INTRODUCTION This information is provided to all hotels/motels/ bed & breakfast (hereinafter referred to as hotels ) in the City of Sherman to explain the rules for the administration of Hotel Occupancy Tax. The City of Sherman urges you to read and adhere to the enclosed material carefully. This is a summary of the City of Sherman Hotel Tax Ordinance and also includes information on the State of Texas Hotel Tax, therefore it is not all-inclusive. Any questions should be addressed by calling the State Comptrollers office at 800-252-1385, accessing their website at http://www.window.state.tx.us/taxinfo/hotel/index.html or calling the City of Sherman Finance Office at 903-892-7309.
ADMINISTRATION OF HOTEL OCCUPANCY TAX CITY OF SHERMAN I. HOTEL OCCUPANCY TAX REPORTING AND PAYMENT REQUIREMENTS Any individual, company, corporation or association operating a hotel, bed & breakfast, inn or motel (hereafter referred to as person ) are required to collect, report and pay Hotel Occupancy Tax to the City of Sherman by the last day of the month following the quarter in which the tax was collected. A. Tax Requirements (Section 11.03 of the Sherman Code of Ordinances) Every person operating a hotel shall collect 7% city tax. On or before the last day of the month following each quarter, every person required to collect tax shall file a report with the City of Sherman Finance Office and pay all tax due at that time. The taxability of various revenue sources is explained further on the comptroller s website at http://www.window.state.tx.us/taxinfo/hotel/index.html. State tax applies to any room or space in a hotel, including a meeting or banquet room. However, local tax only applies to rooms ordinarily used for sleeping. There are no state or local hotel taxes on meeting and banquet rooms located in a building where no sleeping accommodations are provided. B. Registration Requirement - Every hotel is required to have a registration form on file with the City of Sherman Finance Office. If the establishment is sold or has a name change, a hotel is required to provide the City with a new or updated registration form. This form is available on the city s website at www.ci.sherman.tx.us. C. Amount of and Basis for Tax Hotel Occupancy Tax for the City of Sherman is 7% of the consideration paid by the occupant to the hotel and shall not include the cost of any food served or personal services rendered to the occupant not related to the cleaning and readying the room for occupancy, and shall not include any tax imposed by other governmental agencies. The Hotel Occupancy Tax is broken down as follows: State of Texas (to be remitted to the State) 6% City of Sherman (to be remitted to the City) 7% Total to collect 13% D. Reporting City of Sherman forms are available on the city s website www.ci.sherman.tx.us. Follow the links for City Government, Finance and Tax Information, then Hotel Occupancy Tax. Forms may also be obtained from the City of Sherman Finance Office at 405 North Rusk, Sherman, phone 903-892-7309. These forms may be reproduced as needed. A copy of the Hotel Occupancy Report sent to the state for the quarter covered is also required to be included with the city s report. E. Keeping and Preserving of Records Each hotel operator is required to keep complete and accurate records for a period of not less than three years. These records shall be made available within a reasonable period of time after a written request by the city.
E. Due Dates Taxes due for the quarter, the City of Sherman Hotel Occupancy Report and a copy of the State of Texas Occupancy Report filed with the State Comptroller are due in the City of Sherman Finance Office by the last day of the month following the quarter in which the tax was collected. F. Reporting and Payment Violations A person is in violation of the ordinance and is subject to fines, penalties and interest if that person: Fails to collect the tax Fails to file a report Fails to include a copy of the State of Texas Hotel Occupancy Report Fails to pay the City the tax when payment is due; or Files a false report G. Fines, Penalties and Interest Criminal misdemeanor fines under section 1.01.009 of $500 per violation 15% penalty of the total tax owed Reasonable attorney fees Interest at the maximum rate allowed by law H. Certificate of Paid Hotel Occupancy Taxes prior to the sale of a hotel, a Certificate of Paid Hotel Occupancy Taxes can be obtained from the City of Sherman Finance Office. If the buyer has not obtained this certificate, he becomes responsible for any and all reports due and unpaid taxes, penalty, interest and fines. II. HOTEL OCCUPANCY TAX EXEMPTIONS Any individual or group receiving a hotel tax exemption must submit a Texas Hotel Occupancy Tax Exemption Certificate (which may be given to the guest by the hotel s front desk staff), or the hotel may be liable for not having collected the tax. A Tax-Exempt Entity Search on the comptroller s website at http://www.window.state.tx.us/taxinfo/hotel/index.html can be used to obtain online verification of an organizations exemption from hotel and other Texas taxes. Texas Hotel Occupancy Tax Exemption Certificates may be obtained from the comptroller by calling 800-252-1385 or on their website at http://www.window.state.tx.us/taxinfo/taxforms/12- forms.html. A. FEDERAL GOVERNMENT EMPLOYEES are exempt from state and local tax if traveling on official business. Contractors working for the federal government are not exempt. B. STATE GOVERNMENT EMPLOYEES are exempt from state and local hotel occupancy taxes if they have been issued one of two types of exemption cards. One of these cards is a special State Hotel Exemption Photo ID Card. The other card does not have a photo ID, but states when presented with a photo identification card issued by a Texas Agency, the holder of this card is exempt from state, municipal, and county hotel occupancy tax, Tax Code Sec. 156.103(d), or similar wording.
