales tax to certain types of enterprises, namely hotels, inns, tourist courts,
tourist camps, tourist cabins, motels, and similar places that provide lodging and
accommodations.
Finally, as noted above, the Tennessee Supreme Court has stated that where there is doubt as to
the meaning of a taxing statute, the doubt must be resolved in favor of the taxpayer.3 Thus, any
2

This meaning is also illustrated by the definitions of the following terms: “rooming house” (a house where
lodgings are provided for rent); “room and board” (lodgings and food, usually furnished for a set price); “room
service” (service provided to hotel guests in their lodgings); and “roommate” (one of two or more persons sharing
the same living quarters). See MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY 1082 (11th ed. 2007).
3

Note, however, that the burden is on the taxpayer to establish entitlement to an exemption from taxation. See Am.
Airlines, Inc. v. Johnson, 56 S.W.3d 502, 506 (Tenn. Ct. App. 2000) (quoting Rogers Group, Inc. v. Huddleston, 900
S.W.2d 34, 36 (Tenn. Ct. App. 1995)); Tibbals Flooring Co. v. Huddleston, 891 S.W.2d 196, 198 (Tenn. 1994);
United Canners, Inc. v. King, 696 S.W.2d 525, 527 (Tenn. 1985)).

4

doubt as to the intended meaning of the term “room” within the context of TENN. CODE ANN.
§ 67-6-205(c)(1) must be resolved in favor of the taxpayer. Here, such resolution requires the
narrower interpretation of the term.
Accordingly, when the Taxpayer rents a meeting or banquet room for a meeting, seminar,
wedding reception, birthday party, or other similar event, the rental charges are not subject to the
Tennessee sales and use tax.
4-5.

Rental of meeting or banquet rooms to dealers or vendors

When the Taxpayer rents a [FACILITY] meeting or banquet room to an in-state or out-of-state
business that sells merchandise to the public on a temporary basis, the rental charges are
generally subject to the Tennessee sales and use tax. However, certain exceptions may apply.
TENN. CODE ANN. § 67-6-205(c)(8) imposes the Tennessee sales tax on the “renting or providing
of space to a dealer or vendor without a permanent location in this state or to persons who are
registered for sales tax at other locations in this state but who are making sales at this location on
a less than permanent basis.” In other words, the rental charges will not be subject to the sales
and use tax if the business renting the space in order to sell merchandise to the public on a
temporary basis presents evidence that it has registered to collect sales tax at the [FACILITY]
location. Additionally, TENN. CODE ANN. § 67-6-205(c)(8) does not apply to the renting or
providing of space “at conventions, trade shows, or expositions, if the conventions, trade shows,
or expositions do not allow the general public to enter the exhibit area for the purpose of making
sales or taking orders for sales.” TENN. CODE ANN. § 67-6-205(c)(8) also does not apply to the
renting or providing of space to a “craft fair, antique mall, or book fair or gun show, if the book
fair or gun show is sponsored by a not-for-profit corporation” or to the renting or providing of
space at a flea market.
Accordingly, when the Taxpayer rents a [FACILITY] meeting or banquet room to an in-state or
out-of-state business that sells merchandise to the public on a temporary basis, the rental charges
are generally subject to the Tennessee sales and use tax. However, the rental changes will not be
subject to the sales and use tax if the business renting the space presents evidence that it has
registered to collect sales tax at the [FACILITY] location. Similarly, the rental charges will not
be subject to the sales and use tax if any of the other exceptions to TENN. CODE ANN. § 67-6205(c)(8) that are noted above apply.
Regardless of whether the charges for the rental of the meeting or banquet room are subject to
the sales tax under TENN. CODE ANN. § 67-6-205(c)(8), the party renting the space must collect
and remit Tennessee sales and use tax with respect to any taxable retail sales that it makes from
that location.4
4

Note that some exceptions may apply. For example, under TENN. COMP. R. & REG. 1320-5-1-.63(4) (2000), dealers
having average monthly gross sales of $400 or less and taxable services of $100 or less may, in the discretion of the
Commissioner, be required to pay tax to their suppliers on purchases in lieu of registering for sales and use tax
purposes. Additionally, certain sales might qualify as nontaxable “occasional and isolated” sales under TENN. CODE
ANN. § 67-6-102(9)(B), which exempts sales of tangible personal property sold directly to consumers, provided that
“the tangible personal property is not regularly sold by the person or is regularly sold by the person only during a
temporary sales period that occurs on a semiannual, or less frequent, basis.” TENN. COMP. R. & REGS. 1320-5-1-

5

Kristin Husat
Senior Tax Counsel

APPROVED:

Richard H. Roberts
Commissioner of Revenue

DATE:

8-18-11

.09(4) (1990) explains this provision, stating that a “temporary sales period occurring on a semiannual or less
frequent basis” is one that occurs no more than two times per calendar year. A sales period “shall be presumed to be
temporary if it is of 30 consecutive days duration or less.” Id.

6