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					     HOTEL-MOTEL TAX
    IN TENNESSEE CITIES
Updated by Ron Darden, Municipal Management Consultant
                     August 2009




        M UNICIPAL T ECHNICAL A DVISORY S ERVICE


       In cooperation with the Tennessee Municipal League
                                                   HOTEL-MOTEL TAX
                                                   IN TENNESSEE CITIES
                                                   Updated by Ron Darden
                                                   Municipal Management Consultant
                                                   August 2009




                                                      MTAS OFFICES
                                  Knoxville (Headquarters) ............... (865) 974-0411
                                  Johnson City ................................... (423) 854-9882
                                                                                       (423) 282-0416
                                  Nashville ......................................... (615) 532-6827
                                  Jackson ............................................ (731) 423-3710
                                  Martin ............................................. (731) 587-7055

                                               www.mtas.tennessee.edu

The Municipal Technical Advisory Service (MTAS) was                       law, ordinance codification, and wastewater management.
created in 1949 by the state legislature to enhance the                   MTAS houses a comprehensive library and publishes scores
quality of government in Tennessee municipalities. An                     of documents annually.
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Municipal League and affiliated organizations to assist                    to each Tennessee municipality, county and department
municipal officials.                                                       of state and federal government. There is a $10 charge for
                                                                          additional copies of “Hotel-Motel Tax in Tennessee Cities.”
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and anticipating the ever-changing municipal government                   Photocopying of this publication in small quantities for
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TABLE OF CONTENTS
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Levying the Tax and Limitations. . . . . . . . . . . . . . . . . . 1
Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Metropolitan Government Charters . . . . . . . . . . . . . . . . 2
Collecting the Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Estimating Proceeds from Hotel-Motel Tax . . . . . . . . . . . 3
Hotel-Motel Tax by County and City . . . . . . . . . . . . . . . 5
Municipalities with Hotel-Motel Tax Levies and Rates . . . 6
                                     HOTEL-MOTEL TAX
                                    IN TENNESSEE CITIES
                    Updated by Ron Darden, Municipal Management Consultant



If there are hotel or motel lodgings in your city,             LEVYING THE TAX AND LIMITATIONS
you might want to consider a hotel-motel tax to                In home rule chartered cities:
enhance city revenues. The proceeds from the hotel-            • The tax is levied by ordinance with approval by
motel tax can be used for purposes authorized in                   a two-thirds vote of the legislative body
your enacting ordinance, private act, or general law.              at two consecutively scheduled meetings or
Many cities designate and use the tax proceeds for                 upon the approval of a majority of the voters
tourism development.                                               in a municipal referendum that is held by the
                                                                   county election commission upon a petition
GENERAL                                                            of 10 percent of the qualified voters who
“Hotel” is defined as any structure or space, or any                voted in the municipality in the most recent
portion thereof, that is occupied or intended or                   gubernatorial election.
designed for occupancy by transients for dwelling,             • The tax levy is limited to 5 percent.
lodging, or sleeping purposes. It includes any hotel,          • The tax levy is not pre-empted by, and is
inn, tourist camp, tourist court, tourist cabin,                   in addition to, any county tax. See
motel, or any place in which rooms, lodgings, or                   T.C.A. § 67-4-1402.
accommodations are furnished to transients for
consideration. T.C.A. § 67-4-1401.                             In private act chartered cities and most general law
                                                               cities (mayor-aldermanic, city manager-commission,
Tennessee general laws provide for levying                     and modified manager-council charters):
a hotel-motel tax in home rule cities and                      • The tax is authorized by private acts of the
metropolitan governments. Private act chartered                    Tennessee General Assembly. The private act
cities and most general law chartered cities                       must be ratified by a two-thirds vote of the
(mayor-aldermen, manager-council, and modified-                     authorized membership of the municipality’s
manager council chartered cities) must be                          legislative body or approved by a majority of
authorized by private act to levy the tax. There                   those voting in a referendum held for that
are exceptions for certain general law cities, which               purpose, the method to be prescribed by the
may levy the tax by ordinance passed by a two-                     private act.
thirds vote of the governing body. (See “Exceptions”           • Generally, there is no limit on the tax. However,
on page 2.)                                                        after May 12, 1988, if a county has levied
                                                                   a hotel-motel tax, the city cannot levy such
This report discusses how cities levy the hotel-motel              a tax in any amount. Conversely, if the city has
tax, limitations on levy of the tax, exceptions,                   levied a hotel-motel tax, the county may not
collecting the tax, and estimating proceeds from                   levy such a tax within the city in any amount.
the tax; and it provides a list of Tennessee city and
county hotel-motel tax rates.



