Section 480.101  Nature, Rate and Scope of the Tax

 

a)         Nature and Rate of Tax

 

1)         The Hotel Operators' Occupation Tax Act imposes a tax upon persons engaged in the business of renting, leasing or letting rooms in a hotel at the rate of 5% of 94% of the gross rental receipts from the renting, leasing or letting, excluding, however, from the gross rental receipts, the proceeds of the renting, leasing or letting to permanent residents of that hotel (i.e., from persons who occupy or have the right to occupy such rooms for at least 30 consecutive days).

 

2)         There is also imposed an additional tax upon persons engaged in the business of renting, leasing or letting rooms in a hotel at the rate of 1% of 94% of the gross rental receipts from the renting, leasing or letting, excluding, however, from gross rental receipts, the proceeds of the renting, leasing or letting to permanent residents of that hotel.

 

3)         A hotel is any kind of building in which the public may, for a consideration, obtain living quarters or sleeping or housekeeping accommodations (e.g., hunting lodges, camps, cabins, and third-party platform rentals of apartments, houses and rooms).  (For a more complete definition of "hotel", see Section 480.105.)

 

4)         The exclusion for permanent residents means that the tax is imposed on the business of renting rooms for use as living quarters, or for sleeping or housekeeping accommodations, when renting is done on a transient basis.

 

5)         The tax is an occupation tax whose legal incidence is on the lessor of the rooms.  Nevertheless, persons subject to the tax imposed by the Hotel Operators' Occupation Tax Act may reimburse themselves for their tax liability under the Act by separately stating the tax as an additional charge that may be stated in combination, in a single amount, with any locally imposed hotel operators' occupation tax.

 

6)         Any amount added to a taxable rental charge and collected because of the tax also represents a portion of the gross rental receipts that are subject to the tax.  However, the tax rate, instead of being a flat 6% of total receipts, has been adjusted by the General Assembly to be 5% of 94% plus 1% of 94% of total receipts, in order to avoid the payment of tax on amounts added to rental charges because of the tax.

 

7)         Persons who engage in the business of renting, leasing or letting of rooms that are not subject to tax under the Hotel Operators' Occupation Tax Act (e.g., the rentals are only to permanent residents or the rentals are exempt as provided in subsection (c)(2)) are not required to register and remit the tax imposed by the Hotel Operators' Occupation Tax Act.

 

b)         Scope of the Tax − Examples of Taxability and Exemption

 

1)         Since the hotel operators' occupation tax is imposed on receipts from renting rooms for living quarters, or for sleeping or housekeeping accommodations, the tax does not apply to the receipts from the renting of rooms for other purposes, such as for use as display rooms or sample rooms, as meeting rooms, as offices or as private dining rooms.

 

2)         Since the tax is limited to the renting of rooms to the "public", a private club that restricts its renting of rooms to its members and their guests would not be liable for the tax on its rental receipts from those rooms.

 

3)         The business of renting rooms to the public for use as living quarters, or for sleeping or housekeeping accommodations, is subject to the tax even if the person paying for the room may be a church (except as provided in subsection (c)(2)), charity (except as provided in subsection (c)(3)) or school or some other kind of nonprofit organization, and even if the person paying for the room may be a governmental agency or instrumentality (federal, State or local, or even a foreign government).

 

4)         There is no exemption simply because the lessor of the rooms is a nonprofit organization, such as a church (except as provided in subsection (c)(2)), charity (except as provided in subsection (c)(3)) or school. However, a college or other school is not subject to the tax on its receipts from renting rooms to its students for use as living quarters or for sleeping or housekeeping accommodations because this is not the renting of the rooms to the "public".  Nevertheless, if the school rents rooms for these purposes to persons who are not enrolled with the school in courses of study for credit, that renting is not being done to students, but is being done to the "public", and the school incurs hotel operators' occupation tax liability on its rental receipts from this activity, if the lessees do not qualify as permanent residents.

 

5)         Likewise, the renting of rooms on a transient basis to the public for use as living quarters or sleeping or housekeeping accommodations when the lessor is a charitable organization, such as the Y.M.C.A. or the Y.W.C.A., is subject to the hotel operators' occupation tax.

