WORKING DRAFT FOR PRACTITIONER COMMENT - 8/22/17

830 CMR: DEPARTMENT OF REVENUE

830 CMR 64G:00: ROOM OCCUPANCY EXCISE

830 CMR 64G:00 is repealed and replaced with the following:

830 CMR 64G.1.1:  Massachusetts Room Occupancy Excise

(1)   Statement of Purpose; Effective Date; Outline of Topics.
 

(a)   Statement of Purpose.  The purpose of 830 CMR 64G.1.1, is to explain the rules governing the application of the state and local room occupancy excise, M.G.L. c. 64G, to transfers of occupancy of 90 days or less in a bed and breakfast establishment, a hotel, a lodging house or a motel.  830 CMR 64G.1.1 sets forth various factors to  assist  local licensing authorities in determining whether an establishment, is a hotel, a lodging house, or a motel under the applicable licensing provisions of M.G.L. c. 140.  830 CMR 64G.1.1 also provides rules that govern (1) municipalities adopting the local option room occupancy excise under M.G.L. c. 64G, § 3A, and (2) operators collecting, remitting and reporting the state and local room occupancy excise to the Commissioner.

(b)   Effective Date.  830 CMR 64G.1.1 will take effect upon promulgation.

(c)   Outline of Topics.  830 CMR 64G.1.1 is organized as follows:
 

                 (1)   Statement of Purpose, Effective Date, Outline of Topics
                 (2)   Definitions
                 (3)   General Rules
                 (4)   Establishments Subject to the Room Occupancy Excise
                 (5)   Occupancy Exceeding 90 Consecutive Calendar Days
                 (6)   Exempt Accommodations
                 (7)   Occupancy by State Government Representatives
                 (8)   Local Option Room Occupancy Excise
                 (9)   Notification of Room Occupants by Operator
                 (10) Imposition of Local Room Occupancy Excise
                 (11) Convention Center Financing Fee
                 (12) Complimentary Rooms
                 (13) Recordkeeping
                 (14) Room Occupancy Excise Returns and Payments
 

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

Bed and breakfast establishment, a private owner-occupied house where four or more rooms are let and a breakfast is included in the rent, and all accommodations are reserved in advance.

Bed and breakfast home, a private owner-occupied house where three or fewer rooms are let and a breakfast is included in the rent, and all accommodations are reserved in advance.

Commissioner, the Commissioner of Revenue or the Commissioner's duly authorized representative.

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.

Local excise, the room occupancy excise imposed by M.G.L. c. 64G, § 3A.

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 is 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 motel, or bed and breakfast establishment 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,  a motel or a bed and breakfast establishment under any lease, concession, permit, right of access, license, or any other agreement.

Operator, any person operating a hotel, a lodging house, motel or a bed and breakfast establishment 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.

Transfer of occupancy, occurs when an occupant checks in or has a right to check in to a room in a bed and breakfast establishment, a hotel, a motel, or a lodging house, even if the right is not exercised.  Where an occupancy is for a period of more than one day, a transfer of occupancy is deemed to occur at check-in time on each and every day of the period of occupancy.

(3)     General Rules.  The room occupancy excise is an excise imposed, pursuant to M.G.L. c. 64G, upon the transfer or occupancy for a period of ninety days or less of any room or rooms in a bed and breakfast establishment, a hotel, a lodging house or a motel   in Massachusetts.  If a duration of occupancy exceeds 90 consecutive calendar days, the room occupancy excise is not imposed on any portion of the stay, including the first ninety consecutive calendar days.  The room occupancy excise is not imposed if the total amount of the rent charged is less than fifteen dollars per day.  Generally, the room occupancy excise is collected by the operator from the occupant and the operator then remits the excise to the Commissioner at the rate prescribed by the applicable provisions of M.G.L. c. 64G.  The filing and payment schedule for such operators is provided in 830 CMR 64G.1.1(14).  In addition to the state room occupancy excise, each Massachusetts city and town may impose an additional local option room occupancy excise on the total amount of rent pursuant to M.G.L. c. 64G, § 3A.  The rules for adopting and imposing the local option excise are in 830 CMR 64G.1.1(8) through (10).

(4)     Establishments Subject to the Room Occupancy Excise.
 

