SB3496 103RD GENERAL ASSEMBLY

 


 
103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB3496

 

Introduced 2/9/2024, by Sen. Cristina Castro

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 145/2  from Ch. 120, par. 481b.32
35 ILCS 145/3  from Ch. 120, par. 481b.33
35 ILCS 145/3-2 new
35 ILCS 145/3-3 new
35 ILCS 145/4  from Ch. 120, par. 481b.34
35 ILCS 145/5  from Ch. 120, par. 481b.35
35 ILCS 145/6  from Ch. 120, par. 481b.36

    Amends the Hotel Operators' Occupation Tax Act. Provides that re-renters of hotel rooms who meet certain criteria related to gross receipts or number of transactions are required to collect and remit the tax under the Act. Effective immediately.


LRB103 37940 HLH 68072 b

 

 

A BILL FOR

 

SB3496LRB103 37940 HLH 68072 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Hotel Operators' Occupation Tax Act is
5amended by changing Sections 2, 3, 4, 5, and 6 and by adding
6Sections 3-2 and 3-3 as follows:
 
7    (35 ILCS 145/2)  (from Ch. 120, par. 481b.32)
8    Sec. 2. Definitions. As used in this Act, unless the
9context otherwise requires:
10    (1) "Hotel" means any building or buildings in which the
11public may, for a consideration, obtain living quarters,
12sleeping or housekeeping accommodations. The term includes,
13but is not limited to, inns, motels, tourist homes or courts,
14lodging houses, rooming houses and apartment houses, retreat
15centers, conference centers, and hunting lodges.
16    (2) "Operator" means any person engaged in the business of
17renting, leasing, or letting rooms in operating a hotel.
18    (3) "Occupancy" means the use or possession, or the right
19to the use or possession, of any room or rooms in a hotel for
20any purpose, or the right to the use or possession of the
21furnishings or to the services and accommodations accompanying
22the use and possession of the room or rooms.
23    (4) "Room" or "rooms" means any living quarters, sleeping

 

 

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1or housekeeping accommodations.
2    (5) "Permanent resident" means any person who occupied or
3has the right to occupy any room or rooms, regardless of
4whether or not it is the same room or rooms, in a hotel for at
5least 30 consecutive days.
6    (6) "Rent" or "rental" means the consideration received
7for occupancy, valued in money, whether received in money or
8otherwise, including all receipts, cash, credits and property
9or services of any kind or nature."Rent" or "rental" includes
10any fee, charge, or commission received by a re-renter of
11hotel rooms specifically in connection with the re-rental of
12hotel rooms.
13    (7) "Department" means the Department of Revenue.
14    (8) "Person" means any natural individual, firm,
15partnership, association, joint stock company, joint
16adventure, public or private corporation, limited liability
17company, or a receiver, executor, trustee, guardian or other
18representative appointed by order of any court.
19    (9) "Re-renter of hotel rooms" means a person who is not
20employed by the hotel operator but who (i) obtains from the
21hotel operator the right or authority to grant control of,
22access to, or occupancy of a hotel room in this State to a
23guest of the hotel or (ii) facilitates the booking of a hotel
24room located in this State. A person who obtains those rights
25or authorities from the hotel operator is not considered a
26re-renter of a hotel room if the person operates under a shared

 

 

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1hotel brand with the operator.
2(Source: P.A. 100-213, eff. 8-18-17.)
 
3    (35 ILCS 145/3)  (from Ch. 120, par. 481b.33)
4    Sec. 3. Rate; exemptions.
5    (a) A tax is imposed upon hotel operators persons engaged
6in the business of renting, leasing or letting rooms in a hotel
7at the rate of 5% of 94% of the gross rental receipts from
8engaging in business as a hotel operator such renting, leasing
9or letting, excluding, however, from gross rental receipts,
10the proceeds of such renting, leasing or letting hotel rooms
11to permanent residents of a that hotel and proceeds from the
12tax imposed under subsection (c) of Section 13 of the
13Metropolitan Pier and Exposition Authority Act.
14    (b) There shall be imposed an additional tax upon hotel
15operators persons engaged in the business of renting, leasing
16or letting rooms in a hotel at the rate of 1% of 94% of the
17gross rental receipts received by the hotel operator from
18engaging in business as a hotel operator from such renting,
19leasing or letting, excluding, however, from gross rental
20receipts, the proceeds of such renting, leasing or letting to
21permanent residents of that hotel and proceeds from the tax
22imposed under subsection (c) of Section 13 of the Metropolitan
23Pier and Exposition Authority Act.
24    (b-5) Beginning on January 1, 2025, if the renting,
25leasing, or letting of a hotel room is done through a re-renter

