12A-1.0615: Hotel Rewards Points Program
PURPOSE AND EFFECT: Rule 12A-1.0615, F.A.C. (Hotel Reward Points Programs), is being created to provide for the application of Florida tax in situations involving hotel reward points programs within the transient rentals industry that reflects the findings of Report Number 2005-131, Application of the Tourist Development Tax to the Sale of Discounted Hotel Rooms Over the Internet and the Hotel Rewards Points Program, issued by the Senate Committee on Government Efficiency Appropriations. This rule sets forth when transient lodging accommodations provided to reward points programs members will be subjected to Floridas taxes on those accommodations, including the state sales tax, local surtax, and any locally-imposed convention development tax, tourist development tax, tourist impact tax, and municipal resort tax. This rule also sets forth when transactions between the administrator of a hotel reward points program and the hotel participating in the program are subject to tax.
SUMMARY: The proposed creation of Rule 12A-1.0615, F.A.C. (Hotel Reward Points Programs): (1) provides that the rule will govern the taxation of transactions between hotel reward points program administrators and hotels within the program; (2) provides that no tax is to be collected from a member of a program when the member uses a certificate or confirmation number and is provided a room at no charge; (3) defines the terms hotel, reimbursements, and contributions; (4) provides that tax is due when a hotel receives more in reimbursements from the program fund than it paid in contributions to the program fund in the prior calendar year; (5) provides the calculation of taxable reimbursements for a hotels initial twelve months of participation in a program and for each calendar year subsequent to the initial year of operation, including examples of the calculations; and (6) provides the recordkeeping requirements of hotels participating in a reward points program.
SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS: No Statement of Estimated Regulatory Cost was prepared.
Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.
SPECIFIC AUTHORITY: 125.0104(3)(k), 125.0108(2)(e), 212.0305(3)(f), 212.12(12), 212.17(6), 212.18(2), 213.06(1) FS., Ch. 67-930, L.O.F.
LAW IMPLEMENTED: 125.0104(1)-(4), (8), (10), 125.0108, 212.03(1)-(5), (7), 212.0305, 212.054 FS., Ch. 67-930, L.O.F.
A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW:
DATE AND TIME: November 2, 2010, 2:00 p.m.
PLACE: Room 1220, 2450 Shumard Oak Blvd., Tallahassee, Florida. The public can also participate in this hearing through a simultaneous electronic broadcast of this event by the Department of Revenue using WebEx, and conference calling technology. The requirements to participate are access to the Internet and a telephone. The public can participate in this electronic workshop by accessing the broadcast from their home or office. Specific information about how to participate in this electronic meeting from your home or office will be included in the Agenda for this workshop posted on the Departments Proposed Rule site at www.myflorida.com/dor/rules.
Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 48 hours before the workshop/meeting by contacting: Sarah Wachman at (850)410-2651. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Tammy Miller, Senior Attorney, Technical Assistance and Dispute Resolution, Department of Revenue, P. O. Box 7443, Tallahassee, Florida 32314-7443, telephone (850)488-9669
THE FULL TEXT OF THE PROPOSED RULE IS:
12A-1.0615 Hotel Reward Points Programs.
(1) Scope.
(a) The provisions of this rule govern the taxation of transactions between program administrators of hotel reward points programs and hotels providing transient lodging accommodations that participate in these programs.
(b) For purposes of this rule, the term transient rental tax means the state sales tax imposed on transient rentals under Section 212.03, F.S., the discretionary sales surtax as authorized in Section 212.055, F.S., the locally-imposed tourist development tax provided for in Section 125.0104, F.S., the tourist impact tax provided for in Section 125.0108, F.S., the convention development tax in Section 212.0305, F.S., or any municipal resort tax in Chapter 67-930, L.O.F.
(2) Transactions Between a Hotel and a Guest Using Reward Points.
(a) When a member of a hotel reward points program uses a certificate or confirmation number entitling the member to transient accommodations at a participating hotel at no charge, the hotel is not required to collect transient rental tax from the member.
(b) When a member of a hotel reward points program uses a certificate or confirmation number entitling the member to transient accommodations and pays the hotel any room rate or rental charges using any form of payment other than reward points, the member is required to pay the hotel transient rental tax on the amount of the room rate or rental charges paid using any form of payment other than reward points.
(3) Transactions between a Hotel and a Reward Points Program.
(a) For the purposes of this subsection, the following words are defined:
1. Hotel is used in the singular and is meant to describe a single operation, at one specific location, that provides transient accommodations as described in Section 212.03, F.S. The term hotel does not mean a group of affiliated hotels or a group of hotels operated by one franchisee.