HOTEL-MOTEL TAX IN TENNESSEE CITIES • MUNICIPAL TECHNICAL ADVISORY SERVICE                                         1
    Note: MTAS legal consultants advise that                 The ordinance shall set forth the manner
    general law charters may be supplemented                 of collection and administration of the
    with a private act as long as the act is                 privilege tax.
    consistent with state general laws and the             • The provisions of T.C.A. § 67-4-1425 do not
    general law charters.                                    apply in any county having a population of
                                                             not less than 80,000 nor more than 83,000;
EXCEPTIONS                                                   in any county having a population of not less
T.C.A. § 67-4-1425 provides that after May 12, 1988,         than 35,050 nor more than 35,070; or in any
a city located in a county that has levied a hotel-          county having a population of not less than
motel tax cannot levy a city hotel-motel tax under           118,400 nor more than 118,700; or in any county
authority of a private act. The provisions of this           having a population of not less than 25,575
section do not apply in any county, excluding                nor more than 25,850; or in any county having
any county with a metropolitan form of                       a population of not less than 25,575 nor more
government, that:                                            than 25,850 according to the 1990 federal
• Contains or borders a county that contains                 census or any subsequent federal census.
    an airport designated as a regular commercial          • T.C.A. § 67-4-1425 does not apply to any city
    service airport in the International Civil               that has constructed a qualifying project or
    Aviation organization (ICAO) regional air                projects under the Convention Center and
    navigation plan; and                                     Tourism Development Financing Act of 1998.
• Contains a government-owned convention center
    of at least 50,000 square feet with an attached,           Note: Exceptions are listed in
    adjoining, or adjacent hotel or motel facility; or         T.C.A. § 67-4-1425.
• Contains an airport with regularly scheduled
    commercial passenger service, and the creating         METROPOLITAN GOVERNMENT CHARTERS
    municipality of the metropolitan airport               The section providing for a hotel-motel tax in
    authority for the airport is not located within        metropolitan governments is titled Metropolitan
    such county. The tax levied on occupancy of            Government-Tourist Accommodation Tax. “Tourism”
    hotels by cities located within such a county          means the planning and conducting of programs of
    may be used only for tourism as defined by              information and publicity designed to attract to
    T.C.A. § 7-4-101(8). A municipality located in         the county tourists, visitors, and other interested
    any county to which the previous provisions            people from outside the area and also to encourage
    apply may levy a privilege tax upon the privilege      and coordinate the efforts of other public and
    of occupancy in any hotel of each transient in an      private organizations or groups of citizens to
    amount exceeding 5 percent of the consideration        publicize the facilities and attractions of the
    charged by the operator. If a municipality             area for the same purposes. “Tourism” also means
    located in such county is incorporated under           the acquisition, construction, and remodeling of
    the general law, the municipality may levy             facilities useful in attracting and promoting tourist,
    a privilege tax by ordinance adopted by a two-         convention, and recreational businesses.
    thirds vote of its governing body upon the             • The tax is approved by ordinance of the
    privilege of occupancy in any hotel of each                metropolitan council.
    transient in an amount not to exceed 5 percent         • A 3 percent hotel-motel tax is authorized.
    of the consideration charged by the operator.          • An additional 1 percent is authorized for cities
                                                               with a population of more than 100,000.