(a)   Establishments that are hotels or motels.  The room occupancy tax generally applies to the transfer of occupancy of 90 consecutive calendar days or less in a hotel or motel.  Establishments such as cottages, condominium units, or time-sharing units may be included within the definition of a hotel or a motel.  Whether they are depends upon whether these establishments are licensed or required to be licensed as hotels or motels under M.G.L. c. 140, §§ 6 or 32B, respectively.  The Commissioner does not make this determination.  The authority charged with licensing these accommodations as hotels and motels under these provisions makes this determination. A licensing authority, in its discretion, could consider the following factors, among others, as guidance in determining whether such an establishment is a hotel or a motel:

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

2.   The typical occupant is a transient or public traveler.

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

4.   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 type of accommodation.

5.   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.

6.   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.

7.   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.  The room occupancy tax generally applies to the transfer of occupancy of 90 consecutive calendar days or less in a lodging house.  Establishments that provide lodging accommodations to four or more persons may be included within the definition of a lodging house..  Whether they are depends upon whether these establishments are licensed or required to be licensed as a lodging house under M.G.L. c. 140, § 23.  The Commissioner does not make this determination.  The authority charged with licensing a lodging house makes this determination. A licensing authority, in its discretion, could consider the following factors, among others, as guidance in determining whether such an establishment is a lodging house:

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

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

3.   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 type of accommodation.

4.   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.

5.   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)     Occupancy exceeding 90 consecutive calendar days.  In cases where the period of occupancy in a bed and breakfast establishment a hotel, a motel, or a lodging house exceeds 90 consecutive calendar days the following rules apply:
 

(a)   When there is an agreement on the duration of the rental.  When the duration of the rental has been agreed to in advance, will exceed 90 consecutive calendar days, and is evidenced by a written agreement, the operator need not collect tax during the period of the occupancy unless, despite the agreement, the rental terminates before the ninetieth day.  In such a case, the operator must retroactively collect and remit tax for each day of occupancy.

(b)   When there is no agreement on the duration of the rental.  When there is no agreement on the duration of the rental, the operator must collect tax from the occupant on an ongoing basis and remit the tax collected to the Commissioner in accordance with 830 CMR 64G.1.1(14).  After passage of the ninetieth consecutive calendar day, the operator must return or credit any tax collected to the occupant, and may recover any tax paid over to the Commissioner by filing an amended return with the Commissioner.  The operator must maintain proof that the tax has been repaid or credited to the occupant.

(c)   Past Taxes.  An operator who has previously collected and paid over taxes on occupancies exceeding 90 consecutive calendar days may recover them by filing an amended return with the Department prior to the expiration of any period of limitations set out in M.G.L. c. 62C, § 37.  The operator must maintain proof that the tax has been repaid or credited to the occupant.

(d)   Examples.  The following examples illustrate the application of the rules set forth in 830 CMR 64G.1.1(5).  If a local excise applies under the rules set forth in 830 CMR 64G.1.1(8)-(10), inclusive, the rules in the examples set forth in 830 CMR 64G.1.1(5) also apply to the local option room excise.

Example 1.  A enters into an agreement in writing with B to occupy a room in B’s hotel for a period of 100 days.  No state or local excise is imposed unless the agreement terminates before the 90th day.

Example 2.  A occupies a room in B’s motel on a day-to-day basis and without any written agreement for a period of 100 days.  B must collect and pay over tax to the Department of Revenue on a monthly basis for the first 90 consecutive days.  If the occupancy extends beyond 90 consecutive days, the tax must be returned to A.  B may recover any tax paid in accordance with 830 CMR 64G.1.1(5)(b), (c), and (d), as applicable.

Example 3.  A corporation contracts with a hotel operator to reserve several rooms for use by its employees on a continuing basis.  The corporation may cancel its reservations by seven o'clock each evening without obligation; otherwise, the corporation is liable for the full rate for occupancy. The operator is required to collect the excise on fees for occupancy whenever the corporation is liable for room rental unless continuous occupancy exceeds 90 days.  Exercise of the cancellation option constitutes a break in the occupancy by the corporation and therefore begins a new 90-day period.

Example 4.  An individual occupies the same room in the same hotel for 62 consecutive days, then moves to a different room in the same hotel. The operator is required to collect the excise on the rent for the new room until the occupancy exceeds 90 days.  Moving from one room to another within the same hotel does not constitute a break in occupancy, regardless of whether the rates on the two rooms differ.
 

