Oklahoma Tax Commission Amendment to Sales Tax Ruling on Food/Drink as Packaged Room Rate
Below is a letter from the Oklahoma Tax Commission outlining an amendment to the sales tax ruling on food and drink as part of a packaged room rate. More information can be found on the links below and the Oklahoma Tax Commission website at www.oktax.state.ok.us.
RE: Our File Number LR-07-082; Clarification on Oklahoma Tax Rule 710:19-143 amendment
Dear Mr. Hopper:
This is in response to your correspondence of June 19, 2007 wherein you requested verification that lodging properties' may purchase food and drink to be provided to their customers as part of the price of the room exempt from sales tax and that the sales tax permit previously issued these entities may be utilized to make these exempt purchases.
Please be advised that Oklahoma Tax Commission Rule OAC 710;65-19-143 has been amended effective June 25, 2007 to clarify policy regarding the sales tax treatment of food and drinks provided as a part of a packaged room rate by hotel or motel operators. Subsection (e) of Rule 710:65-19-143 states that "Sales tax is not due on food or drinks that are provided as a part of a packaged room rate by hotel or motel operators is the furnishings of the room is subject to tax under Section 1354 or Title 68 and if no separate charge is made for the food or drinks. Such food or drinks are considered to be sold at retail as part of the total charge for the room."
Hotel or motel operators holding a sales tax permit may purchase food and drinks that will be provided as a part of a packaged room rate exempt from sales tax as a sale for resale. Vendors who, in good faith, accept properly completed documentation that the transaction is exempt for resale are relieved from liability to collect sales tax. Should the hotel or motel operators purchase food items exempt for resale and withdraw those items from inventory for a non exempt use, they would owe sales tax on the "sales value" of the items. See 68 O.S. Section 1362(D) and OAC 710:65-1-2.
Attached is a copy of administrative rule provision OAC 710:65-7-8 which sets forth the properly completed documentation that must be accepted from a purchaser claiming a sales tax exemption for resale and retained by the vendor in order for the vendor to be relieved of any liability for the sales tax and the duty to collect imposed by 68 O.S. Section 1361 of Title 68. See also, OAC 710:65-7-6 and OAC 710:65-13-200.
Additionally, you posed the following question:
Question:
If lodging properties could have been making these purchases tax exempt all along because they already had a sales tax permit, is there a procedure for them to claim a refund for years of back sales taxes?
Response:
Hotel or motel operators who paid sales tax on the purchases of food and drinks provided as part of a packaged room rate have the ability to file a refund request. Please see attached form 13-9 and refer to the instructions with the form for the required information and documentation as set out in Oklahoma Tax Commission Rule OAC 710:65-11-1. Requests for refunds should be addressed to Cristy Dixon, Account Maintenance Division, 2501 Lincoln Blvd., Oklahoma City, OK 73194, and (405) 521-3270. Enclosed are copies of Section 227 of Title 68 which deals generally with refunds and Commission Rule 710:65-11-1 which specifically relates to obtaining a sales tax credit or refund.
Oklahoma Tax Commission Rule OAC 710:65-19-143 along with other sales tax amendments will be posted on our website: www.oktax.state.ok.us. You may also reference the above Commission Rules and forms on the website.
I trust this information is helpful. If I can be of any additional assistance, please feel free to call me at 521-3133.
