HB173: making technical corrections relative to the exception from the meals and rooms tax for gratuities.

CHAPTER 249

HB 173 - FINAL VERSION

06mar03... 0225h

06/05/03 1845s

24jun03... 2120CofC

2003 SESSION

03-0568

09/10

HOUSE BILL 173

AN ACT making technical corrections relative to the exception from the meals and rooms tax for gratuities.

SPONSORS: Rep. Major, Rock 79

COMMITTEE: Ways and Means

ANALYSIS

This bill makes technical corrections relative to the exception from the meals and rooms tax for gratuities.

This bill was requested by the department of revenue administration.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

06mar03... 0225h

06/05/03 1845s

24jun03... 2120CofC

03-0568

09/10

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Three

AN ACT making technical corrections relative to the exception from the meals and rooms tax for gratuities.

Be it Enacted by the Senate and House of Representatives in General Court convened:

249:1 Exception from Meals and Rooms Tax; Gratuities. RSA 78-A:6-a, II-VI are repealed and reenacted to read as follows:

II. Gratuity charges added to the charge for a taxable meal or taxable room shall not be taxed under this chapter if:

(a) The gratuity is not used by the operator in lieu of the tipped employee minimum wage requirements of RSA 279:21, or as a pool from which bonuses are paid to managerial personnel;

(b) The gratuity is paid to the service personnel providing the service for which the gratuity is charged;

(c) The amount of the gratuity does not exceed 18 percent of the charge for the taxable meal and/or rent imposed on each occupancy;

(d) The gratuity exceeds the percentage specified in subparagraph (c) and the amount is not separately stated, the exception from tax shall be limited to the percentage enumerated and the additional gratuity shall be subject to tax; and

(e) The payroll or other business records of the operator substantiate the distribution of the gratuity to the service employees as a payment that does not supplement wages or is not in lieu of wages.

III. Gratuity charges arranged by written contract between operators and motorcoach service providers or other businesses making group purchases on behalf of purchasers or occupants shall not be taxed under this chapter if the requirements of RSA 78-A:6-a, II are met.

IV. Gratuity charges included in package arrangements offered by hotels to purchasers or occupants, which are not arranged by written contract between operators and motorcoach service providers or other businesses making group purchases on behalf of purchasers or occupants, shall not be taxed under this chapter if the requirements of RSA 78-A:6-a, II are met.

V. The amount of any gratuity charge excepted from tax by RSA 78-A:6-a, II, III, or IV shall be limited to that amount actually received by the service personnel providing the service for which such gratuity is charged.

VI. Any auxiliary charges, not including gratuity charges, such as, but not limited to, service charges, house charges, management fees, or housekeeping charges, added to the charge for a taxable meal or taxable room, shall not be taxed under this chapter if:

(a) The taxable meal or taxable room rental may be purchased without such auxiliary charges at the option of the purchaser or occupant; and

(b) The amount of the auxiliary charge is separately stated on the contract or receipt.

VII. The portion of a single aggregate charge allocated to items which are not customarily associated with the purchase of a taxable room or taxable meal, including but not limited to ski lift tickets, boat ride fees, amusement park admission tickets, theater tickets, or other similarly packaged items shall not be taxable if:

(a) The packaged item or service is not part of the operator's standard room rental or meal and the allocated cost of the package item or service is equal to the amount paid to an outside vendor or the allocated cost of the package item or service is the amount over and above the amount which a consumer would be ordinarily charged for the room rental and/or meal had the consumer purchased the room or meal without the packaged item or service;

(b) The allocated cost of the package for gratuities meets the requirements of RSA 78-A:6-a, II; and

(c) The operator's business records provide the documentation necessary for the department to determine the allocation of costs and the proper application of the tax.

249:2 Collection of Tax. Amend RSA 78-A:7, I to read as follows:

I.(a) The operator shall either state the amount of the tax to each occupant, purchaser of a meal, or renter, or state that the tax is included in the price of the occupancy, meal, or gross rental receipts received. If the amount of the gratuity is not separately stated, the purchaser's or occupant's contract or receipt shall include the following language:

"The 8 percent tax on meals and rooms is included for the costs of meals and lodging only."

(b) The operator shall demand and collect the tax from the occupant, purchaser, or renter. The occupant, purchaser, or renter shall pay the tax to the operator. If the tax is included in the price of the meal, occupancy, or gross rental receipts received, upon request the operator shall state to the purchaser, occupant, or renter the amount of the tax.

249:3 Effective Date. This act shall take effect July 1, 2003.

(Approved: July 14, 2003)

(Effective Date: July 1, 2003)