Texas—Sales and Use Tax: Mobile Lodging Provider subject to Sales & Use Tax

TEXAS: A mobile lodging provider was subject to Texas sales and use tax as the Taxpayer’s lodges, providing mobile lodging, dining, and recreational facilities to oil and gas industry workers, were considered tangible personal property.

The Taxpayer’s business provides mobile lodging and related services (e.g., catering and housekeeping) to oil and gas industry workers by setting up mobile camps at locations with convenient access to industry projects. The mobile camps consist of lodging, dining, and recreational facilities. Taxpayer’s website identified the lodging facilities as modular buildings and states that they can be set up within a twenty-four-hour period. The Taxpayer acquired its mobile camps from a related entity and brings them from Canada to Texas, where they are placed to form an open lodge on land that the Taxpayer leases. The open lodge is accessible to anyone wishing to book a room. The Taxpayer had installed power, propane, water, and sewage conveyance systems on the leased land to support the open lodge. The taxpayer states it operates one lodge in Texas where the modules are built on I-beams and transported only by flatbed trailer. The Taxpayer provided invoices for room rentals at its open lodge, which indicate that Taxpayer is collecting Hotel Occupancy Tax on the room rentals.

Texas imposes a use tax on the storage, use, or other consumption of taxable items in the state, and the term taxable item includes tangible personal property and taxable services. In this matter, the Taxpayer’s lodges located in Texas were tangible personal property subject to sales and use tax in Texas. The Taxpayer’s lodges retained its identity as tangible personal property as they were easily transportable, and its removal did not damage the tangible personal property or realty. In addition, the hooking up of electric, water, or sewage lines to the camp facilities did not permanently annex the facilities. Therefore, the Taxpayer was responsible for accruing and remitting use tax. Letter No. 202106021L, Texas Comptroller of Public Accounts, June 21, 2021

Hotel Occupancy Tax

About Davis Davis & Harmon LLC – Sales Tax Experts: Headquartered in Dallas, Texas, Davis Davis & Harmon LLC – Sales Tax Experts specializes in sales/use tax refund recovery and audit defense. Our team of consultants is comprised of former Big 4 sales tax consultants and state sales tax auditors. Each of our consultants has 15 to 20 years of experience, providing our clients with access to a highly specialized team of sales/use tax professionals. At Davis Davis & Harmon, LLC we are committed to maintaining the highest standards in our talent pool. We work hard to meet our clients’ needs by ensuring that you view our firm as an extension of your company and a member of your team.

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