2                                           HOTEL-MOTEL TAX IN TENNESSEE CITIES • MUNICIPAL TECHNICAL ADVISORY SERVICE
• An additional 1 percent is authorized when the               It generally is the duty of every hotel and motel
  metropolitan government enters into a binding                operator liable for collecting and paying to the city
  contract with a general contractor for the                   any tax imposed by the city to keep and preserve
  construction of a convention center.                         for a period of three years all records that may be
• An additional 1 percent is authorized                        necessary to determine the amount of the tax owed.
  for Nashville to help finance a new                           The authorized collector generally may inspect the
  convention center.                                           records at all reasonable times. See your private act
• A municipality with a population of 5,000                    or general law authority.
  or more lying partly within a county with
  a metropolitan form of government and partly                 ESTIMATING PROCEEDS
  within an adjacent county may levy a privilege               FROM HOTEL-MOTEL TAX
  tax on the privilege of occupancy in any hotel               If your city is eligible to adopt a hotel-motel
  of each transient in an amount set by the                    occupancy tax, try to estimate the expected annual
  governing body of such municipality and not                  revenues to see if the results are worth the effort.
  exceeding 3 percent. T.C.A. § 7-4-102 (c).                   The expected revenues depend largely upon the
                                                               tourist or transient flow. One of the following
COLLECTING THE TAX                                             methods may be helpful in estimating anticipated
Provisions for collecting the tax are outlined in              hotel-motel tax revenues:
Tennessee statutes for home rule chartered cities,             • Estimate the gross receipts reported by each
in private acts and ordinances for those adopting                  hotel and motel on its municipal business tax
the tax under private act, and in statutes and                     return and contained in confidential state sales
ordinances for metropolitan governments.                           tax reports. This information gives you a rough
                                                                   idea of each establishment’s annual volume of
The hotel-motel operator generally is required to                  business. Unfortunately, these returns usually
file, under oath, a monthly tax return with the                     combine room receipts with receipts from
authorized collector with the number of copies of                  restaurants, bars and gift shops.
the return as the collector reasonably requires. The           • Determine the total number of hotel and motel
report must include facts and information deemed                   rooms subject to the tax along with an average
reasonable to verify the tax due. The form of the                  room rate per night, then estimate the overall
report generally is developed by the authorized                    percentage rate of occupancy, and use the
collector and approved by the city legislative body                following formula to arrive at an estimated
prior to use. The collector generally is required to               annual tax yield:
audit each operator in the city at least once per
year and report on the audits made on a quarterly                  Number of rooms X average room rate per night
basis to the city legislative body. See for example                X tax rate X 365 days X percent of occupancy =
T.C.A. § 67-4-1406.                                                annual revenue from hotel/motel tax.

Taxes collected by hotel or motel operators that               The tax is limited to a percent charge on the
are not remitted to the authorized collector on or             occupancy of a room in a hotel, motel, tourist camp,
before the due dates are delinquent. An operator is            etc., by transients, defined as persons occupying
liable for interest on delinquent taxes authorized by          the room generally for a period of “less than
general law or private act.                                    30 continuous days.”




HOTEL-MOTEL TAX IN TENNESSEE CITIES • MUNICIPAL TECHNICAL ADVISORY SERVICE                                          3
An MTAS consultant can help your city prepare
a private act or ordinance that includes essential
provisions such as how the proceeds are to be used,
who collects the tax, the due date, compensation
to the hotel for collecting, interest and penalty for
late payment, and record requirements.

This revenue source may help municipalities
increase their tourist promotion activities or
supplement general fund revenues. Following is
a list of the 67 counties in Tennessee with
a hotel-motel tax. If your city isn’t located in one
of these counties, or if you are a home rule city,
you should consider a hotel-motel tax to enhance
your general funds. Please contact your UT MTAS
municipal management consultant if you need more
information or assistance.




4                                           HOTEL-MOTEL TAX IN TENNESSEE CITIES • MUNICIPAL TECHNICAL ADVISORY SERVICE
                             HOTEL-MOTEL TAX BY COUNTY AND CITY1
COUNTY               PERCENT RATE        COUNTY                PERCENT RATE   COUNTY                   PERCENT RATE

