Technical Information Release

Technical Information Release TIR 07-2: Lowney v. Commissioner of Revenue

Date: 01/26/2007
Organization: Massachusetts Department of Revenue
Referenced Sources: Massachusetts General Laws




On November 9, 2006, the Massachusetts Court of Appeals decided the case of Lowney v. Commissioner of Revenue, ______ Mass. App. _____ (2006), which determined that no room occupancy excise is due on rentals of rooms in hotel, motels or lodging houses if the rental period exceeds 90 days. The decision and the Department's response to it are explained below.


General Laws chapter 64G, § 3 imposes an excise on the "the transfer of occupancy of any room or rooms in a bed and breakfast establishment, hotel, lodging house, or motel in this commonwealth by any operator at the rate of five per cent of the total amount of rent for each such occupancy." Id. The term "occupancy," is, in turn, defined as:

the use or possession, or the right to the use or possession, of any room or rooms in a bed and breakfast establishment, hotel, lodging house or motel designed and normally used for sleeping and living purposes . . . for a period of ninety consecutive calendar days or less, regardless of whether such use and possession is as a lessee, tenant, guest or licensee.

Id., § 1(g).

Prior to the Lowney decision, the Department had long taken the position that rental of a room in a hotel, motel, or lodging house for a period in excess of 90 days was subject to tax under the room occupancy excise, G.L. c. 64G, from the first through 90 th day, and tax-free only thereafter. See TIR 79-5 (operator required to collect tax for "first ninety consecutive days"). G.L. c. 64G, § 1(g). In Lowney, however, the Appeals Court stated: "We conclude that the phrase 'a period of ninety consecutive calendar days or less' comprehends a clear beginning and a clear end, the latter of which occurs before or on the ninetieth day." Lowney at _____. Accordingly possession for a period of 91 days was not "occupancy" within the meaning of the statute. As a result, a rental in excess of 90 days is not subject to the excise at all. The Department will not appeal this decision and will deal with occupancies exceeding 90 days as follows.

1. Going Forward. The Department is aware that at the outset of a rental, neither the operator of the hotel nor the paying occupant may be aware of the ultimate length of the rental. When the length of the rental has been agreed to in advance, will exceed 90 days, and is evidenced by a writing (that need not be a formal contract), the operator need not collect tax during the period of the occupancy unless, despite the agreement, the rental terminates prior to the ninetieth day. In such a case, the operator must retroactively collect and remit tax for each day of occupancy. If there is no agreement on the length of the rental, the operator must collect tax from the occupant on an ongoing basis and remit any tax collected to the Department monthly in accordance with 830 CMR 62C.16.1: Room Occupancy Excise Returns and Payments. After passage of the ninetieth day, the operator must return or credit any tax collected to the occupant, and may recover any tax paid over to the Department by (1) taking a credit against any tax owed on future returns, or (2) by filing an application for abatement with the Department on Form CA-6. The operator must retain proof that the tax has been repaid or credited to the occupant.

2. Past Taxes. An operator who has previously collected and paid over taxes on occupancies exceeding 90 days may recover them by filing an application for abatement (Form CA-6) with the Department prior to the expiration of any period of limitations set out in G.L. c. 62C, § 37. No actual refund of money will be made unless the operator proves to the satisfaction of the Department that the tax has been, or will be, paid or credited to the occupant.

3. Local Option Excises . The Lowney case will also affect the local option portion of the room occupancy excise. Municipalities are advised that future collections of room occupancy will no longer include the first 90 days of a prolonged stay where the duration of the arrangement is known in advance. Municipalities that have received excise payment that includes taxes collected during the first 90 days of occupancy will either have these amounts deducted from future payments, or will have to repay them.


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 excise is imposed unless the agreement terminates before the 90 th day.

2. A occupies a room on 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 Part II, above.

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.

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.

5. An airline contracts with a motel operator for use by airline employees of eight rooms to be paid for by the airline (whether or not the rooms are actually used). The airline is considered the occupant for purposes of determining whether the occupancy exceeds 90 days. If it does so, the operator need not collect the collect the excise on the rental charges to the airline.


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.


This TIR supersedes TIR 79-5 and any other Public Written Statement, including 830 CMR 64G.1.1, on the room occupancy excise to the extent of any inconsistency. All rules stated in TIR 79-5 with respect to continuity of occupancy remain unchanged.


/s/Alan LeBovidge
Alan LeBovidge
Commissioner of Revenue



January 26, 2007

TIR 07-2

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