Were annual season-pass fees for resort cabins, cottages, and campsites taxable in Texas?

Plain-English summary

The resort charged one annual season-pass fee for accommodation rights that included seven guaranteed nights. The Comptroller said the full fee for a cabin or duplex cottage was subject to hotel occupancy tax, whether or not the passholder actually used the accommodations. Because the passholder bought the right to use a room, the full fee became taxable when the reservation was made.

Campsite reservation fees were different: the letter said they were subject to neither hotel occupancy tax nor limited sales tax as an amusement service.

If a passholder reserved a cabin or duplex and later traded down to a campsite, the hotel tax was not due and had to be refunded. If the passholder traded up from a campsite to a cabin or duplex, hotel tax applied to the total charge.

Common questions

Did hotel tax depend on how many nights the passholder actually stayed? No. The entire cabin or cottage fee was taxable because the passholder had a contractual right to seven guaranteed nights.

Were campsite reservations taxed as hotel stays or amusement services? No, according to the letter.

What happened when the accommodation changed? A trade-down from a cabin or duplex to a campsite required a hotel-tax refund; a trade-up to a cabin or duplex made the total charge taxable.

Citations and references

• Tex. Tax Code § 156.051 — hotel occupancy tax on payment for the use, possession, or right to use or possess a room.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8604L0720C10

Original ruling text

April 10, 1986

Dear **:

Thank you for your letter of March 7, 1986, and for the additional information
I requested on your SEASON PASS concept.

The annual fees paid for either the cabin or duplex cottage accommodations are
taxable in total regardless whether or not the accommodations are used. Section
156.051 of the Texas Tax Code imposes the hotel occupancy tax on a person who,
under a right of access or contract, pays for the use or possession or for the
right to the use or possession of a room. Since passholders have the right to
seven guaranteed nights in a cabin or duplex, the total fee is taxable at the
time the reservation is made.

The fees for campsite reservations are not subject to either the hotel
occupancy tax or limited sales tax as an amusement service.

If a passholder makes a reservation for accommodations in either a cabin or
duplex and later trades down to a campsite, hotel occupancy tax will not be due
and must be refunded to the passholder. If a passholder trades up from a
campsite accommodation to a cabin or duplex accommodation, hotel occupancy tax
will be due on the total charge(s).

This opinion is based upon the facts you presented. If there are additional or
different facts, this opinion may change.

Please feel free to contact me if you have additional questions. You may write
me, call toll free 1-800-252-5555 from anywhere in Texas or phone 512/463-4600.

Sincerely,

Eddie C. Washington
Tax Policy Section
Tax Administration Division

March 7, 1986

Mr. Eddie C. Washington
Tax Policy Section
Tax Administrative Division
Comptroller of Public Accounts
State of Texas
Austin, Texas 78774

Dear Mr. Washington:

With respect to your letter of 2/24/86, I am enclosing some pricing literature
on the SEASON PASS concept. If you have additional questions after reading the
material, please let me know.

Sincerely,

February 24, 1986

Dear **:

Thank you for your letter of February 10, 1986, concerning the proper
collection and remittance of hotel occupancy tax.

You indicate in your letter that the "package" includes various accommodations
and privileges which are offered during the four seasons of the year. Your
letter also indicates that the pricing structure is an annual fee which varies
according to the season and accommodation.

I need additional information before I can determine your hotel tax
responsibility.

Please provide information on your pricing structure.

Is every member paying the annual fee entitled to the guaranteed seven (7)
nights in a particular season, space available nights during the entire year
and unlimited day visitor privileges? Please explain.

If you have any questions or need more information, please call me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Administration Division.

Sincerely,

Eddie C. Washington
Tax Policy Section
Tax Administration Division

February 10, 1986

Dear Mr. Bullock:

I am writing this letter as per the telephone request of Mr. Carlos Garcia of
your office with whom I spoke recently regarding COMPANY A' SEASON PASS
concept.

To briefly explain this new concept, COMPANY A is a resort that is offering a
lease package which includes:

a) 7 guaranteed nights in a cabin or campsite in one particular season (either
spring, summer, fall or winter)
b) space available cabin or campsite nights during the entire year
c) unlimited day visitor privileges on an annual basis

The pricing structure is one annual fee which varies according to the season
and accommodation. Also, the fee is paid up front before any overnight
accommodations have been utilized.

My question with respect to sales tax is: Do we charge tax on this annual fee
for cabin accommodations even though there is no way to accurately predict how
many nights will actually be spent in a cabin or what percentage of that total
fee extrapolates out to be an overnight cabin utilization?

Please advise as to your decision in this matter.

Sincerely,