 

6)         If an operator should make a separate and specific charge for the use of bedding or other facilities furnished in connection with the use of a room as living quarters or for sleeping or housekeeping accommodations, the operator's additional receipts from this source are subject to the hotel operators' occupation tax.  However, that tax does not apply to the operator's receipts from selling food, beverages or other tangible personal property, nor to receipts from the selling of tickets to theatre performances or other similar activities, nor to other receipts that are not in any way reasonably connected with or attributable to the renting, leasing or letting of rooms for use as living quarters or for sleeping or housekeeping accommodations; provided that exemption for nontaxable receipts cannot be claimed unless supported by proper books and records as provided for in Section 4 of the Hotel Operators' Occupation Tax Act and in Section 480.115.

 

c)         Exemption from Hotel Operators' Occupation Tax

 

1)         The hotel operators' occupation tax is not imposed upon gross rental receipts for which the hotel operator is prohibited from obtaining reimbursement for the tax from the customer by reason of a federal treaty (Section 3 of the Act).  Under the Vienna Convention, some foreign diplomats are not required to pay reimbursement charges that are similar in nature to taxes. 

 

A)        The exemption for rentals to certain diplomatic personnel applies only to diplomatic personnel possessing certain types of diplomatic tax exemption cards issued by the U.S. Department of State, Office of Foreign Missions. There are 2 types of diplomatic tax exemption cards:  personal tax exemption cards and mission tax exemption cards.  For each of these categories, 2 types of color-coded cards are issued: a blue-striped card that allows an individual or mission to make purchases exempt from all sales and use taxes and taxes on hotel rooms and a striped card of one of several other colors (yellow, green, red, or red-green) that allows an individual or mission to make tax-exempt purchases in all purchase categories except for the restricted purchase categories printed on the colored stripe.  In June 2011, the Office of Foreign Missions began issuing newly designed diplomatic tax exemption cards.  In addition, the American Institute in Taiwan/Washington issues Mission Tax Exemption Cards and Personal Tax Exemption Cards to officials of the Taipei Economic and Cultural Representative Office.  For examples of these cards, see 86 Ill. Adm. Code 130.Illustration A.

 

B)        In documenting this exemption, a hotel operator must obtain the mission's name, the card holder's name, the exemption number, the expiration date, and a photocopy of the diplomatic card.

 

2)         Effective July 1, 2017, the Hotel Operators' Occupation Tax is not imposed upon gross rental receipts received by an entity that is organized and operated exclusively for religious purposes and possesses an active Exemption Identification Number (ExIN) issued by the Department pursuant to the Retailers' Occupation Tax Act when acting as a hotel operator renting, leasing, or letting rooms:

 

A)        in furtherance of the purposes for which it is organized; or

 

B)        to entities that:

 

i)        are organized and operated exclusively for religious purposes;

 

ii)         possess an active ExIN issued by the Department pursuant to the Retailers' Occupation Tax Act; and

 

iii)        rent the rooms in furtherance of the purposes for which they are organized.

 

C)        No gross rental receipts are exempt under subsection(c)(2) unless the hotel operator obtains the active ExIN from the exclusively religious entity to whom it is renting and maintains that number in its books and records.

 

D)        Gross rental receipts from all rentals other than those described in subsection (c)(2) are subject to the tax imposed by the Hotel Operators' Occupation Tax Act, unless otherwise exempt under that Act.  [35 ILCS 145/3(d-5)]

 

EXAMPLE 1:  A religious organization is organized and operated exclusively for religious purposes and has an active ExIN.  It operates a retreat center and organizes and conducts a 3-day marriage counseling seminar and rents rooms to the participants of the seminar. The seminar is in furtherance of its organizational purposes. The receipts from these rentals are not subject to the hotel operators' occupation tax under subsection (c)(2).