2. Reimbursements mean money or credits received by a hotel from a reward points program fund.
3. Contributions mean money or credits paid by a hotel to a reward points program fund.
(b) Transient rental tax is due on a hotels reimbursements when the hotel receives more in reimbursements than it paid in contributions in the prior calendar year.
(c) Calculation of Taxable Reimbursements for Periods Other than a Hotels Initial Year of Participation.
1. Each January, a hotel must determine the percentage to be applied to reimbursements received during the subsequent calendar year using the following calculation:
Total Reimbursements Received in Prior Calendar Year - Total Contributions Paid in Prior Calendar Year
÷ Total Reimbursements Received in Prior Calendar Year
= Percentage to be Applied to Reimbursements Received in Current Calendar Year
If the resulting percentage is zero or less, then no transient rental tax is due on reimbursements received in the subsequent calendar year.
2. The full amount of reimbursements received by the hotel in the current reporting period must be multiplied by the percentage to determine the amount of reimbursements subject to transient rental tax for that reporting period.
3. Example: A hotels total reimbursements and contributions in the preceding calendar year are $10,000 and $7,500, respectively. The hotels percentage for the current calendar year will be calculated in January as ($10,000 $7,500)/$10,000 or 25%. If the current reporting periods reimbursements are $1,000, the amount of reimbursements subject to tax in the current reporting period is $250.
(d) Calculation of Taxable Reimbursements for a Hotels Initial Twelve Months of Participation in a Reward Points Program.
1. At the end of a hotels initial twelve months of participation in a reward points program, the hotel must determine the percentage to be applied to reimbursements received during the initial twelve months of participation using the following calculation:
Total Reimbursements Received During the Initial Twelve Months Total Annual Contributions Paid During the Initial Twelve Months
÷ Total Reimbursements Received During the Initial Twelve Months
= Percentage to be Applied to Reimbursements Received in the Initial Year
If the resulting percentage is zero or less, then no transient rental tax is due on reimbursements received in the initial twelve months of participation.
2. The full amount of reimbursements received by the hotel in the initial twelve months of participation must be multiplied by the percentage to determine the amount of reimbursements subject to transient rental tax for the initial twelve months. The full amount of any tax due must be remitted with the hotels first tax return due following the end of the initial twelve months of participation. The hotel must keep a supplemental schedule allocating the remittance to the appropriate reporting periods of the initial twelve months of participation in the hotels books and records kept in the normal course of business. This schedule must be made available to the proper taxing authority upon request.
3. The percentage calculated for the initial twelve months of participation must also be used to calculate taxable reimbursements for all remaining reporting periods in the calendar year in which the calculation is made.
4. Example: A hotel begins participating in a reward points program in June 2010. In June 2011, the hotel must calculate the percentage using the total reimbursement and contribution amounts for June 2010 through May 2011. The resulting percentage must be applied to all reimbursements received from June 1, 2010, through May 31, 2011, to determine the amount of reimbursements subject to transient rental tax for that period. The hotel must report any taxable reimbursements for June 2010 through May 2011 on the hotels first tax return due following May 2011. The hotel must also apply the June 2010 through May 2011 percentage to all reimbursements received each reporting period for the remainder of calendar year 2011. In January 2012, the hotel must recalculate the annual percentage using the total reimbursement and contribution amounts for January through December, 2011.
5. If a hotel ceases to participate in a reward points program before the completion of a full twelve month period, then the hotel must determine the percentage to be applied to reimbursements received by using the period of time that the hotel participated in the reward points program. Any tax due must be reported on the hotels first tax return due following the date on which the hotel ceases to participate in the reward points program.
(e) Tax must be reported and remitted as provided in Rule 12A-1.056, F.A.C.
(4) Recordkeeping.
(a) A hotel must maintain records received from or sent to the program administrators indicating reimbursements and contributions, and records indicating the calculations required under this rule to determine the amount of transient rentals tax due, until tax imposed or administered by Chapter 212, F.S., may no longer be determined and assessed under Section 95.091(3), F.S.
(b) Electronic storage of the required records will be sufficient compliance with the provisions of this subsection.
Rulemaking Authority 125.0104(3)(k), 125.0108(2)(e), 212.0305(3)(f), 212.12(12), 212.17(6), 212.18(2), 213.06(1) FS., Ch. 67-930, L.O.F. Law Implemented 125.0104(1)-(4), (8), (10), 125.0108, 212.03(1)-(5), (7), 212.0305, 212.054 FS., Ch. 67-930, L.O.F. HistoryNew________.
