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City and County of Denver

Introduction To Hospitality Taxes

www.denvergov.org

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Welcome to Denvers Introduction To Hospitality Taxes Seminar. This seminar will cover the basic steps you, as a taxpayer will need to take to ensure proper tax is being reported.

The tax rates used during this presentation were valid and correct at time of recording. Rates may have changed since the recording, please visit www.denvergov.org/treasury for Denvers tax rates and www.colorado.gov/revenue/tax for current state wide tax rates.

The tax rates used during this presentation were valid and correct at the time of recording. Rates may have changed since the recording, please visit www.denvergov.org/treasury for Denvers tax rates and www.colorado.gov/revenue/tax for current state wide tax rates.

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HOSPITALITY TAXES

Lodgers Tax

Taxable at 10.75%

Exemptions

Sales

Taxable at 3.62% & 4%

Non-taxable

Purchases

Taxable at 3.62% & 4%

Non-taxable

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AGENDA

This Session will focus on the taxes charged or owed by companies in the hospitality industry. Our primary focus will be on lodgers tax, but other taxes such as sales tax for general merchandise and the special tax rate on prepared food will be briefly touched upon during this video.

For more information on sales and use tax please refer to the other videos.

LODGERS TAX

Tax is due on the amount charged for a room to a person who is not a permanent resident.

Sleeping Accommodation in a Hotel, Motel, Lodging House, Guest House, Bed & Breakfast, Time Share etc

May include cancellation charges if guest retains right to use the room

(Tax Guide 52)

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What is Lodgers Tax?

Lodgers tax is a tax imposed at the rate of 10.75% upon the amount charged for a room used or a room that a person has the right to use for sleeping accommodations.

This can be in a Hotel, Motel , Lodging House, Boarding House, Guest House, a Bed & Breakfast, or even a Time Share.

LODGERS TAX

Colorado Convention Center4.75%

CCC (Bond payments)3.25%

General Fund 1.75%

Denver Metro Convention & Visitors

Bureau, Convention Marketing and

Tourism Promotion Project 1.00%

Total Denver Lodgers Tax Rate10.75%

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The Denver Lodgers Tax is distributed to different funds within the City. This slide shows the breakdown.

LODGERS TAX

Separate Lodgers Tax Return

Due by 20th of the month following the month of the transaction

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Lodgers tax has a separate return from the sales and use tax return and is due on the 20th day of the month following the end of the previous month.

LODGERS TAX

Pet fees

Mandatory fees to have a pet in the room - subject to Lodgers Tax

Damage deposit for a pet not taxable even if retained

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Certain mandatory fees would be considered to be part of the purchase price of the lodging such as cleaning and pet fees.

However, if there is a damage deposit for the cleaning or pet fees and it is not mandatory, it would not be taxable even if retained.

LODGERS TAX

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30 days or more actual occupancy or written agreement to pay for and occupy

Exemptions:

Charitable, religious and government organizations

Tax Guides 10 & 87

There are several exemptions granted for lodgers tax, the most common is the thirty day exemption.

If a person rents a room for a short period of time (less than 30 days) the transaction is taxable, but if that person stays over 30days, on the thirtieth day the transaction would be non taxable and all previous tax would be refunded or credited back to the renter.

Other exemptions are charitable, religious, and governmental. We will be discussing these in greater detail.

LODGERS TAX

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Exemptions:

(Charitable, religious and govt)

Must meet ALL 3 of the following requirements

Part of regular charitable or religious activities or govt

Payment made directly with funds of exempt entity

No reimbursement of any kind to exempt entity

(3-question form)

AND

For an organization to be exempt whether they are charitable, religious, or governmental; the purchase must be part of the organizations regular business functions and activities .

The bill must be made to the exempt entity and must be paid for with the exempt entity funds.

For an event to be tax exempt, the participant at the event can not reimburse the exempt entity in any manner, such as purchase of a ticket, payment of a registration fee, or making an involuntary donation.

LODGERS TAX

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Exemptions:

(Charitable, religious and govt)

Charitable organizations must have a

Letter of Exemption from Denver

Religious organizations must

Be incorporated and registered with the Sec. of State

Hold regular worship services to which the public are invited

Be recognized by CO Property Tax Administrator as a religious organization

Denver has its own definition of charitable therefore all charitable corporations must apply and receive a letter of exemption from Denver. When the charitable corporation applies to the hotel for exemption they must provide their letter to the hotel.

Letters are not required for religious or governmental purchases. However, religious organization must meet the qualifications on this slide to be exempt.

LODGERS TAX

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Exemptions:

Documentation to be retained on file by hotel

Denver Exemption Letter

(For Charitable Corporations only)

Completed 3-question Exemption Form

The State of Colorado Exemption Certificate

Proof of payment with exempt funds

(Charitable, religious and govt)

The documentation that a hotel would need to retain for a charitable corporation , religious, or governmental organization would include the prepared Denver exemption form, the State of Colorado exemption certificate, proof of payment with the exempt entities funds, and any other supporting exemption documentation such as the 501 (c)3 exemption letter from the IRS. For charitable corporations the hotel should also retain a copy of the Denver exemption letter.