 

EXAMPLE 2:  Religious Organization A is organized and operated exclusively for religious purposes and has an active ExIN.  It operates a retreat center and rents a block of rooms to Religious Organization B. Religious Organization B is organized and operated exclusively for religious purposes, possesses an active ExIN, and provides rooms to the participants of a spiritual seminar it has organized and will conduct. The seminar furthers the organizational purposes of Organization B. Organization A's receipts from these rentals are not subject to the hotel operators' occupation tax under subsection (c)(2).  In this Example, if the rooms are paid for by the individual participants and not by Organization B, Organization A must keep records demonstrating that the individual to whom the room was rented was a participant in the seminar conducted by Organization B.  If Organization A does not keep these records, the receipts from those rentals are taxable.

 

EXAMPLE 3:  Religious Organization A is organized and operated exclusively for religious purposes and has an active ExIN.  It operates a retreat center. Religious Organization A's organizational documents demonstrate it is organized, in part, to partner with school districts to provide one-on-one support to students to help them overcome the educational and societal challenges they face both in and out of school. Organization B is a not-for-profit organization that provides funds and support to school districts that serve at-risk students. Religious Organization A rents a block of rooms to Organization B for participants attending a seminar conducted by Organization B for educators of at-risk youth.  Because the seminar conducted by Organization B is in furtherance of Organization A's organizational purposes, the receipts from the rental to Organization B are not subject to the hotel operators' occupation tax under subsection (c)(2).  In this Example, Religious Organization A must keep records demonstrating that the seminar was in furtherance of its organizational purposes (e.g., a copy of its charter, mission statement, and by laws, as well as any brochures or agendas pertaining to the seminar). In addition, if the rooms are paid for by the individual participants and not by Organization B, Religious Organization A must keep records demonstrating that the individual was a participant in the seminar conducted by Organization B (e.g., a copy of the seminar's sign-in sheet).

 

EXAMPLE 4:  A religious organization operates a retreat center, is organized and operated exclusively for religious purposes, and has an active ExIN.  It rents a block of rooms to persons attending a wedding reception at the center or rents a block of rooms to a not-for-profit organization that conducts a sports-medicine seminar. The receipts from either of these rentals do not qualify for the exemption in subsection (c)(2) because the rentals are neither made in furtherance of the organizational purposes of the religious organization operating the retreat center, nor made to a religious organization organized and operated exclusively for religious purposes that has an active ExIN.

 

E)        Records

 

i)          When a religious organization that has an active ExIN operates a retreat center, conducts an event in furtherance of its organizational purposes, and rents rooms to persons attending that event, the religious organization must obtain and maintain the following:  documents demonstrating the nature of the event (e.g., brochures, pamphlets, or agendas of the event); documents demonstrating how the rental of the rooms was in furtherance of its organizational purposes (e.g., a copy of the religious organization's mission statement or charter); and the dates of the room rentals.

 

ii)         When a religious organization that has an active ExIN operates a retreat center and rents rooms to an entity organized and operated exclusively for religious purposes with an active ExIN that conducts an event in furtherance of its organizational purposes, the religious organization operating the retreat center must obtain and maintain the following:  the name, address, and phone number or email of the renting religious organization conducting the event; the renting religious organization's active ExIN; documents demonstrating the nature of the event (e.g., brochures, pamphlets, or agendas of the event); a certification that the room rentals were in furtherance of the organizational purposes of the renting religious organization; the dates of the room rentals; and any contracts between the retreat center and the religious organization that rented the rooms.

 

iii)        When a religious organization that has an active ExIN operates a retreat center and is not conducting an event at the center but rents to another organization that conducts an event that furthers the organizational purposes of the retreat center's religious organization, the religious organization operating the retreat center must obtain and maintain the following:  the name, address, and phone number or email of the renting organization conducting the event; documents demonstrating the nature of the event (e.g., brochures, pamphlets, or agendas); a certification by the religious organization operating the retreat center that the room rentals by the renting organization were in furtherance of the retreat center's organizational purposes, and documents demonstrating how the rental of the rooms was in furtherance of the retreat center's organizational purposes (e.g., the retreat center's mission statement or charter); the dates of the room rentals; and any contracts between the religious organization operating the retreat center and the renting organization conducting the event.

