When a hotel charges for audio/visual equipment (microphones, projectors, screens) used at a meeting, banquet, or seminar, is that sales tax or state hotel occupancy tax -- and does it matter whether the hotel is also catering the food and whether the charge is itemized separately?

Plain-English summary

This is an internal Tax Policy Division policy memo (published on STAR as general guidance), not a response to a specific taxpayer request — it summarizes the Comptroller's settled position, citing several prior hearings and letter rulings, on how hotels should tax audio/visual equipment charges tied to meeting rooms, banquet rooms, and seminars.

First, the threshold point: A/V equipment charges are never treated as a tax-free "rental" of tangible personal property to the guest. Even though attendees use the equipment (microphones, projectors, screens), they never get to remove it from the event or otherwise control it — and a real rental requires transferring possession and operational control, which doesn't happen here (citing Hearing No. 35,086). So the hotel itself owes sales tax on its own purchase or rental of the equipment, and separately, some tax applies to what it charges its meeting-room customers.

Which tax applies to the CUSTOMER'S charge turns on two variables — whether the hotel is catering food for the event, and whether the A/V charge is itemized separately or bundled into a lump sum:

1. Separately stated A/V charge + hotel also caters the food → regular SALES TAX applies. Rule 3.293 defines "equipment used to provide the food service" broadly to mean ANY equipment used at the catered event, not just food-serving items — so A/V gear counts.
2. Separately stated A/V charge + hotel does NOT cater the food → STATE HOTEL OCCUPANCY TAX applies instead, the same way extra televisions or rollaway beds are taxed under Rule 3.162.
3. Lump-sum charge covering the room + A/V equipment together → STATE HOTEL OCCUPANCY TAX applies regardless of whether the hotel caters the food or not.

What this means for you

Hotels billing for meeting/banquet room A/V equipment

Your invoicing structure determines your tax treatment: if you're also catering the event, itemize the A/V charge separately to apply sales tax cleanly (per this policy); if you're not catering, or if you bundle everything into one lump-sum room charge, hotel occupancy tax applies instead. Either way, don't try to structure A/V charges as a nontaxable "equipment rental" — the Comptroller has already rejected that characterization.

Event planners and meeting organizers negotiating hotel contracts

Ask your hotel whether your A/V charge will be itemized separately or bundled into the room rate, and whether food/catering is part of the package — both affect which tax you'll see on the invoice, and at what rate (sales tax rates and hotel occupancy tax rates differ).

Common questions

Q: Can a hotel treat A/V equipment charges as a nontaxable equipment rental since guests are using the gear?
A: No, per this policy — using equipment isn't the same as renting it; a real rental requires transferring possession/control, which doesn't happen when guests use hotel-provided A/V equipment at an event.

Q: Does it matter if the hotel is also serving the food for the event?
A: Yes, per this policy — a separately stated A/V charge is sales-taxable if the hotel caters, but subject to hotel occupancy tax instead if it doesn't.

Q: Does billing everything as one lump sum change the tax result?
A: Yes, per this policy — a lump-sum room-plus-A/V charge is always subject to state hotel occupancy tax, regardless of catering.

Citations and references

Rules referenced:

• 34 Tex. Admin. Code Rule 3.293 ("equipment used to provide the food service" — broadly defined)
• 34 Tex. Admin. Code Rule 3.162(a)(2) (hotel occupancy tax on charges furnished with room occupancy)
• 34 Tex. Admin. Code Rule 3.298 (referenced re: lump-sum meeting-room charges)

Cited prior guidance:

• Hearing No. 35,086 — A/V equipment use by guests isn't a "rental" since possession/control isn't transferred
• STAR documents 9609L1428G01, 9606983P, 9411L1327D13, 9210L1200F09, 9107H1122G07, 8807H0887C01 (catered-event equipment)
• STAR documents 200103106L, 200102031L, 9601472L (lump-sum meeting room charges)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200207378L

Original ruling text

DATE: July 25, 2002

TO: David Somerville

FROM: Donald S. Dillard

VIA: Kirk Davenport

SUBJECT: Audio/Visual Equipment Charges by Hotels

Charges for audio/visual equipment when renting a meeting or banquet room in a
hotel is not the rental of tangible personal property. Like beds, televisions,
and other furnishings, there is no transfer of control or possession. While
customers may use these items, they do not remove them from the premises
[FOOTNOTE: Hearing No. 35,086 - "The fact that some of Petitioner's customers
may use the tangible personal property does not transform the item into a
rental. A rental requires that possession and operational control be
transferred, which is not the case with Petitioner's customers since they are
unable to remove the tangible personal property from the event or control it in
any other manner."]. Hotels, therefore, owe sales taxes on the purchase or
rental of audio/visual equipment.

Whether state hotel occupancy tax or sales taxes are due on audio/visual
equipment charges is determined by whether or not the hotel is acting as a
caterer and if the charges are separately stated.

1. Separately stated charges for audio/visual equipment in conjunction with
   the rental of hotel meeting or banquet rooms is subject to:

a. Sales taxes when the hotel provides food. This concurs with Rule 3.293 and
a number of hearings decisions and letter rulings on equipment used at catered
events [FOOTNOTE: Hearing No. 35,086 - "The Comptroller's Office interprets
the phrase 'all equipment used to provide the food service' to mean any and all
equipment used at the catered event, and not limited to just the equipment used
to serve the food products."]. See STAR documents 9609L1428G01, 9606983P,
9411L1327D13, 9210L1200F09, 9107H1122G07, and 8807H0887C01.

b. State hotel occupancy tax when the hotel does not provide food. Similar to
the rental of rollaway beds or extra televisions, this position agrees with
Rule 3.162 [FOOTNOTE: Rule 3.162(a)(2) - "All charges for items or services,
other than personal services or charges for the use of a telephone, which are
furnished in connection with the actual occupancy of the room are subject to
the hotel occupancy tax. The taxable charges include charges for the use of a
television and charges for the furnishing of additional beds or cots. These
charges are includable within the tax base whether or not separately stated."].

2. Lump-sum charges on the rental of hotel meeting or banquet rooms that
   includes audio/visual equipment is subject to state hotel occupancy tax,
   whether the hotel provides food or not. This policy concurs with Rules 3.298
   and 3.162, as well as several letter rulings. See STAR documents 200103106L,
   200102031L, and 9601472L.

In summary, sales taxes are due on separately stated charges for audio/visual
equipment when renting meeting or banquet rooms in hotels and the hotel is also
the caterer. If the hotel is not providing food, equipment charges, whether
lump sum or separated, are subject to state hotel occupancy tax.