Texas State government employees who use either of the state Hotel Tax Exemption cards must submit a Texas Hotel Occupancy Tax Exemption Certificate, or the hotel may be held liable for not collecting the tax. Hotels are required to retain these certificates in order to verify legitimate exemptions when audited by a government agency. All other Texas State government employees, including those with educational organizations, must pay the hotel occupancy tax. If appropriate, the state and local governments will then reimburse the state employer through a separate process, in which the hotel is not involved. C. EDUCATIONAL ORGANIZATIONS including independent school districts, public or private elementary, secondary, college, universities, junior colleges, technical institutes, and medical or dental school of Texas and other states are required to pay City of Sherman Hotel Occupancy Tax. Sales tax exemption certificates can not be used for hotel tax exemption purposes. Some may be exempt from state hotel occupancy tax. Any individual or group receiving a hotel tax exemption from state tax must submit a Texas Hotel Occupancy Tax Exemption Certificate (which may be given to the guest by the hotel s front desk staff), or the hotel may be liable for not having collected the tax. D. RELIGIOUS ORGANIZATIONS are exempt from state hotel occupancy tax but are required to pay City of Sherman Hotel Occupancy Tax. Some religious organizations have received a hotel exemption certificate from the Comptroller. Sales tax exemption certificates can not be used for hotel tax exemption purposes. Any religious organization receiving such exemption must present its letter of exemption from the Comptroller and submit to the hotel a Texas Hotel Occupancy Tax Exemption Certificate (which may be given to the guest by the hotel s front desk staff), or the hotel may be held liable for not collecting the tax. The hotel tax exemption for religious organizations is to be granted only to individuals employed by the religious organization unless the hotel bill for nonemployees is being paid directly by the religious organization. If the employee is being reimbursed by the religious organization, the employee may pay by personal check, credit card, or cash. E. CHARITABLE ORGANIZATIONS must pay City of Sherman Hotel occupancy taxes. In order for a charitable organization to be exempt from state hotel occupancy tax, it must first have received a letter of certification from the Comptroller of the State of Texas. Sales tax exemption certificates can not be used for hotel tax exemption purposes. Any charitable organization receiving such exemption must present its letter of exemption from the Comptroller and submit to the hotel a Texas Hotel Occupancy Tax Exemption Certificate (which may be given to the guest by the hotel s front desk staff), or the hotel may be held liable for not collecting the tax. The hotel tax exemption for charitable organizations is to be granted only to individuals employed by the charitable organization unless the hotel bill for non-employees is being paid directly by the charitable organization. If the employee is being reimbursed by the charitable organization, the employee may pay be personal check, credit card, or cash. F. PERMANENT GUEST (30 DAY RULE) - Guests who notify the hotel of their intent to stay 30 or more consecutive days shall be exempt from all (state and City of Sherman) hotel occupancy taxes from the beginning of their stay, provided there is no interruption
in payment for the room. Guests who do not advise the hotel, upon arrival, that they intend to stay 30 consecutive days must pay the tax for the first 30 days. Hotels may wish to post hotel occupancy taxes on the folio for the first 30 days of a guest s stay, and then adjust the taxes off on day 31. If a guest checks out 28 days after registration, and hotel occupancy taxes have not been posted or collected, the hotel will be liable for the tax. G. CITY AND COUNTY EMPLOYEES must pay all hotel occupancy taxes.