830 CMR: DEPARTMENT OF REVENUE
830 CMR 64G.00: ROOM OCCUPANCY EXCISE
830 CMR 64G.00 is amended by adding the following section:
830 CMR 64G.1.1: Establishments Subject to the Room Occupancy Excise

(1) Statement of Purpose. The purpose of this regulation, 830 CMR 64G.1.1, is to describe the factors that are relevant in determining whether an establishment is a hotel, a lodging house, or a motel for the purpose of the room occupancy excise. The regulation addresses certain establishments about which taxpayers most commonly have questions. It is not intended to contain a complete list of all establishments subject to the room occupancy excise.

(2) Definitions. For the purpose of this regulation, 830 CMR 64G.1.1, the following terms shall have the following meanings:

Hotel, any establishment used for the feeding and lodging of guests which is licensed or required to be licensed under the provisions of M.G.L. c. 140, § 6.

Lodging house, an establishment where lodgings are let to four or more persons not within the second degree of kindred to the operator, and which is licensed or required to be licensed under M.G.L. c. 140, § 23.

Motel, any establishment used for the lodging of guests which is licensed or required to be licensed under the provisions of M.G.L. c. 140, § 32B, or a private club. A motel might or might not provide meals for its guests.

Occupancy, the use or possession or the right to the use or possession of any room or rooms in a hotel, in a lodging house or in a motel, or the right to the use or possession of the furnishings or services and accommodations accompanying the use and possession of such room or rooms, for a period of ninety days or less.

Occupant, a person who for consideration uses, possesses, or has a right to use or possess any room or rooms in a hotel, in a lodging house, or in a motel under any lease, concession, permit, right of access, license, or any other agreement.

Operator, any person operating a hotel, a lodging house, or a motel in Massachusetts, including, but not limited to, the owner or proprietor of such buildings, lessee, sublessee, mortgagee in possession, or licensee.

Rent, the consideration received for occupancy valued in money or otherwise, including all receipts, cash, credits, property, or services of any kind or nature, and any amount for which credit is allowed by the operator to the occupant, without any deduction to the agreed upon consideration.

(3) General Rule. A room occupancy excise is imposed upon the transfer of occupancy of any room or rooms for a period of ninety days or less in a hotel, in a lodging house, or in a motel located in Massachusetts.

(4) Establishments Subject to the Room Occupancy Excise.

(a) Establishments that are hotels or motels. Establishments such as cottages, condominium units, or time-sharing units may come within the definition of a hotel or a motel. Whether they do depends upon all the facts and circumstances surrounding each case. Generally, the following factors are relevant in determining whether such an establishment is a hotel or a motel for the purpose of the room occupancy excise.

a. Sleeping accommodations are provided for the lodging of paying guests.

b. The typical occupant is a transient or public traveller.

c. The occupancy of the room or rooms in such an establishment is typically less than one week.

d. The relationship between operator and occupant is not that of landlord and tenant, with an exclusive right or privilege in any particular room. Instead, the occupant merely has an agreement for the use or possession of a particular room or rooms.

e. The operation of the establishment is characterized by centralized management with a manager, or someone of comparable duties, who oversees the general operation of the establishment.

f. The operator provides maid and linen service for its guests, meaning that the operator cleans the room or rooms and changes the linen on a regular basis as part of the rent or as part of a separate charge.

g. If meals are served, the establishment has the necessary utensils, equipment, and facilities for cooking, preparing, and serving food for its guests.

The presence of one or more of these factors may indicate that an establishment is a hotel or a motel.

(b) Establishments that are lodging houses. Establishments that provide lodging accommodations to four or more persons may come within the definition of a lodging house. Whether they do depends upon all the facts and circumstances surrounding each case. Generally, the following factors are relevant in determining whether such an establishment is a lodging house for the purpose of the room occupancy excise.

a. Lodging accommodations are provided for four or more persons not within the second degree of kindred of the operator.

b. The occupancy is characterized by a degree of permanency, so that the establishment is considered the occupant's residence or temporary residence.

c. The relationship between the operator and the occupant is not that of landlord-tenant, with an exclusive right or privilege in any particular room. Instead, the occupant merely has an agreement with the operator for the use or possession of a particular room or rooms.

d. The operator may provide maid and linen service, meaning the operator may clean the room or rooms and may change the linen on a regular basis as part of the rent or as a separate charge.

e. The operator may provide meals or may furnish individual cooking facilities for the preparation, serving, eating, and storage of food.

The presence of one or more of these factors may indicate that an establishment is a lodging house.

(5) Examples. The following examples illustrate the application of 830 CMR 64G.1.1(4). This list is not intended to be a complete list of establishments subject to the room occupancy excise.