(6)     Exempt Accommodations.  The room occupancy excise does not apply to the following types of accommodations:
 

(a)   lodging accommodations at federal, state or municipal institutions;

(b)   lodging accommodations, including dormitories, at religious, charitable, educational and philanthropic institutions; provided, however, that this exemption shall not apply to accommodations provided to the general public by any such institution at a hotel or motel operated by the institution;

(c)   privately owned and operated convalescent homes or homes for the aged, infirm, indigent or chronically ill;

(d)   religious or charitable homes for the aged, infirm, indigent or chronically ill;

(e)   summer camps for children eighteen years of age or under or developmentally disabled individuals; provided, however, that such summer camp which offers its facilities off-season to individuals sixty years of age or over for the period not to exceed thirty days in any calendar year shall not lose its exemption hereunder.  For the purposes of 830 CMR 64G.1.1(6)(e) a developmentally disabled individual shall mean an individual who has a severe chronic disability which:
 

1.     is attributable to a mental or physical impairment or combination of mental and physical impairments;

2.     is likely to continue indefinitely;

3.     results in substantial functional limitations in three or more of the following areas of major life activity: (i)_self-care; (ii) receptive and expressive language; (iii) learning; (iv) mobility; (v) self-direction; (vi) capacity for independent living; and (vii) economic self-sufficiency; and

4.     reflects the individual's need for a combination and sequence of special, interdisciplinary, or generic care, treatment, or other services which are of lifelong or extended duration and are individually planned and coordinated.
 

(f)    a bed and breakfast home.

(g)   transfers of occupancy for employees of the United States Armed Forces traveling on official U.S. military orders for periods that encompass the date of occupancy.
 

1.     For purposes of 830 CMR 64G.1.1(6)(g), an employee of the United States Armed Forces means an employee, as defined in section 3401(c) of the Internal Revenue code, as amended and in effect for the applicable period, who is employed by any branch of the United States Armed Forces, or their respective reserve components, as enumerated by 10 U.S.C. § 26(a)(1)-(7).  The term "Armed Forces" means the United States Army, Navy, Marine Corps, Air Force, and Coast Guard.  See 10 U.S.C. § 101(a)(4).  Employees of the National Guard, and its reserve components as defined in 10 U.S.C. § 101(c) are also eligible for this exemption.  The term "traveling on official United States military orders" means traveling under the express written authority of, and pursuant to the specific written orders of a duly authorized representative of one of the United States Armed Forces or National Guard for purposes of carrying out such specific orders.

2.     To substantiate a claim of exemption under 830 CMR 64G.1.1(7)(g), the occupant must provide the operator of a bed and breakfast establishment, as a hotel, a motel, or a lodging house, with proof of identification as an employee of the U.S. Armed Forces, or National Guard, such as an identification card issued by the U.S. Army, Navy, Marine Corps, Air Force or the National Guard, and either of the following:
 

a.   a copy of the actual military orders, or

b.   an affidavit, letter or other attestation on official stationery, signed by an authorized official of the United States Armed Forces during the period of occupancy, indicating that the employee is traveling at the direction of the Armed Forces during the period of occupancy. E-mailed documentation with an electronic signature is acceptable. If the occupant states that federal agency policy prohibits the hotel from retaining a copy of the federal identification card, then the hotel’s books and records should contain a notation reflecting that the federal identification card has been inspected by a hotel employee, or a copy of alternative identification.
 

(h)   Federal Government Employees:
 

1.     If a federal employee or other federal governmental officer is acting within the scope of his or her official duties for the federal government and in that capacity stays in a hotel, motel or other place of public accommodation, that occupancy is exempt from room occupancy excise. The exemption is available whether the federal government pays directly for the room, or the employee pays for the room and is later reimbursed.

2.     In order to substantiate a claim for exemption, the federal employee occupying the room must provide the operator of the establishment with:

a.   proof of identification that the occupant is an employee of the federal government, such as an official identification card issued by the appropriate branch of government, and

b.   proof that the occupant is traveling at the direction of the federal government during the period of occupancy such documentation as an affidavit, letter, or other attestation on official stationery, signed by an authorized official of the appropriate Armed Forces office, agency or branch of the military indicating that the employee is traveling at the direction of the government during the period of occupancy. E-mailed documentation with an electronic signature is acceptable. If the occupant states that federal agency policy prohibits the hotel from retaining a copy of the federal identification card, then the hotel’s books and records should contain a notation reflecting that the federal identification card has been inspected by a hotel employee, or a copy of alternative identification.
 

(i)    Corporations exempt from state room occupancy taxes under federal laws.
 

(7)     Occupancy by State Government Representatives.  The occupancy of rooms by employees of any state, its agencies or political subdivisions, and the occupancy of rooms by employees of charitable organizations that are not exempt from state room occupancy taxes under federal laws are subject to tax, whether or not such employees are on official business and whether such employees or their employers made payment for the occupancy.