 

 

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1of hotel rooms who meets either of the following thresholds,
2then, subject to the provisions of Section 3-2 and 3-3, the
3re-renter is considered the hotel operator for the purposes of
4the taxes under subsections (a) and (b):
5        (1) the cumulative gross receipts from rentals in
6    Illinois by the re-renter of hotel rooms are $100,000 or
7    more; or
8        (2) the re-renter of hotel rooms cumulatively enters
9    into 200 or more separate transactions for rentals in
10    Illinois.
11    A re-renter of hotel rooms shall determine on a quarterly
12basis, ending on the last day of March, June, September, and
13December, whether he or she meets the threshold of either
14paragraph (1) or (2) of this subsection (b-5) for the
15preceding 12-month period. If the re-renter of hotel rooms
16meets the threshold of either paragraph (1) or (2) for a
1712-month period, he or she is subject to tax under this Act and
18is required to remit the tax imposed under this Act and file
19returns for the 12-month period beginning on the first day of
20the next month after he or she determines that he or she meets
21the threshold of paragraph (1) or (2). At the end of that
2212-month period, the re-renter of hotel rooms shall determine
23whether he or she continued to meet the threshold of either
24paragraph (1) or (2) during the preceding 12-month period. If
25he or she met the threshold in either paragraph (1) or (2) for
26the preceding 12-month period, he or she is considered a hotel

 

 

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1operator in this State and is required to remit the tax imposed
2under this Act and file returns for the subsequent 12-month
3period. If, at the end of a 12-month period during which a
4re-renter is required to remit the tax imposed under this Act,
5the re-renter determines that he or she did not meet the
6threshold in either paragraph (1) or (2) during the preceding
712-month period, he or she shall subsequently determine on a
8quarterly basis, ending on the last day of March, June,
9September, and December, whether he or she meets the threshold
10of either paragraph (1) or (2) for the preceding 12-month
11period.
12    (c) No funds received pursuant to this Act shall be used to
13advertise for or otherwise promote new competition in the
14hotel business.
15    (d) However, such tax is not imposed upon the privilege of
16engaging in any business in Interstate Commerce or otherwise,
17which business may not, under the Constitution and Statutes of
18the United States, be made the subject of taxation by this
19State. In addition, the tax is not imposed upon gross rental
20receipts for which the hotel operator is prohibited from
21obtaining reimbursement for the tax from the customer by
22reason of a federal treaty.
23    (d-5) On and after July 1, 2017, the tax imposed by this
24Act shall not apply to gross rental receipts received by an
25entity that is organized and operated exclusively for
26religious purposes and possesses an active Exemption

 

 

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1Identification Number issued by the Department pursuant to the
2Retailers' Occupation Tax Act when acting as a hotel operator
3renting, leasing, or letting rooms:
4        (1) in furtherance of the purposes for which it is
5    organized; or
6        (2) to entities that (i) are organized and operated
7    exclusively for religious purposes, (ii) possess an active
8    Exemption Identification Number issued by the Department
9    pursuant to the Retailers' Occupation Tax Act, and (iii)
10    rent the rooms in furtherance of the purposes for which
11    they are organized.
12    No gross rental receipts are exempt under paragraph (2) of
13this subsection (d-5) unless the hotel operator obtains the
14active Exemption Identification Number from the exclusively
15religious entity to whom it is renting and maintains that
16number in its books and records. Gross rental receipts from
17all rentals other than those described in items (1) or (2) of
18this subsection (d-5) are subject to the tax imposed by this
19Act unless otherwise exempt under this Act.
20    This subsection (d-5) is exempt from the sunset provisions
21of Section 3-5 of this Act.
22    (d-10) On and after July 1, 2023, the tax imposed by this
23Act shall not apply to gross rental receipts received from the
24renting, leasing, or letting of rooms to an entity that is
25organized and operated exclusively by an organization
26chartered by the United States Congress for the purpose of

 

 