Anderson . . . . . . . . . . . 5     Henry. . . . . . . . . . . . . . 5       Shelby . . . . . . . . . . . . .    5
Bedford . . . . . . . . . . . . 0    Hickman . . . . . . . . . . . . 5        Smith . . . . . . . . . . . . . .   0
Benton . . . . . . . . . . . . . 5   Houston . . . . . . . . . . . . 5        Stewart . . . . . . . . . . . .     0
Bledsoe . . . . . . . . . . . . 0    Humphreys . . . . . . . . . . 5          Sullivan . . . . . . . . . . . .    0
Blount . . . . . . . . . . . . . 4   Jackson . . . . . . . . . . . . 0        Sumner. . . . . . . . . . . . .     5
Bradley . . . . . . . . . . . . 5    Jefferson . . . . . . . . . . . 4        Tipton . . . . . . . . . . . . .    5
Campbell . . . . . . . . . . . 5     Johnson . . . . . . . . . . . . 5        Trousdale . . . . . . . . . . .     0
Cannon. . . . . . . . . . . . . 0    Knox . . . . . . . . . . . . . . 5       Unicoi . . . . . . . . . . . . .    5
Carroll . . . . . . . . . . . . . 0  Lake . . . . . . . . . . . . . . 5       Union. . . . . . . . . . . . . .    0
Carter . . . . . . . . . . . . . 5   Lauderdale . . . . . . . . . . 5         Van Buren . . . . . . . . . . .     7
Cheatham . . . . . . . . . . . 5     Lawrence . . . . . . . . . . . 5         Warren . . . . . . . . . . . . .    5
Chester . . . . . . . . . . . . 4    Lewis . . . . . . . . . . . . . . 5      Washington . . . . . . . . . .      0
Claiborne . . . . . . . . . . . 3    Lincoln . . . . . . . . . . . . . 5      Wayne . . . . . . . . . . . . .     0
Clay . . . . . . . . . . . . . . . 0 Loudon. . . . . . . . . . . . . 5        Weakley . . . . . . . . . . . .     5
Cocke . . . . . . . . . . . . . . 3  Macon . . . . . . . . . . . . . 0        White . . . . . . . . . . . . . .   5
Coffee . . . . . . . . . . . . . 0   Madison . . . . . . . . . . . . 5        Williamson . . . . . . . . . .      4
Crockett . . . . . . . . . . . . 5   Marion . . . . . . . . . . . . . 5
Cumberland. . . . . . . . . . 5      Marshall . . . . . . . . . . . . 7
Davidson . . . . . . . . . . . 4     Maury . . . . . . . . . . . . . 5
Decatur . . . . . . . . . . . . 5    McMinn . . . . . . . . . . . . 5
DeKalb . . . . . . . . . . . . . 5   McNairy . . . . . . . . . . . . 0
Dickson . . . . . . . . . . . . 5    Meigs . . . . . . . . . . . . . . 5
Dyer . . . . . . . . . . . . . . 0   Monroe. . . . . . . . . . . . . 5
Fayette . . . . . . . . . . . . 5    Montgomery . . . . . . . . . 3
Fentress . . . . . . . . . . . . 5   Moore . . . . . . . . . . . . . 3
Franklin . . . . . . . . . . . . 5   Morgan . . . . . . . . . . . . . 5
Gibson . . . . . . . . . . . . . 4   Obion . . . . . . . . . . . . . . 5
Giles . . . . . . . . . . . . . . 5  Overton . . . . . . . . . . . . 0
Grainger . . . . . . . . . . . . 0   Perry . . . . . . . . . . . . . . 5
Greene . . . . . . . . . . . . . 7   Pickett . . . . . . . . . . . . . 0
Grundy . . . . . . . . . . . . . 0   Polk . . . . . . . . . . . . . . . 3
Hamblen . . . . . . . . . . . . 5    Putnam . . . . . . . . . . . . 6
Hamilton . . . . . . . . . . . 4     Rhea . . . . . . . . . . . . . . 2
Hancock . . . . . . . . . . . . 0    Roane . . . . . . . . . . . . . 5
Hardeman . . . . . . . . . . . 5     Robertson . . . . . . . . . . . 5
Hardin . . . . . . . . . . . . . 5   Rutherford . . . . . . . . . . 3
Hawkins . . . . . . . . . . . . 0    Scott . . . . . . . . . . . . . . 5
Haywood . . . . . . . . . . . 5      Sequatchie . . . . . . . . . . 2
Henderson . . . . . . . . . . 5      Sevier . . . . . . . . . . . . . 0
_______________
1
  2007 MTAS Library Survey and CTAS Tennessee County Tax Statistics, 2008.

HOTEL-MOTEL TAX IN TENNESSEE CITIES • MUNICIPAL TECHNICAL ADVISORY SERVICE                                            5
                 MUNICIPALITIES WITH HOTEL-MOTEL TAX LEVIES AND RATES
MUNICIPALITY                                    PERCENT RATE           MUNICIPALITY                                   PERCENT RATE