(8)     Local Option Room Occupancy Excise.
 

(a)   Acceptance of Local Option Excise and Notification to Commissioner.  In order for a city or town to impose the local option room occupancy excise, the city or town must accept the provisions of M.G.L. c. 64G, § 3A in the manner specified in that section.  The city or town must determine the rate of the local excise, and then must notify the Commissioner of its acceptance of the local excise, the rate at which the local excise is to be imposed, and the effective date of the local excise.  This notification must be received by the Commissioner at least thirty days before the effective date.

(b)   Local Excise Rate.  The local excise may be imposed at any rate up to but not exceeding the total amount provided in M.G.L. c. 64G, § 3A of rent for each occupancy.  The surtax imposed by St. 1969, c. 546, § 22 does not apply to the local option excise.

(c)   Effective Date of Local Excise.  The local excise takes effect on the first day of the first calendar quarter following thirty days after acceptance by a city or town of the provisions of M.G.L. c. 64G, § 3A, or on the first day of such later calendar quarter as the city or town may designate, when it accepts the provisions of M.G.L. c. 64G, § 3A in the meaning specified in that section.

Example 1:  Town A accepts the local excise on March 15, 2016.  The local excise in Town A will take effect on July 1, 2016, unless Town A has designated a later effective date.

Example 2:  City B accepts the local excise on January 30, and designates an effective date of October 1 of the same year.  The local excise in City B will take effect on October 1 of the same year.

(d)   Notice to Operators.  The Commissioner will attempt to notify all operators registered with the Commissioner pursuant to M.G.L. c. 62C, § 67, who operate a hotel, motel, lodging house, or bed and breakfast establishment within a city or town which has accepted the local excise, of such acceptance, but failure to receive the Commissioner's notification shall not affect an operator's obligation to collect and pay over the local excise.

(e)   Collection of Local Excise Upon Transfer of Occupancy.  Every operator of a hotel, motel, lodging house, or bed breakfast establishment located within a city or town which has accepted the provisions of M.G.L. c. 64G, § 3A is required to collect the local excise upon every transfer of occupancy in the operator's hotel, motel, or lodging house which occurs on or after the effective date of the local excise.

(f)    Exemptions from Local Excise.  The local excise exemptions are the same as the state excise exemptions.  A local excise is not imposed if the total amount of rent is less than fifteen dollars per day or its equivalent, or if the accommodation is exempt under M.G.L. c. 64G, § 2. For municipalities that have adopted the local option room occupancy excise in accordance with M.G.L. c. 64G, § 3A, the rules applicable to stays exceeding 90 consecutive calendar days set forth in 830 CMR 64H.1.1(5) also apply to the local excise.

(g)   Hotel, Motel, Lodging House or Bed and Breakfast Establishment Located within More than One City or Town.  The following rules will apply to the collection of the local excise by an operator of a hotel, motel, lodging house or bed breakfast establishment which is located within more than one city or town:
 

1.   When Only One of the Cities or Towns Having a Hotel, Motel, Lodging House, or Bed and Breakfast Establishment Located Within It Has Imposed the Local Excise.  The operator is required to collect the local excise upon every transfer of occupancy in the operator's hotel, motel, lodging house, or bed and breakfast establishment which occurs on or after the effective date of the local excise.  The amount of the local excise collected and paid to the Commissioner by the operator will be credited in full to the city or town which has imposed the local excise.

2.     When Two or More of the Cities or Towns Having a Hotel, Motel, Lodging House, or Bed and Breakfast Establishment Located Within Them Have Imposed Local Excises.  The operator is required to collect the local excise at the highest rate imposed by such cities or towns for every transfer of occupancy in the operator's hotel, motel, lodging house, or bed and breakfast establishment which occurs on or after the effective date of the local excise.  The amount of the local excise collected and paid to the Commissioner by the operator will be credited by the Commissioner to each city or town which has imposed the local excise in proportion to the number of rooms located in each city or town in which the transfer of occupancy occurs.
 

(h)   Revocation or Amendment of Local Excise.  A city or town cannot impose the local excise for a period less than twelve months.  If a city or town wishes to revoke or amend its local excise, such revocation or amendment may not take effect until at least twelve months after the date the local excise was last imposed or amended.  If a city or town wishes to impose a local excise after a local excise has been revoked, the imposition of the local excise may not take effect until at least twelve months after the date the local excise was last revoked.
 