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1providing disaster relief and that possesses an active
2Exemption Identification Number issued by the Department
3pursuant to the Retailers' Occupation Tax Act if the renting,
4leasing, or letting of the rooms is in furtherance of the
5purposes for which the exempt organization is organized. This
6subsection (d-10) is exempt from the sunset provisions of
7Section 3-5 of this Act.
8    (e) Persons subject to the tax imposed by this Act may
9reimburse themselves for their tax liability under this Act by
10separately stating such tax as an additional charge, which
11charge may be stated in combination, in a single amount, with
12any tax imposed pursuant to Sections 8-3-13 and 8-3-14 of the
13Illinois Municipal Code, and Section 25.05-10 of "An Act to
14revise the law in relation to counties".
15    (f) If any hotel operator collects an amount (however
16designated) which purports to reimburse such operator for
17hotel operators' occupation tax liability measured by receipts
18which are not subject to hotel operators' occupation tax, or
19if any hotel operator, in collecting an amount (however
20designated) which purports to reimburse such operator for
21hotel operators' occupation tax liability measured by receipts
22which are subject to tax under this Act, collects more from the
23guest customer than the operators' hotel operators' occupation
24tax liability in the transaction is, the guest customer shall
25have a legal right to claim a refund of such amount from such
26operator. However, if such amount is not refunded to the guest

 

 

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1customer for any reason, the hotel operator is liable to pay
2such amount to the Department.
3(Source: P.A. 103-9, eff. 6-7-23.)
 
4    (35 ILCS 145/3-2 new)
5    Sec. 3-2. No resale exemption; tax incurred by re-renters
6of hotel rooms. A hotel operator who rents, leases, or lets
7rooms subject to tax under this Act to a re-renter of hotel
8rooms incurs the tax under this Act on the gross rental
9receipts it receives from that re-renter of hotel rooms and
10cannot claim any resale exemption. In such situations, the
11re-renter of hotel rooms incurs tax under this Act on its gross
12rental receipts as provided in Section 3 of this Act.
 
13    (35 ILCS 145/3-3 new)
14    Sec. 3-3. Re-renter of hotel rooms; credit for tax
15reimbursement. A re-renter of hotel rooms may take a credit
16against the tax it incurs on the rental of a hotel room under
17this Act for the amount it paid under subsection (f) of Section
183 of this Act to a hotel operator as reimbursement for the tax
19incurred under this Act for the rental of that room for the
20purposes of re-rental.
 
21    (35 ILCS 145/4)  (from Ch. 120, par. 481b.34)
22    Sec. 4. Books and records. Every operator shall keep
23separate books or records of his business as an operator so as

 

 

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1to show the rents and occupancies taxable under this Act
2separately from his transactions not taxable under this Act.
3If any operator fails to keep such separate books or records,
4he shall be liable to tax at the rate designated in Section 3
5hereof upon the entire proceeds from his business hotel. The
6Department may adopt rules that establish requirements,
7including record forms and formats, for records required to be
8kept and maintained by taxpayers. For purposes of this
9Section, "records" means all data maintained by the taxpayer,
10including data on paper, microfilm, microfiche or any type of
11machine-sensible data compilation.
12(Source: P.A. 88-480.)
 
13    (35 ILCS 145/5)  (from Ch. 120, par. 481b.35)
14    Sec. 5. Certificate of registration; retailers' occupation
15tax registration provisions apply. It shall be unlawful for
16any person to engage in the business as a hotel operator of
17renting, leasing or letting rooms in a hotel in this State
18without a certificate of registration from the Department.
19    All of the provisions of Sections 2a and 2b of the
20Retailers' Occupation Tax Act, in effect on the effective date
21of this Act, as subsequently amended, shall apply to persons
22in the business as hotel operators of renting, leasing or
23letting rooms in a hotel in this State, to the same extent as
24if such provisions were included herein.
25(Source: Laws 1961, p. 1728.)
 

 

 

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1    (35 ILCS 145/6)  (from Ch. 120, par. 481b.36)
2    Sec. 6. Returns; allocation of proceeds Filing of returns
3and distribution of revenue. Except as provided hereinafter in
4this Section, on or before the last day of each calendar month,
5every person engaged as a hotel operator in the business of
6renting, leasing or letting rooms in a hotel in this State
7during the preceding calendar month shall file a return with
8the Department, stating:
9        1. The name of the operator;
10        2. His residence address and the address of his
11    principal place of business and the address of the
12    principal place of business (if that is a different
13    address) from which he engages in the business as a hotel
14    operator of renting, leasing or letting rooms in a hotel
15    in this State (including, if required by the Department,
16    the address of each hotel from which rental receipts were
17    received);
18        3. Total amount of rental receipts received by him
19    during the preceding calendar month from engaging in
20    business as a hotel operator renting, leasing or letting
21    rooms during such preceding calendar month;
22        4. Total amount of rental receipts received by him
23    during the preceding calendar month from renting, leasing
24    or letting rooms to permanent residents during such
25    preceding calendar month;

 

 