 

3)         Effective July 1, 2023, the Hotel Operators' Occupation Tax shall not apply to gross rental receipts received from the renting, leasing, or letting of rooms to an entity that is organized and operated exclusively by an organization chartered by the United States Congress for the purpose of providing disaster relief and that possesses an active Exemption Identification Number (ExIN) issued by the Department pursuant to the Retailers' Occupation Tax Act if the renting, leasing, or letting of the rooms is in furtherance of the purposes for which the exempt organization is organized.  The American National Red Cross is an example of an organization chartered by the United States Congress for the purpose of providing disaster relief pursuant to 36 U.S.C. Ch. 3001.  [35 ILCS 145/3(d-10)]

 

A)        The exempt chartered organization must make the payment itself for the renting of the rooms.  Cash payments are not allowed with the exemption.  Acceptable payment methods include:

 

i)          use of a credit card that is directly billed to the organization and is either in its name only or in the organization's name and the name of a person authorized to use it; or

 

ii)         a check drawn on an account belonging only to the organization; or

 

iii)        use of a purchase order from the organization that is billed to the organization.

 

B)        To qualify, the hotel operator must obtain and maintain from the organization:

 

i)          documentation that the renting, leasing, or letting of the room is associated with the organization.  Acceptable documentation includes a copy of an employee identification badge; and

 

ii)         a copy of the active Illinois Exemption Number Certificate issued by the Department.  (Note: It is the operator's responsibility to verify that the organization's ExIN is valid and active).

 

d)         How to Compute Applicable Tax Rate or Effective Date of New Tax

 

1)         For the purposes of the Hotel Operators' Occupation Tax Act, any tax liability incurred in respect to the renting, leasing or letting of rooms in a hotel shall be computed by applying, to the gross receipts from the renting, leasing or letting, the tax rate in effect as of the date the lessee occupies a specific room or rooms or becomes irrevocably liable to pay rent for the right to occupy a specific room or rooms.  Deposits paid in advance shall be deemed to be received as rental receipts when the specific room or rooms to which the deposit is applied as rent shall be deemed to be rented, leased or let within the meaning of the preceding sentence.

 

2)         Likewise, when something that has been exempted becomes taxable as to room renting, leasing or letting that occurs on or after some particular date, the date of renting, leasing or letting for this purpose shall be deemed to be the date when the lessee occupies a specific room or rooms or becomes irrevocably liable to pay rent for the right to occupy a specific room or rooms.

 

(Source:  Amended at 48 Ill. Reg. 14846, effective September 25, 2024)

 

Section 480.105  Definitions

 

"Hotel" means any building or buildings in which the public may, for a consideration, obtain living quarters, sleeping or housekeeping accommodations.  The term includes inns, motels, tourist homes or courts, lodging houses, rooming houses, apartment houses, hunting lodges, camps, cabins, and third-party platform rentals of apartments, houses, and rooms.

 

"Occupancy" means the use or possession, or the right to the use or possession, of any room or rooms in a hotel for any purpose, or the right to the use or possession of the furnishings or to the services and accommodations accompanying the use and possession of the room or rooms.

 

"Operator" means any person operating a hotel.

 

"Permanent resident" means any person who occupied or has the right to occupy any room or rooms, regardless of whether it is the same room or rooms, in a hotel for at least 30 consecutive days.

 

"Rent" or "rental" means the consideration received for occupancy, valued in money, whether received in money or otherwise, including all receipts, cash, credits and property or services of any kind or nature.

 

"Room" or "rooms" means any living quarters, sleeping or housekeeping accommodations.

 

(Source:  Amended at 44 Ill. Reg. 16471, effective September 25, 2020)

 

Section 480.110  Registration and Returns

 

a)         Registration

 

1)         It is unlawful for any person to engage in the business of renting, leasing or letting rooms in a hotel in this State without a Certificate of Registration from the Department of Revenue (Department).

 

2)         Any person who engages in such business is required to apply to the Department for a Certificate of Registration on a form which is prescribed by the Department, and which will be furnished on request.  Upon receipt of the application to register in proper form, the Department will issue a Certificate of Registration to the applicant.  Such Certificate of Registration must be publicly displayed.