Example 1. Althea owns a condominium unit in an establishment which for many years was operated as a seasonal motel on Cape Cod. Althea and the other condominium unit owners rent out their units through a resident manager employed by the condominium management association. The resident manager rents the condominium units to persons for periods ranging from one night to one month. The units are rented from approximately June through October. Maid and linen service is not provided. The individual unit owners have little or no personal use of the units at other times of the year. Occupants are obtained by advertising and by referrals made by the unit owners. The rental income is collected by the manager and distributed to each unit owner. The condominium building is a motel for the purpose of the room occupancy excise, and the transfer of occupancy of the individual condominium units is subject to the room occupancy excise.

Example 2. The Minglewood Condominium Resort is a time sharing condominium resort. Each furnished unit in the condominium is owned for 30 one-week intervals from April through November. During the remaining 22 weeks of each year the units are unoccupied and general maintenance is done. Each one week interval has its own recorded deed, and the owner of each interval pays real estate taxes. Each interval owner may rent out the interval individually, through a real estate agent, or through the resort's exclusive rental agent. Unit owners receive rental income only when their interval is rented. Rental rates are set by each unit owner. Maid and linen service is not provided. The condominium resort is not a hotel or a motel for the purpose of the room occupancy excise, and the transfer of occupancy of units for one week intervals is not subject to the room occupancy excise.

Example 3. Mr. Charlie owns a cottage on Cape Cod, which is not owned or operated in connection with any hotel, motel, or other business. Mr. Charlie rents the cottage from approximately June through August. The cottage is unoccupied for the rest of the year. Mr. Charlie rents the cottage to individuals on a weekly, monthly, or seasonal basis. Mr. Charlie does not rent the cottage for periods less than one week. Occupants are obtained by advertising or through a local real estate agent. Mr. Charlie does not provide any maid and linen service. The cottage is not a hotel or a motel for the purpose of the room occupancy excise, and the transfer of occupancy of the cottage is not subject to the room occupancy excise.

Example 4. Mr. Cumberland operates a motel on Cape Cod. During the summer months, Mr. Cumberland hires six students to work at the motel. The students are paid an hourly rate and are provided with a room at the motel. The students share rooms at the motel, and each pays Mr. Cumberland $20.00 per day for the room. The students are not provided with meals. For the first ninety consecutive days, the transfer of occupancy of the rooms is subject to the room occupancy excise. Occupancy after the first ninety consecutive days is not subject to the excise.

Example 5. The Terrapin Club is a private club located in Boston, Massachusetts. The club has a reading room, dining area, and lodging accommodations. The club members pay an annual membership fee, but must pay separately for any meals served in the club or for the use of any of the club's lodging accommodations. Club members pay $30.00 dollars per night for the occupancy of a room. The club limits the occupancy of its rooms to members only. Maid and linen service is provided by the club. The club also serves meals in its dining area to club members. Club members pay a listed price for each meal. A private club that provides lodging comes within the definition of a motel. M.G.L. c. 64G, § 1(c). The Terrapin Club is a motel for purposes of the room occupancy excise, and the transfer of occupancy of a room in the club to club members is subject to the room occupancy excise.

Example 6. Abel is a student at State University. During the summer months, Abel works as a crew member on the Nantucket ferry. He rents a room from Mr. Benson for the summer. Abel's room is located in the basement of Mr. Benson's home. Mr. Benson and his family occupy the upper floors of the house and are year round residents on the Cape. Mr. Benson rents the room to Abel for $75.00 per week. Mr. Benson does not provide Abel with maid and linen service or with meals. Abel pays rent only for the use of the room. Mr. Benson's home is not a motel or a lodging house for the purpose of the room occupancy excise, and the transfer of occupancy of a room in Mr. Benson's home is not subject to the room occupancy excise.

Example 7. Mr. Straw operates the Franklin Towers, which for many years was operated as a hotel in downtown Boston. Franklin Towers is operated under a rooming house license from the City of Boston. There are fifty rooms in Franklin Towers that are rented for $15.00 per day to persons not related to Mr. Straw. Each room contains a bed, a gas plate for cooking meals, and a refrigerator. One common bathroom is located on each floor of Franklin Towers. Franklin Towers is the permanent residence of a majority of the occupants. The remainder of the occupants use it as a temporary residence, staying in Franklin Towers up to six months on the average. The occupants rent the rooms under an agreement which gives them the use of a particular room. They are not tenants of Franklin Towers. Maid and linen service is provided at an extra charge of $5 per week; however, most of the residents do not use this service. Franklin Towers is a lodging house for purposes of the room occupancy excise. For the first ninety consecutive days, the transfer of occupancy of any room is subject to the room occupancy excise. Occupancy after the first ninety consecutive days is not subject to the excise.

(6) Determination Whether An Establishment Is A Hotel, A Lodging House, Or A Motel. Ordinarily, the Commissioner will not issue letter rulings to determine whether or not a particular establishment is a hotel, a lodging house, or a motel as defined in 830 CMR 64G.1.1(2). The Determination Bureau of the Department of Revenue will determine whether or not a particular establishment is a hotel, a lodging house, or a motel for the purpose of the room occupancy excise.

REGULATORY HISTORY
Date of Promulgation: 5/27/88