Texas Comptroller of Public Accounts    STAR System


8906H0952A07



HEARING NO. 24,654


IN RE: **************
TAXPAYER NO.: **************
AUDIT OFFICE: **************
AUDIT PERIOD: JULY 1, 1983 through JUNE 30, 1987

HOTEL OCCUPANCY TAX

BEFORE THE COMPTROLLER
OF PUBLIC ACCOUNTS
OF THE STATE OF TEXAS

THOMAS L. POOLE
Administrative Law Judge

ELIZABETH WILSON DAVIS
Representing Tax Division

**************
Representing Petitioner


COMPTROLLER'S DECISION

PRELIMINARY STATEMENT

On December 9, 1988, Petitioner waived its right to an oral hearing and 
requested that a decision be made based on the written submissions of the 
parties.

PETITIONER'S CONTENTION

A cancellation fee, charged by Petitioner when a customer cancels it contract 
for future occupancy, is not subject to tax.

FINDINGS OF FACT

1. Petitioner was audited for the above referenced period and tax. Petitioner 
was sent a TEXAS NOTICE OF TAX DUE of $************** tax plus interest. 
Penalty was waived.

2. Petitioner is in the business of operating a hotel and conference center.

3. Petitioner's customers reserve space and facilities in advance. Petitioner 
and the customer enter into a written contract, an example of which is attached 
as EXHIBIT A and incorporated into this decision.

DISCUSSION AND CONCLUSIONS OF LAW

Petitioner contends that its cancellation fee is not subject to Hotel Occupancy 
Tax. I will conclude that the contention should be granted in part only.

Petitioner assets that the cancellation fee constitutes damages the customer 
agrees to pay for breach of contract. I agree with Petitioner in cases where 
the customer cancels more than thirty days before the scheduled arrival. In 
those situations, the customer never achieves a right and capacity to occupy. 
If, however, the customer cancels within thirty days of the scheduled arrival, 
the full room price is collected unless the space is rented to someone else. In 
the absence of clear evidence or authority to the contrary, it is concluded 
that the customer has paid the full consideration necessary to achieve a right 
of occupancy and the charge is taxable under TEX. TAX CODE ANN. SECTION 
156.051(a).

RECOMMENDATION

The audit should be amended by deleting cancellation fees when the customer 
cancelled more than thirty days before the scheduled arrival and the fee was 
less than the contract price.

Signed this 13th day of March, 1989.


THOMAS L. POOLE 
Administrative Law Judge


ORDER OF THE COMPTROLLER 

The above decision of the Administrative Law Judge is approved and adopted in 
all respects. This decision becomes final on the 20th day of June, 1989.

If a rehearing is desired, a Motion for Rehearing must be filed with the clerk 
of the Administrative Law Judges on or before the date this decision becomes 
final, and must state the grounds upon which the motion is based.

RENDERED and ISSUED this 5th day of June, 1989.


BOB BULLOCK
Comptroller of Public Accounts
of the State of Texas




ACCESSION NUMBER: 8906H0952A07   
SUPERSEDED: N 
DOCUMENT TYPE: H 
DATE: 06/05/1989
TAX TYPE: HOTEL