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1        5. Total amount of other exclusions from gross rental
2    receipts allowed by this Act;
3        6. Gross rental receipts which were received by him
4    during the preceding calendar month and upon the basis of
5    which the tax is imposed;
6        7. The amount of tax due;
7        8. Credit for any reimbursement of tax paid by a
8    re-renter of hotel rooms to hotel operators for rentals
9    purchased for re-rental, as provided in Section 3-3 of
10    this Act;
11        9. 8. Such other reasonable information as the
12    Department may require.
13    If the operator's average monthly tax liability to the
14Department does not exceed $200, the Department may authorize
15his returns to be filed on a quarter annual basis, with the
16return for January, February and March of a given year being
17due by April 30 of such year; with the return for April, May
18and June of a given year being due by July 31 of such year;
19with the return for July, August and September of a given year
20being due by October 31 of such year, and with the return for
21October, November and December of a given year being due by
22January 31 of the following year.
23    If the operator's average monthly tax liability to the
24Department does not exceed $50, the Department may authorize
25his returns to be filed on an annual basis, with the return for
26a given year being due by January 31 of the following year.

 

 

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1    Such quarter annual and annual returns, as to form and
2substance, shall be subject to the same requirements as
3monthly returns.
4    Notwithstanding any other provision in this Act concerning
5the time within which an operator may file his return, in the
6case of any operator who ceases to engage in a kind of business
7which makes him responsible for filing returns under this Act,
8such operator shall file a final return under this Act with the
9Department not more than 1 month after discontinuing such
10business.
11    Where the same person has more than 1 business registered
12with the Department under separate registrations under this
13Act, such person shall not file each return that is due as a
14single return covering all such registered businesses, but
15shall file separate returns for each such registered business.
16    In his return, the operator shall determine the value of
17any consideration other than money received by him in
18connection with engaging in business as a hotel operator the
19renting, leasing or letting of rooms in the course of his
20business and he shall include such value in his return. Such
21determination shall be subject to review and revision by the
22Department in the manner hereinafter provided for the
23correction of returns.
24    Where the operator is a corporation, the return filed on
25behalf of such corporation shall be signed by the president,
26vice-president, secretary or treasurer or by the properly

 

 

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1accredited agent of such corporation.
2    The person filing the return herein provided for shall, at
3the time of filing such return, pay to the Department the
4amount of tax herein imposed. The operator filing the return
5under this Section shall, at the time of filing such return,
6pay to the Department the amount of tax imposed by this Act
7less a discount of 2.1% or $25 per calendar year, whichever is
8greater, which is allowed to reimburse the operator for the
9expenses incurred in keeping records, preparing and filing
10returns, remitting the tax and supplying data to the
11Department on request.
12    If any payment provided for in this Section exceeds the
13operator's liabilities under this Act, as shown on an original
14return, the Department may authorize the operator to credit
15such excess payment against liability subsequently to be
16remitted to the Department under this Act, in accordance with
17reasonable rules adopted by the Department. If the Department
18subsequently determines that all or any part of the credit
19taken was not actually due to the operator, the operator's
20discount shall be reduced by an amount equal to the difference
21between the discount as applied to the credit taken and that
22actually due, and that operator shall be liable for penalties
23and interest on such difference.
24    There shall be deposited into the Build Illinois Fund in
25the State Treasury for each State fiscal year 40% of the amount
26of total net revenue from the tax imposed by subsection (a) of

 

 

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1Section 3. Of the remaining 60%: (i) $5,000,000 shall be
2deposited into the Illinois Sports Facilities Fund and
3credited to the Subsidy Account each fiscal year by making
4monthly deposits in the amount of 1/8 of $5,000,000 plus
5cumulative deficiencies in such deposits for prior months, and
6(ii) an amount equal to the then applicable Advance Amount
7shall be deposited into the Illinois Sports Facilities Fund
8and credited to the Advance Account each fiscal year by making
9monthly deposits in the amount of 1/8 of the then applicable
10Advance Amount plus any cumulative deficiencies in such
11deposits for prior months. (The deposits of the then
12applicable Advance Amount during each fiscal year shall be
13treated as advances of funds to the Illinois Sports Facilities
14Authority for its corporate purposes to the extent paid to the
15Authority or its trustee and shall be repaid into the General
16Revenue Fund in the State Treasury by the State Treasurer on
17behalf of the Authority pursuant to Section 19 of the Illinois
18Sports Facilities Authority Act, as amended. If in any fiscal
19year the full amount of the then applicable Advance Amount is
20not repaid into the General Revenue Fund, then the deficiency
21shall be paid from the amount in the Local Government
22Distributive Fund that would otherwise be allocated to the
23City of Chicago under the State Revenue Sharing Act.)
24    For purposes of the foregoing paragraph, the term "Advance
25Amount" means, for fiscal year 2002, $22,179,000, and for
26subsequent fiscal years through fiscal year 2033, 105.615% of