 

3)         All the provisions of Subpart G of the Retailers' Occupation Tax Regulations (86 Ill. Adm. Code 130) (including the provisions concerning the furnishing of bond or other security by taxpayers to the Department, among other things), to the extent to which any such provision is not inconsistent with the Hotel Operators' Occupation Tax Act [35 ILCS 145] (the Act), and the Sections promulgated thereunder, shall apply to the tax collected pursuant to this Part.

 

b)         Return and Payment of the Tax

 

1)         Except as provided hereinafter in this Section, on or before the last day of each calendar month, every person engaged in the business of renting, leasing or letting rooms in a hotel in this State during the preceding calendar month shall file a return with the Department, stating:

 

A)        The name of the operator;

 

B)        his residence address and the address of his principal place of business and the address of the principal place of business (if that is a different address) from which he engages in the business of renting, leasing or letting rooms in a hotel in this State;

 

C)        total amount of rental receipts received by him during the preceding calendar month from renting, leasing or letting rooms during such preceding calendar month;

 

D)        total amount of rental receipts received by him during the preceding calendar month from renting, leasing or letting rooms to permanent residents during such preceding calendar month;

 

E)        total amount of other exclusions from gross rental receipts allowed by the Act;

 

F)         gross rental receipts which were received by him during the preceding calendar month and upon the basis of which the tax is imposed;

 

G)        the amount of tax imposed, less a discount of 2.1% or $25.00 per calendar year, whichever is greater, which is allowed to reimburse the operator for the expenses incurred in keeping records, preparing and filing returns, remitting the tax and supplying data to the Department on request pursuant to this Act, if the return and payment are filed in accordance with this Section;

 

H)        the amount of penalty due, if any; and

 

I)         such other reasonable information as the Department may require.

 

2)         If the operator's average monthly tax liability to the Department does not exceed $200.00, the Department may authorize his returns to be filed on a quarter annual basis, with the return for January, February and March of a given year being due by April 30 of such year; with the return for April, May and June of a given year being due by July 31 of such year; with the return for July, August and September of a given year being due by October 31 of such year, and with the return for October, November and December of a given year being due by January 31 of the following year.

 

3)         If the operator's average monthly tax liability to the Department does not exceed $50.00, the Department may authorize his returns to be filed on an annual basis, with the return for a given year being due by January 31 of the following year.

 

4)         Such quarter annual and annual returns, as to form and substance, shall be subject to the same requirements as monthly returns.

 

5)         Notwithstanding any other provision in the Act concerning the time within which an operator may file his return, in the case of any operator who ceases to engage in a kind of business which makes him responsible for filing returns under the Act, such operator shall file a final return under the Act with the Department not more than one month after discontinuing such business.

 

6)         Where the same person has more than one business registered with the Department under separate registrations under the Act, such person shall not file each return that is due as a single return covering all such registered businesses, but shall file separate returns for each such registered business.

 

7)         In his return, the operator shall determine the value of any consideration other than money received by him in connection with the renting, leasing or letting of rooms in the course of his business, and he shall include such value in his return.  Such determination shall be subject to review and revision by the Department.

 

8)         Where the operator is a corporation, the return filed on behalf of such corporation shall be signed by the president, vice-president, secretary or treasurer or by the properly accredited agent of such corporation.

 

9)         The person filing the return shall, at the time of filing such return, pay to the Department the amount of tax due.

 

c)         Special Reporting Problem Connected With Exclusion for Permanent Residents.  The Act defines a "permanent resident" as a person who occupies or has the right to occupy a room for at least 30 consecutive days.  It will not always be possible for a hotel to determine whether a guest is a "permanent resident" at the end of a particular reporting period.  In such cases:

 

1)         Where a guest has occupied a room for 30 consecutive days as of the end of a reporting period, no tax is due.

 

2)         Where a guest has a binding contract for at least 30 days, no tax need be reported or paid; except that, if the contract is terminated before the end of the first 30 days, a tax should be paid for the period up to the time when the contract is terminated.

