Texas Comptroller of Public Accounts    STAR System


October 29, 2009


Dear *************

As I understand your question, you are asking if tour operators and travel 
agencies located outside the United States are required to collect and remit 
Texas hotel occupancy tax on the difference in the amount charged their 
customers for hotel rooms in Texas and the amount paid to a hotel for the 
rooms. You asked if all tour operators worldwide are obliged to register for 
collecting and remitting hotel tax in Texas.

Whether a foreign tour operator or travel agent is responsible for collecting 
and remitting hotel occupancy tax to the state of Texas depends on the specific 
activities engaged in by the operator or agent, including the terms of any 
applicable contracts or agreements, to determine if the company is acting as an 
agent in obtaining lodging for customers or is reselling hotel rooms to 

An agent has a contractual relationship to act on behalf of the agentís client. 
Some typical activities engaged in by an agent for hotel tax purposes were 
described in Comptrollerís Decision No. 32,105 (STAR document #9504H1346F01). 
The Petitioner in this case was a company that organized and operated 
educational music festivals for secondary school students. The company also 
arranged for lodging for schools with students attending the festival. The 
company reserved the rooms in the schoolsí names, forwarded payment for the 
rooms to the hotel after receiving payment from the school, forwarded the 
schoolís room assignments to the hotel and charged the schools 
dollar-for-dollar for the rooms (i.e., there was no mark up on the cost of 
rooms charged by the company). If a school cancelled its hotel room 
reservation, the schoolís deposit was refunded according to the hotelís 
cancellation policy.

Based on these facts, the Comptroller concluded that the company was an agent 
for the schools and not a seller of entertainment and lodging:  ďAs for hotel 
rooms, these accommodations were not bought in a block by the Petitioner and 
then resold to the schools. The school purchased the hotel accommodations using 
the Petitioner as their agent.Ē  Therefore, the company in question was not 
required to collect and remit Texas hotel tax.

Factors that indicate that a person is acting as an agent and not as someone 
who is selling hotel rooms include the following:  agents only reserve the 
number of rooms requested, do not mark up the price of the rooms and any room 
cancellation policies are those of the hotel and not set by the agent. Agents 
pay hotels directly for rooms for their clients, including tax, and the hotels 
are responsible for remitting the tax. An agentís separately stated charge for 
services on a client invoice or bill is a commission and not subject to hotel 

There are several factors we look at to determine if a room is being controlled 
and sold by someone other than the hotel such that the operator or agent must 
collect hotel tax on the charge to the customer.  For example, we consider 
hotel rooms to be resold when a tour operator contracts with a hotel to make 
rooms available for rent to the tour operatorís customers for an agreed price 
and then the tour operator marks up the room charge to the customer. The tour 
operator needs to collect and remit hotel tax to the state on the marked up 
price of the room. Credit may be taken for hotel taxes directly paid by the 
operator to the hotel on the lower wholesale price of the room. Records must be 
maintained to link tax paid by customers to the operator with tax paid to 
hotels by the operator.  We will also look at whether the tour operator sets it 
own cancellation policies separate from those of the hotel and whether the 
cancellation of the reservation by the customer can be handled by the hotel or 
only through the operator.  We consider whether the operator has agreements 
with the hotels for rooms that may or may not be reserved by customers and what 
the terms of those agreements are.

If there are specific facts that apply to your situation which are different 
than those discussed above, please let us know and we will provide a response 
based on those facts.

A completed Texas Hotel Occupancy Tax Questionnaire (form AP-102) will need to 
be submitted to register to collect and remit the 6 percent state hotel 
occupancy tax. Local hotel occupancy tax is administered by the local taxing 
jurisdictions, so you will need to contact the county and, if applicable, city 
where a hotel is located to determine local hotel tax responsibilities.

Our office does not maintain a list of other states in the U.S. that do or do 
not impose a tax on lodging or information about their laws and policies 
regarding responsibilities to collect and remit state and local hotel taxes.

Links to forms, the State Tax Automated Research (STAR) system and other tax 
information is on our ďHotel Occupancy TaxĒ Web page at 

This opinion is based on the facts presented. Other facts, though similar, may 
result in different answers.

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If you have questions or need more information, please contact me.


Donald S. Dillard
Oil & Gas, Fuels and Miscellaneous Taxes
Tax Policy Division
Texas Comptroller of Public Accounts

DATE: 10/29/2009