LODGERS TAX

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Exemptions:

Proof of payment documentation:

Wire Transfer document

Check - photocopy

Cash PO and completed Form for Cash

Purchases

(Charitable, religious and govt)

Credit card - affidavit

Proof of payment with exempt funds can be a copy of a check, cash with purchase order from the exempt entity, wire transfers and certain credit cards included on the affidavit form.

Affidavits and exemption forms are available on our website by going to Business Tax Information and then Denver Ordinance and Tax Rules, there is a link to Tax Supplemental Forms.

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The Federal Government currently uses the GSA Smart Pay 2 Program. The slide shown is the form used to identify an individually billed card from an organizationally billed card.

The third card is a travel card (the blue one) and may not be organizationally billed. The sixth digit needs to be a 0,6,7,8 or 9 to be exempt.

If the sixth digit is a 1,2,3 or 4 then this is an individually billed card and would be considered taxable and is not proof of payment for exemption.

The other three cards shown here would be exempt.

LODGERS TAX

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There is an affidavit for a sale purchased by a religious or charitable corporation.

The affidavit indicates that proof of exempt funds includes cash with a purchase order, check drawn on the exempt entity, or purchase paid with a Commercial or Purchasing credit card.

Understand these cards must say Purchasing or Commercial as part of the card.

LODGERS TAX

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Exemptions:

If adequate documentation is not provided, the hotel is to charge the tax and advise the guest that they may file a Claim for Refund with Denver , providing the guest files the claim with Denver within 60 days of the transaction.

If the guest does not provide adequate documentation, you, the hotel should charge the guest the tax and you could advise them to file a claim for refund with Denver, provided they file the claim within 60 days of the transaction.

LODGERS TAX

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Exemptions:

Burden of proof is on the hotel

Call the City to confirm exemptions

Taxpayer service 720-913-9400

Audit Unit 720-913-9330

Miscellaneous

Remember the burden of proof to show the transaction is exempt is on the hotel.

If you need to call the City to confirm an exemption, please refer to the numbers on this slide, or 311.

TAXABLE SALES

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General Merchandise 3.62%

Rental of:

Roll-away beds

AV Equipment

Conference phones

Videos

Pay-Per-View

Video games & equip.

Internet access kits

Examples of taxable sales:

Gift shop sales (including chewing gum)

Copies

Incoming faxes

Laundry detergent

Ice not for human

consumption

(coolers, for sculpting)

Earlier we discussed that a hotel may charge sales tax at 3.62% for Denver on general merchandise.

This slide shows examples of sales that would be subject to the 3.62% Denver sales tax rate.

TAXABLE SALES

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Charges by caterers for food, service and

delivery

Vending machines and drinks by the glass

(tax is included)

(Tax Guides 32 & 55)

Food & Beverages 4.0%

Examples of taxable sales:

Restaurant or room service

In-room stock

Mandatory service charges

Gift shop candy etc. (plain water for human consumption is exempt)

A hotel may make sales of food for immediate consumption, these sales would be taxed at the 4% Denver rate.

These sales could include restaurants, room service, mandatory gratuity or service charges, food from gift shop, honor or mini bar, food from caterers, and vending machines.

NON-TAXABLE SALES

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Meeting room rental

Laundry/valet services

Parking charges

Outgoing faxes

Postage stamps

Internet access fees

Original ice sculptures

(Work of Art exemption - Tax Guide 53)

Examples of non-taxable sales:

Some sales by the hotel will not be subject to tax. This slide shows some examples.

FUNDRAISING

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Sales to organizations for use in fundraising are taxable (Tax Guide 36)

Annual Membership Fees paid to charitable and religious organizations are usually voluntary and if so, do not invalidate an exemption.

As we discussed earlier, sales to an organization that are reimbursed by the participants are not tax exempt. Therefore all sales to the organizations for use in fundraising activities are taxable.

PURCHASES

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Purchases made by the hotel, or restaurant may be subject to sales/use tax.

If the purchase is taxable, sales tax may be paid at the time of purchase. If not, use tax should be remitted.

Please refer to our use tax video for more information.

Like all companies, consumer use tax may be due from hotels. Please refer to the use tax video for more information.

Since hotels have Employees, they would be liable for the Denver Occupational Privilege tax, please refer to that video if you need more information.

www.denvergov.org

THIS CONCLUDES OUR PRESENTATION ON HOSPITALITY

CONTINUE YOUR DENVERTAX EDUCATION BY VIEWING OUR OTHER TAX VIDEOS

This concludes our introduction to Hospitality, continue your Denver tax education by viewing our other tax videos.

www.denvergov.org

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CITY AND COUNTY OF DENVER TREASURY DIVISION

Please check the box for the picture that matches the credit card used to make the purchase.

Write in the first six digits and the last four digits from the credit card used to make the purchase.

DO NOT WRITE THE COMPLETE ACCOUNT NUMBER .

FEDERAL SMART PAY CREDIT CARD PROGRAM

Account number ____ ____ ____ ____ X ____ X X X X X X X X X X

Please attach this form to the signed Affidavit of Sale Paid by Government Credit Card

Revised 06/0491 - 2