Background: Hotels may offer optional in-room movies to guests for an additional charge. Typically, the hotel guest can select a movie from a list of titles appearing on the television screen in the room. The television is connected to a central control unit that includes a computer and server or remote VCR. When a selection is made by the hotel guest, the movie is run electronically. [1] The hotel places a charge on the guest bill for each movie selected for viewing by the guest.

Issue: Are charges from a hotel to its guests for optional in-room movies subject to sales/use tax or room occupancy tax?

Directive: Charges from a hotel to its guests for optional in-room movies are not subject to sales/use tax or room occupancy tax.

Discussion of Law: Massachusetts imposes an excise upon all retail sales of tangible personal property and telecommunications services in Massachusetts by a vendor unless otherwise exempt. The definition of sale includes any transfer of title or possession of tangible personal property. Telecommunications services resold to hotel guests are also subject to tax. Where applicable, the excise is imposed at the rate of five percent of the sales price of the property or services sold. G.L. c. 64H, §§ 1, 2; see also 830 CMR 64H.1.6(6). A complementary five percent use tax is imposed on tangible personal property and telecommunications services purchased from any vendor for storage, use, or consumption in Massachusetts. G.L. c. 64I, §§ 1, 2.

A charge from a hotel to its guest for the right to view an optional in-room movie is not subject to sales or use tax because no tangible personal property is transferred from the hotel to its guest and the provision of an in-room movie is not a telecommunications service.

Massachusetts also imposes an excise upon the transfer of occupancy of any room or rooms in a bed and breakfast establishment, hotel, lodging house, or motel in Massachusetts by any operator at the rate of five percent of the total amount of rent for each such occupancy. The transfer of occupancy is defined to include "the right to the use or possession of the furnishings or the services and accommodations accompanying the use and possession" of a room or rooms. G.L. c. 64G, §§ 1, 3.

Generally, the entire periodic charge from an operator to its guests, which may include various services or the use of recreational or other facilities, is subject to the room occupancy tax. [2] However, charges for optional recreational, personal or other services which may be purchased by hotel guests for a separate charge, including, but not limited to, secretarial, translation, or babysitting services or fees for the use of golf or other sports facilities are not part of the rent subject to tax. Provision of in-room movies is an optional service not subject to the room occupancy tax.

/s/Frederick A. Laskey
Frederick A. Laskey
Commissioner of Revenue

FAL:DMS:ecl

October 8, 1999

DD 99-11



[1] If a hotel rents videotapes in tangible form to its guests, those rental charges are subject to sales tax. See LR 85-9.

[2] In one unique case, the ATB ruled that a resort operation in the Berkshires was distinguishable from a typical hotel or motel in that the resort's primary purpose was to provide recreation rather than lodging. In that circumstance, the resort was permitted to allocate a portion of its daily charges to the use of recreational facilities. That portion of the daily charge was not subject to the rooms occupancy tax . Eastover, Inc. v. Commissioner of Revenue, ATB Docket Nos. 14786,14787, 14788, 14789 (1989).