 

 

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1the Advance Amount for the immediately preceding fiscal year,
2rounded up to the nearest $1,000.
3    Of the remaining 60% of the amount of total net revenue
4beginning on August 1, 2011 through June 30, 2023, from the tax
5imposed by subsection (a) of Section 3 after all required
6deposits into the Illinois Sports Facilities Fund, an amount
7equal to 8% of the net revenue realized from this Act during
8the preceding month shall be deposited as follows: 18% of such
9amount shall be deposited into the Chicago Travel Industry
10Promotion Fund for the purposes described in subsection (n) of
11Section 5 of the Metropolitan Pier and Exposition Authority
12Act and the remaining 82% of such amount shall be deposited
13into the Local Tourism Fund each month for purposes authorized
14by Section 605-705 of the Department of Commerce and Economic
15Opportunity Law. Beginning on August 1, 2011 and through June
1630, 2023, an amount equal to 4.5% of the net revenue realized
17from this Act during the preceding month shall be deposited as
18follows: 55% of such amount shall be deposited into the
19Chicago Travel Industry Promotion Fund for the purposes
20described in subsection (n) of Section 5 of the Metropolitan
21Pier and Exposition Authority Act and the remaining 45% of
22such amount deposited into the International Tourism Fund for
23the purposes authorized in Section 605-707 of the Department
24of Commerce and Economic Opportunity Law. "Net revenue
25realized" means the revenue collected by the State under this
26Act less the amount paid out as refunds to taxpayers for

 

 

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1overpayment of liability under this Act.
2    Beginning on July 1, 2023, of the remaining 60% of the
3amount of total net revenue realized from the tax imposed
4under subsection (a) of Section 3, after all required deposits
5into the Illinois Sports Facilities Fund:
6        (1) an amount equal to 8% of the net revenue realized
7    under this Act for the preceding month shall be deposited
8    as follows: 82% to the Local Tourism Fund and 18% to the
9    Chicago Travel Industry Promotion Fund; and
10        (2) an amount equal to 4.5% of the net revenue
11    realized under this Act for the preceding month shall be
12    deposited as follows: 55% to the Chicago Travel Industry
13    Promotion Fund and 45% to the International Tourism Fund.
14    After making all these deposits, any remaining net revenue
15realized from the tax imposed under subsection (a) of Section
163 shall be deposited into the Tourism Promotion Fund in the
17State Treasury. All moneys received by the Department from the
18additional tax imposed under subsection (b) of Section 3 shall
19be deposited into the Build Illinois Fund in the State
20Treasury.
21    The Department may, upon separate written notice to a
22taxpayer, require the taxpayer to prepare and file with the
23Department on a form prescribed by the Department within not
24less than 60 days after receipt of the notice an annual
25information return for the tax year specified in the notice.
26Such annual return to the Department shall include a statement

 

 

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1of gross receipts as shown by the operator's last State income
2tax return. If the total receipts of the business as reported
3in the State income tax return do not agree with the gross
4receipts reported to the Department for the same period, the
5operator shall attach to his annual information return a
6schedule showing a reconciliation of the 2 amounts and the
7reasons for the difference. The operator's annual information
8return to the Department shall also disclose payroll
9information of the operator's business during the year covered
10by such return and any additional reasonable information which
11the Department deems would be helpful in determining the
12accuracy of the monthly, quarterly or annual tax returns by
13such operator as hereinbefore provided for in this Section.
14    If the annual information return required by this Section
15is not filed when and as required the taxpayer shall be liable
16for a penalty in an amount determined in accordance with
17Section 3-4 of the Uniform Penalty and Interest Act until such
18return is filed as required, the penalty to be assessed and
19collected in the same manner as any other penalty provided for
20in this Act.
21    The chief executive officer, proprietor, owner or highest
22ranking manager shall sign the annual return to certify the
23accuracy of the information contained therein. Any person who
24willfully signs the annual return containing false or
25inaccurate information shall be guilty of perjury and punished
26accordingly. The annual return form prescribed by the

 

 

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1Department shall include a warning that the person signing the
2return may be liable for perjury.
3    The foregoing portion of this Section concerning the
4filing of an annual information return shall not apply to an
5operator who is not required to file an income tax return with
6the United States Government.
7(Source: P.A. 102-16, eff. 6-17-21; 103-8, eff. 6-7-23.)
 
8    Section 999. Effective date. This Act takes effect upon
9becoming law.