April 16, 2013

Sales Tax Refund Opportunity for Hotels with Locations in Texas (article)

There is an immediate sales and use tax savings strategy available to hotels with locations in Texas.

In DTWC Corporation v. Combs, Court of Appeals of Texas, Third District, Austin, No. 03-10-00801-CV, April 11, 2013, the court determined that a hotel operator was entitled to a sale-for-resale exemption from Texas sales and use tax on its purchases of soap, shampoo, mouthwash, shower caps, pens, notepads, and other non-reusable consumable items that it put in its hotel rooms for guests to use as they saw fit, including using the items, not using the items, or taking the items with them when they left.

This decision reverses the Decision, Hearing Nos. 42,388, 43,576, 43,947, 44,189, 44,512, 44,608, 44,609, 44,610, 45,381, 45,781, 45,782, 45,783, Texas Comptroller of Public Accounts, July 26, 2006, which previously supported the Comptroller’s position of taxation on those items. The refund claim must be made within four years from the date on which the tax was due and payable.

Because this case was issued on April 11, 2013, there has not yet been an appeal filed, nor any note as to whether an appeal will be filed, with the Supreme Court of Texas. As such, and considering the result at the Court of Appeals, CBIZ MHM recommends filing protective refund claims to maximize the potential refund available to our clients while this litigation process continues.

CBIZ MHM, LLC analyzes applicable bills to determine whether sales and use tax exemptions are applicable and we prepare the paperwork necessary to file for refunds. Our team knows the restrictions and how to maximize the savings with those requirements in mind. Further, our team knows how to mitigate the difficulties in obtaining refunds from the Texas Comptroller of Public Accounts, and what is needed to file the refund claims properly.

For more information on this opportunity, contact your local CBIZ MHM tax professional.

Copyright © 2013, CBIZ, Inc. All rights reserved. Contents of this publication may not be reproduced without the express written consent of CBIZ. To ensure compliance with requirements imposed by the IRS, we inform you that-unless specifically indicated otherwise-any tax advice in this communication is not written with the intent that it be used, and in fact it cannot be used, to avoid penalties under the Internal Revenue Code, or to promote, market, or recommend to another person any tax related matter. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

CBIZ MHM is the brand name for CBIZ MHM, LLC, a national professional services company providing tax, financial advisory and consulting services to individuals, tax-exempt organizations and a wide range of publicly-traded and privately-held companies. CBIZ MHM, LLC is a fully owned subsidiary of CBIZ, Inc. (NYSE: CBZ)

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