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Tax on Transient Occupancy of Hotel Rooms

REGULATION No. 1.504-1
TAX ON TRANSIENT OCCUPANCY OF HOTEL ROOMS
(San Francisco Business and Tax Regulations Code, Article 7)

(a) Authority.  The Tax Collector promulgates this regulationpursuant to the Tax Collector’s authority to adopt rules andregulations under San Francisco Business and Tax Regulations Code§§6.7-1, 6.16-1 and 504.

(b) Purpose.  The purpose of this regulation is to clarify the taxtreatment and interpretation of the Tax Collector’s Office regardingthe consideration for services and accommodations accompanying the useor possession of hotel guest rooms that are subject to the transientoccupancy tax imposed under Article 7 of the San Francisco Business andTax Regulations Code.

(c) Definitions.  For purposes of this regulation the terms“operator”, “occupant”, “occupancy”, “hotel”, “guest room”, and “rent”are as defined in Section 501 of Article 7 of the Business and TaxRegulations Code. The term “Hotel Tax” means the tax on the occupancyof hotel guest rooms imposed under Article 7 of the Business and TaxRegulations Code.

(d) Background.  The City and County of San Francisco taxes theoccupancy of hotel guest rooms.  The Hotel Tax is calculated as apercentage of the rent for the occupancy of a hotel guest room in SanFrancisco.  The law defines “occupancy” as “the use or possession, orthe right to the use or possession of any room or apartment in a hotelor to the use and possession of the furnishings or to the services andaccommodations accompanying the use and possession of the room.”  Thelaw requires that hotel operators collect the tax from occupants. Occupants are the persons who, for consideration, use or possess, orhave the right to use or possess, a room in a hotel in San Francisco. Hotel operators hold Hotel Tax revenues in trust and remit them to theTax Collector every month.  If the hotel operator fails to collect thetax, the operator is liable to the City and County for the amount ofthe tax due on the amount of taxable rent for the occupancy of the roomas if the occupant had paid the tax.  Hotel operators self-report theHotel Tax and file returns with the Tax Collector.  From time to timethe Tax Collector examines the books and records of hotel operators toensure compliance with Article 7 and other provisions of the Businessand Tax Regulations Code.

The Tax Collector interprets the definition of "occupancy" set forthin Section 501(c) of Article 7 to include all furnishings, services andaccommodations accompanying the use and possession of any room,including but not limited to parking and valet services that are exemptfrom the parking tax under Section 606(2) or (3) of Article 9 of theBusiness and Tax Regulations Code.  The consideration paid by theoccupant, or on behalf of or for the benefit of the occupant, for theroom and all furnishings, services and accommodations accompanying theuse and possession of the room, including but not limited to suchparking and valet services, is subject to the Hotel Tax except (i)amounts that are subject to the sales tax imposed under Part 1 ofDivision 2 of the Revenue and Taxation Code or (ii) amounts that areexempt from the Hotel Tax pursuant to applicable law.

(e) Procedure for Payment and Collection of Tax on TransientOccupancy of Hotel Rooms.  Every occupant of a guest room in a hotel inthe City and County of San Francisco shall pay, and every operatorshall collect, report upon and remit to the Tax Collector, the HotelTax on all of the consideration paid for the room, as well as all ofthe consideration paid for any and all furnishings, services andaccommodations accompanying the use and possession of the room, asdescribed in subsection (d), above.  The occupant shall pay the HotelTax on the rent for the room and such furnishings, services andaccommodations, which the operator shall collect, report upon and remitto the Tax Collector, regardless of whether the charges for suchfurnishings, services and accommodations are stated, billed, paid orreceived separately from other charges for the occupancy of the room. This procedure shall apply to all operators and occupants irrespectiveof any past practice or procedure of the operator or occupant regardingthe payment, collection, remittance and reporting of the Hotel Tax.

(f) Application.  Pursuant to the authority granted under Businessand Tax Regulations Code §6.16-1, all operators must comply with thisregulation starting November 1, 2003, or as soon thereafter asreasonably practicable, but no later than December 1, 2003.

(g) Guidelines.  Pursuant to the authority referenced in paragraph(a), the Tax Collector may promulgate guidelines from time to timeregarding the application of this regulation to specific furnishings,services and accommodations accompanying the use and possession ofhotel guest rooms.

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