Hotel Consumables Tax Exempt

If you are a hotel that provides soap, shampoo, conditioner, mouthwash, shower caps, pens, notepads, and other similar non-reusable, consumable items (“hotel consumables”), you are in luck!

As you are likely aware, the Texas Comptroller of Public Accounts (“Comptroller”) has long held that hotel consumables placed in rooms for use by hotel guests are subject to sales and use tax at the time of purchase. On April 11, 2013, however, the Texas Court of Appeals reversed the district court’s judgment and the longstanding position of the Comptroller by ruling that such hotel consumables are exempt from sales and use tax. In its opinion in DTWC Corp. v. Combs, No. 03-10-00801-CV (Tex. Ct. App. April 11, 2013), the court reasoned that hotel consumables are being sold by the hotel to its guests and, therefore, qualify as non-taxable under the plain meaning of the sale for resale exemption codified in Section 151.302(a) of the Texas Tax Code.

The Comptroller did not file a petition for review with the Supreme Court of Texas by the deadline, so the Appeals Court’s decision is final. This means that if you are a hotel and have been paying sales and use taxes on purchases of hotel consumables, you may be eligible for a significant tax refund. Our state tax specialists at M&A can assist, so call for a consultation now!

Collecting Local Tax within Emergency Services Districts Senate Bill 1502

An emergency services district (ESD) may call an election to adopt a sales tax rate that applies to only the part of the district where the additional tax rate will not cause the total local tax rate to exceed the 2 percent rate maximum. This bill effectively allows for multiple rates within an ESD’s territory.

New Sales Tax Holiday for Energy Efficient Products House Bill 3693

Certain energy efficient products purchased during Memorial Day weekend will now be exempt from sales tax. There are no limits on the number of items purchased during this new sales tax holiday. The products qualifying for the exemption include air conditioners (priced under $6000), clothes washers, ceiling fans, dehumidifiers, dishwashers, light bulbs, programmable thermostats and refrigerators (priced under $2000). The first Energy Star Sales Tax Holiday will be Memorial Day Weekend in May 2008.

Texas Hurricane Ike Tax Relief

Taxpayers in Texas counties that were declared disaster areas as a result of Hurricane Ike are eligible for exemptions for certain services. Taxpayers may request extensions of up to 90 days to file state tax returns due in September and October, 2008. Businesses may also postpone paying taxes while they clean up storm-damaged property.

The following are the exempt services:

  • Repairing storm-damaged, non-residential property. (ex. office buildings, stores)
  • Repairing storm-damaged, tangible personal property. (ex. cleaning of clothing, draperies, rug, carpet and furniture)
  • Cutting storm-damaged trees. (However, hauling of trees, limbs and other storm debris are taxable)
  • Staying at a hotel from September 8 through October 14, 2008 as a result of storm.

(Residents from a county or parish delcared a disaster area, or relief workers dispatched to that county)

  • Fundraising for storm victims.
  • Purchasing with vouchers or debit cards provided by relief organizations.

The following are the exempt counties:

Anderson DeWitt Kaufman San Augustine
Angelina Ellis Kenedy San Jacinto
Aransas El Paso Kleberg San Patrcio
Archer Fort Bend Lamar Shelby
Austin Franklin Lavaca Smith
Bee Galveston Liberty Starr
Bell Goliad Lubbock Tarrant
Bexar Grayson Matagorda Titus
Bowie Gregg McLennan Tom Green
Brazoria Hardin Montgomery Travis
Brazos Harris Nacogdoches Trinity
Brooks Harrison Navarro Tyler
Calhoun Henderson Newton Van Zandt
Cameron Hidalgo Nueces Victoria
Cass Hill Orange Walker
Chambers Hopkins Panola Waller
Cherokee Hunt Parker Webb
Collin Jackson Polk Wharton
Colorado Jasper Potter Willacy
Comal Jefferson Randall Williamson
Dallas Jim Hogg Refugio Wise
Denton Jim Wells Sabine Wood

The Comptroller’s Hurricane Ike information::