 

3)         Where the hotel does not know whether a guest is a "permanent resident" at the end of the period for which a return is filed (because the first 30 days are not up), a tax should be paid.  If the guest later stays for 30 days, the amount of rental for the first 30 days, or portion thereof, upon which a tax has already been paid, should be deducted in Item 3 on the return for the next month, and a schedule should be filed with the return explaining such deduction.

 

d)         Gross Receipts or Gross Billing Basis of Reporting

 

1)         At the beginning of a registration under the Hotel Operators' Occupation Tax Act, the registrant may elect to file returns on the receipts basis (reporting, for the return period, only those receipts received during such return period), or the registrant may elect to file returns on the gross billing basis (reporting, for the return period, all rentals billed during the return period whether collected during such return period or not).

 

2)         An operator may change from the gross billing basis to the gross receipts basis of reporting in tax returns without obtaining special permission from the Department.  However, once an operator has commenced to file returns on the gross receipts basis, he may not change his method of reporting to the gross billing basis without first obtaining permission from the Department to make this change.

 

3)         On the receipts basis of reporting, since the operator does not report and pay tax on receipts until he receives them, he would never have any occasion for taking a bad debt deduction on his returns.  However, where the operator who is filing returns on the gross billing basis pays tax to the Department on a billing which later turns out to be a bad debt, and which is charged off on the operator's books as a bad debt for Federal income tax purposes, the operator may take a deduction for such bad debt on his Hotel Operators' Occupation Tax return to the Department.  If such operator, after taking such bad debt deduction, should later realize a recovery thereon, he shall report and pay tax on the amount of such recovery when filing his return for the return period in which such recovery occurs.

 

(Source:  Amended at 21 Ill. Reg. 2383, effective February 3, 1997)

 

Section 480.115  Books and Records

 

a)         General Requirements

Every operator shall keep separate books or records of his or her business as an operator so as to show the rents and occupancies taxable under the Hotel Operators' Occupation Tax Act separately from his or her transactions that are not taxable under that Act.  If any such operator fails to keep separate books or records, he or she shall be liable to tax at the rate designated in Section 3 of the Hotel Operators' Occupation Tax Act upon the entire proceeds from his hotel.

 

b)         Preservation and Retention of Records

 

1)         Books and records and other papers reflecting gross receipts received during any period with respect to which the Department is authorized to issue proposed assessments as provided by the Act shall be preserved until the expiration of that period unless the Department, in writing, shall authorize their destruction or disposal prior to that expiration. (See 86 Ill. Adm. Code 130.825.)

 

2)         In determining the period for which the Department is authorized to issue a proposed assessment, the following material (with necessary adaptations because of the time when the Hotel Operators' Occupation Tax became effective)  from Sections 4 and 5 of the Retailers' Occupation Tax Act [35 ILCS 120] (which are incorporated by reference into Section 7 of the Hotel Operators' Occupation Tax Act) must be considered.

 

3)         Except in case of willful failure or refusal to file a return, or except in case of a fraudulent return, or except with the consent of the person to whom the proposed assessment is to be issued, no proposed assessment shall be issued on and after each January 1 and July 1 covering gross receipts received during any month or period of time more than 3 years prior to that January 1 and July 1, respectively:

 

A)        Provided, however, that:

 

i)          the foregoing limitations upon the issuance of a proposed assessment shall not apply to the issuance of a proposed assessment with respect to any prior period of time  in cases in which the Department has, within the period of limitation then provided, notified the person making the return of a proposed assessment even though that return had not been corrected by the Department in the manner required by the Act prior to the issuance of the notice; and

 

ii)         the foregoing limitations upon the issuance of a proposed assessment shall not apply to the issuance of any such assessment with respect to any prior period of time prior in cases in which the Department has, within the period of limitation then provided, notified a person of the amount of tax computed even though the Department had not determined the amount of tax due from that person in the manner required by the Act prior to the issuance of the notice; but in no case shall the amount of any such proposed assessment for any period otherwise barred by the Act exceed for that period the amount shown in the Notice of Proposed Assessment.

