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​Legislative changes for the 1% State Transient Room Tax, and Local Transient Room Taxes, effective 01/01/2023

Provisions included by the General Assembly in House Bill 8 expand the transient room tax to include stays at campgrounds and RV parks. In addition, the new statutory language requires those facilitating the rental of accommodations to collect the room tax on their total charges for the rental of accommodations. Also, receipts from a customer for a continuous stay of 30 days or more are excluded from the transient room tax. The new statewide transient room tax language is available at KRS 142.400.  The new local transient room tax language is available at KRS 91A.390, KRS 91A.392, KRS 153.440, and KRS 153.450.  

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Yes, those required to pay the taxes include “any person that facilitates the rental of the accommodations by brokering, coordinating, or in any other way arranging for the rental of the accommodations" and this provision includes short term rental platforms and OTCs.

This requirement applies to both the statewide transient room tax and local transient room taxes.

​Yes, the definition of “rent" includes “any charges for any services necessary to facilitate the rental of accommodations whether the amount is charged by the provider of the accommodations or by a person facilitating the rental of the accommodations." Therefore, the tax applies to fees and commissions charged by those that facilitate the rental of accommodations.​

​No, the hosts of local, short-term rental properties are not required to register or report their rental receipts for the statewide transient room tax if all their rentals are handled by online rental platforms. However, if the hosts receive any rent directly and not through a facilitator, then the hosts must register, report all rental receipts, and remit tax on the portion of receipts received directly from customers. The Department of Revenue offers an electronic statewide transient room tax return that provides guidance on how to report on all rental receipts.

​Yes, all charges listed above meet the definition of “rent" as charges related to and part of the total rental of accommodations and, therefore, are subject to the tax even if separately stated on the customer's bill.​

​No, the calculation of the transient room tax on the rent does not include any local or state taxes paid by the person or entity renting the accommodations. See KRS 142.400(3). However, gross receipts subject to the state sales tax include all local fees and taxes not imposed directly on the customer but that are passed on to the customer as part of the charge for the accommodations. Therefore, the 6% state sales tax applies to the total sales price for the accommodations charged to the customer, which includes any local transient room taxes or local assessments. See KRS 139.010(17).

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​As of January 1, 2023, charges for the rental of accommodations for a continuous period of 30 days or more are exempt from both the statewide and local transient room taxes. Therefore, charges for the first 29 days of a continuous stay of 30 days or more are also exempt.​

​The exemption for continuous stays of 30 or more days does not require the same employee to occupy the room or rooms a company has booked.  However, the same room or rooms must be booked and paid for by the company throughout the 30-day or more continuous period, even if the room or rooms happen to be vacant for certain nights of the continuous period.​

​Yes, the payment for campground or RV park access is considered a rental of accommodations subject to the transient room tax.  However, the rent for a specific campsite or RV park space for a continuous rental period of 30 days or more, where the specific site is exclusively occupied by or reserved for that single customer's use for the entire rental period, is excluded from the transient room tax.

​The transient room taxes are imposed upon the persons providing or facilitating the accommodations regardless of the tax status of the customers; therefore, there are no exemptions from the tax due on the rental receipts.

​No, federal entities are not subject to state and local taxes.  However, if a third party is under contract with the federal government to operate the federal facilities or facilitates the rental of the accommodation, then the third party is liable for the state and local transient taxes on the rental charges to customers.​

​HB 8 did not impact the application of the statewide transient room tax to houseboats.  Since its enactment in 2005, rent for houseboat accommodations provided from either a fixed position or under terms that prohibit the customer from navigating the boat is subject to the statewide transient room tax.  In contrast, rentals of watercraft leaving the boat dock, navigating the waterway, or moving about for recreational purposes are not subject to the statewide transient room tax.  ​

​Yes, these rental charges are considered the sale of accommodations with the facilities used primarily for the purpose of lodging​.

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