(9)     Notification of Room Occupants by Operator.  Beginning on the effective date of the local excise in any city or town, each operator of a bed and breakfast establishment, a hotel, a motel, or a lodging house in the city or town must inform occupants of the existence and rate of the local excise. Every occupant's bill must separately state the rent charge, the name of the city or towns imposing the local excise, the dollar amount and rate of the local excise, and the dollar amount and rate of the state excise.

(10)   Imposition of Local Option Room Occupancy Excise for check-outs occurring on or after effective date.
 

(a)   Occupant Who Checks Out on Effective Date of Local Excise.  The local excise is imposed upon every transfer of occupancy that occurs on or after the effective date of the local excise in a city or town.  Where an occupant checks into a room in a hotel, motel, or lodging house before the effective date of the local excise and checks out on the effective date of the local excise, the transfer of occupancy has occurred before the effective date of the local excise and, therefore, the local excise is not imposed.

(b)   Occupant Who Checks Out After Effective Date of Local Excise.  If an occupant checks into a room in a hotel, motel, or lodging house before the effective date of the local excise and checks out after the effective date of the local excise, the operator must collect the local excise from such occupant beginning on the effective date of the local excise, even if the operator rents rooms at a rate covering a period of occupancy longer than one day.  If an occupancy is for a period of more than one day, the operator must collect the local excise on the rent attributable to those actual or deemed transfers of occupancy which occur on or after the effective date of the local excise.
 

(11)   Convention Center Financing Fee.  In addition to the state and local option room occupancy excises, a convention center financing fee is imposed on the transfer of occupancy by any operator of a hotel, motel, or other lodging establishment in Boston, Cambridge, Springfield, West Springfield, Chicopee or Worcester.  All operators of bed and breakfast establishment, hotels, motels, and other lodging accommodations in these localities must collect the Convention Center Financing fee together with state and local option taxes in the same manner and at the same time as these excises.

(12)   Complimentary Rooms.  Under certain circumstances, a hotel, motel, lodging house or bed and breakfast establishment may permit some of its rooms to be occupied on a complimentary or discounted basis.  The following rules apply to transfers of such occupancy:
 

(a)   The room occupancy excise must be collected if: (1) the place in which the complimentary or discounted room is located  is a hotel, motel, lodging house or bed and breakfast establishment; (2) there is a transfer of occupancy; and (3) there is consideration (in money or otherwise, including services) for the transfer valued at $15.00 or more.  All three conditions must be met before a complimentary or discounted room may be taxed.

(b)   When a hotel, motel, lodging house, or bed and breakfast establishment receives no benefit beyond the actual rent paid in money, the excise is computed with respect to the amount actually paid for the occupancy.

(c)   When a hotel, motel, lodging house or bed and breakfast establishment receives a benefit, either direct or indirect, beyond the actual rent paid in money, the excise is based on the fair market value of the room received.  Examples of direct and indirect benefits include, but are not limited to advertising services; exchange of goods and services; services by employees, and benefits to employees.
 

(13)   Recordkeeping.  Operators must keep records sufficient to determine whether the proper amount of tax has been paid, as well as records substantiating repayment of previously paid taxes to occupants whose rentals exceed 90 days in length.  These records must be kept for the amount of time specified in the Record Retention Regulation, 830 CMR 62C.25.1, and must be produced for review by the Department in the course of an audit of the operator.

(14)   Room Occupancy Excise Returns and Payments.
 

(a)     Requirement to File Room Occupancy Excise Return. Every operator, as defined in M.G.L. c. 64G, § 1, required to file a room occupancy excise return under M.G.L. c. 62C, § 16(g), must file a room occupancy excise return in the form and manner prescribed by the Commissioner and pay the tax due for each calendar month on or before the twentieth day of the following calendar month with the Commissioner, whether or not the operator must collect any other local or state excises.

(b)   Payment of Room Occupancy Excise.  The state and local excises must be paid by the operator to the Commissioner in the format and manner specified by the Commissioner at the time for filing returns specified by the Commissioner.

(c)   Penalties.  Any operator that fails to timely file a return pay the excise or fail to file a return and/or pay the required excise in the format required by Commissioner may be subject to penalties under M.G.L. c. 62C.  See 830 CMR 62C.33.1.

(d)   Interest.  Any portion of the room occupancy excise that is not paid on or before the due date of the room occupancy excise return will have added to it, interest from the due date of the return to the date the tax is paid at a rate prescribed by M.G.L. c. 62C, § 32.

 

WORKING DRAFT FOR PRACTITIONER COMMENT - 8/22/17