Sales Tax Slice: Sun, Sand, Surf, and Sales Tax


 

BeachAs Nor’easters batter the East Coast and a cold winter marches on, many begin to turn their eyes south in the hopes of escaping for a warm spring break. But though they may escape the cold, in the Gulf Coast states of Florida, Alabama, Mississippi, Louisiana, and Texas, they likely won’t escape sales tax completely.

For those headed to hotels, you’ll probably encounter sales tax before you start packing. Florida, Louisiana, and Mississippi impose sales tax on the rental of hotel rooms, while Alabama and Texas do not. Hotel amenities, which are additional items or services provided to guests, are taxable in Florida unless the charges are separately stated on the bill and are withheld if the item or service is refused by the guest. Texas also taxes hotel amenities unless separately stated and unrelated to the occupancy of a room, such as charges for a hotel shuttle. If you’re driving yourself, parking charges are taxable in Louisiana, Mississippi, and Texas, but not in Alabama or Florida.

How you plan your stay could also affect the sales tax you owe. Texas includes in the sales tax base charges paid by customers to book hotel rooms through online travel companies (OTCs). Louisiana also charges sales tax on all charges collected by OTCs. If you opt for staying in an Airbnb instead of a hotel, you’ll also likely pay tax. Although Alabama and Texas do not apply sales and use tax to hotel accommodations, which includes Airbnb, they do subject these accommodations to a hotel occupancy excise tax.

Spring break can be a major opportunity for Gulf Coast cities to boost revenue; for example, last year South Padre Island, Texas, collected over $300,000 in sales tax in March alone. But it’s likely that for most people hitting the beach, their minds will be on the surf and not on the sales tax.

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: What vacation-related purchases does your state impose sales tax on?

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