 

B)        If, when a tax or penalty under the Act becomes due and payable, the person alleged to be liable is out of the State, the proposed assessment may be issued, within the times limited by the Act, after that person enters or returns to the State; and if, after the tax or penalty under the Act becomes due and payable, the person alleged to be liable departs from and remains out of the State, the time of that person's absence is no part of the time limited for the issuance of the proposed assessment; but these provisions concerning absence from the State shall not apply to any case in which, at the time a tax or penalty becomes due under the Act, the person allegedly liable is not a resident of this State.

 

c)         Preservation of Books During Pendency of Assessment Proceedings

However, if a Notice of Proposed Assessment has been issued, and if the questions raised by that Notice have not been completely disposed of, books and records reflecting receipts received during the period covered by the proposed assessment must be preserved until the termination of all proceedings before the Department and before any court upon review.

 

d)         Department Authorization to Destroy Records Sooner than Would Otherwise be Permissible

In all cases, the Department may, in writing, authorize the destruction of books and records and other papers prior to the expiration of the periods of time during which the taxpayer, except for the written authorization from the Department, is required to keep the books and records.

 

(Source:  Amended at 43 Ill. Reg. 5109, effective April 17, 2019)

 

Section 480.120  Penalties, Interest and Procedures

 

All civil penalties, provisions concerning interest and procedures (such as the making of assessments, the venue and mode of conducting hearings, subpoenas, matters pertaining to judicial review and other procedural subjects), together with statutes of limitation, are the same under the Hotel Operators' Occupation Tax Act as under the Retailers' Occupation Tax Act.  For information concerning criminal penalties, see Section 8 of the Hotel Operators' Occupation Tax Act.

 

(Source:  Amended at 43 Ill. Reg. 5109, effective April 17, 2019)

 

Section 480.125  Claims to Recover Erroneously Paid Tax

 

a)         The Filing of Claims

            Where an operator pays Hotel Operators' Occupation Tax to the Department in error, either as a result of a mistake of fact or an error of law, the operator may file a claim with the Department upon a form which the Department prescribes and will issue on request.

 

b)         Bearing the Burden of the Tax

            In addition to proving that he did not owe the tax for which recovery is sought, the claimant must also prove that he bore the burden of the amount of such tax, either by not shifting the burden of the tax to anyone else in the first instance, or by unconditionally refunding any amounts passed on because of the tax to his customers, who bore the burden thereof.

 

c)         Statute of Limitations

            As to any claim filed with the Department on and after each January 1 and July 1, no amount of tax or penalty erroneously paid (either in total or partial liquidation of a tax or penalty under The Hotel Operators' Occupation Tax Act) more than 3 years prior to such January 1 and July 1, respectively, shall be credited.

 

d)         Credit Memorandum or Refund

            When any claim is allowed, the Department shall issue an assignable credit memorandum to the claimant for the amount so allowed.

 

e)         Refunds

            In case the Department determines that the claimant is entitled to a refund, such refund shall be made only from such appropriation as may be available for that purpose.  If it appears unlikely that the amount appropriated would permit everyone having a claim allowed during the period covered by such appropriation to elect to receive a cash refund, the Department will make such refunds only in hardship cases (i.e., in cases in which the claimant cannot use a credit memorandum).  The two most likely situations where this would be the case are the situation in which the claimant has discontinued business and the situation in which the claimant will have a small volume of liability to the Department in the foreseeable future, but receives a large credit memorandum which it therefore might take the claimant a long time to liquidate by using it to pay current taxes.  In these instances, the claimant probably would have to sell the credit memorandum at a loss in order to realize anything from it within any reasonable period of time.

 

f)         Procedure – Incorporation by Reference

 

1)         The procedure for disposing of claims and of credit memoranda shall be the same as that provided for in the Retailers' Occupation Tax Act and in Article 16 of the Retailers' Occupation Tax Regulations.

 

2)         In general, the provisions of 86 Ill. Adm. Code 130:  Subpart O of the Retailers' Occupation Tax Regulations (including provisions concerning interest on overpayments of tax as well as other provisions) shall apply to claims under The Hotel Operators' Occupation Tax Act.  For that purpose, said Subpart O is incorporated by reference into this Regulation and made a part hereof.