Adamsville . . . . . . . . . . . . . . . . . . . . . 5                 Lake City . . . . . . . . . . . . . . . . . . . . . . 5
Alcoa . . . . . . . . . . . . . . . . . . . . . . . . . 1              LaVergne . . . . . . . . . . . . . . . . . . . . . 2.5
Bartlett . . . . . . . . . . . . . . . . . . . . . . . 5               Lebanon . . . . . . . . . . . . . . . . . . . . . . . 2
Brentwood . . . . . . . . . . . . . . . . . . . . . 4                  Lynchburg-Moore . . . . . . . . . . . . . . . . . 3
Bristol . . . . . . . . . . . . . . . . . . . . . . . . 5              Manchester . . . . . . . . . . . . . . . . . . . . . 6
Brownsville . . . . . . . . . . . . . . . . . . . . . 7                McKenzie . . . . . . . . . . . . . . . . . . . . . . 5
Caryville . . . . . . . . . . . . . . . . . . . . . . . 2              Memphis . . . . . . . . . . . . . . . . . . . . . . 1.7
Chattanooga . . . . . . . . . . . . . . . . . . . . 4                  Monteagle . . . . . . . . . . . . . . . . . . . . . 5
Clarksville. . . . . . . . . . . . . . . . . . . . .02                 Morristown . . . . . . . . . . . . . . . . . . . . . 5
Clinton . . . . . . . . . . . . . . . . . . . . . . . . 3              Mountain City . . . . . . . . . . . . . . . . . . . 5
Collierville . . . . . . . . . . . . . . . . . . . . . 5               Murfreesboro . . . . . . . . . . . . . . . . . . . 2.5
Dickson . . . . . . . . . . . . . . . . . . . . . . 2.5                Nashville/Davidson . . . . . . . . . . . . . . . 6
Dyersburg . . . . . . . . . . . . . . . . . . . . . . 5                Oak Ridge . . . . . . . . . . . . . . . . . . . . . . 5
East Ridge . . . . . . . . . . . . . . . . . . . . . 2                 Oliver Springs . . . . . . . . . . . . . . . . . . . 5
Fairview . . . . . . . . . . . . . . . . . . . . . . . 2               Pigeon Forge . . . . . . . . . . . . . . . . . . 2.25
Franklin . . . . . . . . . . . . . . . . . . . . . . . 4               Pittman Center . . . . . . . . . . . . . . . . . . 3
Gatlinburg . . . . . . . . . . . . . . . . . . . . . 3                 Rogersville . . . . . . . . . . . . . . . . . . . . . 4
Germantown . . . . . . . . . . . . . . . . . . . . 5                   Samburg . . . . . . . . . . . . . . . . . . . . . . . 5
Goodlettsville . . . . . . . . . . . . . . . . . . . 3                 Savannah . . . . . . . . . . . . . . . . . . . . . . 5
Gordonsville . . . . . . . . . . . . . . . . . . . . 3                 Selmer . . . . . . . . . . . . . . . . . . . . . . . . 5
Harriman . . . . . . . . . . . . . . . . . . . . . . 5                 Sevierville . . . . . . . . . . . . . . . . . . . . . 2
Henderson . . . . . . . . . . . . . . . . . . . . . 5                  Shelbyville . . . . . . . . . . . . . . . . . . . . . 7
Huntingdon . . . . . . . . . . . . . . . . . . . . 5                   Smyrna. . . . . . . . . . . . . . . . . . . . . . . 2.5
Jackson . . . . . . . . . . . . . . . . . . . . . . . 5                South Fulton . . . . . . . . . . . . . . . . . . . . 5
Jellico . . . . . . . . . . . . . . . . . . . . . . . . 5              Spencer . . . . . . . . . . . . . . . . . . . . 22.28
Johnson City . . . . . . . . . . . . . . . . . . . . 5                         of county hotel-motel tax collection
Jonesborough . . . . . . . . . . . . . . . . . . . 5                   Tullahoma . . . . . . . . . . . . . . . . . . . . . . 5
Kimball . . . . . . . . . . . . . . . . . . . . . . . 5                Union City . . . . . . . . . . . . . . . . . . . . . 5
Kingsport . . . . . . . . . . . . . . . . . . . . . . 7                Winchester . . . . . . . . . . . . . . . . . . . . . 5
Knoxville . . . . . . . . . . . . . . . . . . . . . . 3




6                                                       HOTEL-MOTEL TAX IN TENNESSEE CITIES • MUNICIPAL TECHNICAL ADVISORY SERVICE
                               M UNICIPAL T ECHNICAL A DVISORY S ERVICE
The University of Tennessee does not discriminate on the basis of race, sex, color, religion, national origin, age, disability or veteran status in provision of
educational programs and services or employment opportunities and benefits. This policy extends to both employment by and admission to the university.

The university does not discriminate on the basis of race, sex or disability in its education programs and activities pursuant to the requirements of Title VI of the
Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, Section 504 of the Rehabilitation Act of 1973, and the Americans with Disabilities
Act (ADA) of 1990.

Inquiries and charges of violation concerning Title VI, Title IX, Section 504, ADA or the Age Discrimination in Employment Act (ADEA) or any of the
other above referenced policies should be directed to the Office of Equity and Diversity (OED), 1840 Melrose Avenue, Knoxville, TN 37996-3560, telephone
(865) 974-2498 (V/TTY available) or 974-2440. Requests for accommodation of a disability should be directed to the ADA Coordinator at the UTK Office
of Human Resources, 600 Henley Street, Knoxville, TN 37996-4125.
                                                             MTAS1416 • E14-1050-000-008-10

				
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