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Finance

Hotel Occupancy Privilege Tax

Definitions

"Hotel" means any structure, or any portion of any structure, which is occupied or intended or designed for occupancy by transients for dwelling, lodging or sleeping purposes within the area of the jurisdiction of the metropolitan government, and includes any hotel, inn, tourist court, tourist camp, tourist cabin, motel or any place in which rooms, lodgings or accommodations are furnished to transients for a consideration.

"Consideration" means the consideration charged, whether or not received, for the occupancy in a hotel valued in money whether to be received in money, goods, labor or otherwise, including all receipts, cash, credits, property and services of any kind or nature without any deduction therefrom whatsoever. Nothing in this definition shall be construed to imply that consideration is charged when the space provided to the person is complimentary from the operator and no consideration is charged to or received from any person.

"Occupancy" means the use or possession or the right to the use or possession, of any room, lodgings or accommodations in a hotel for a period of less than thirty continuous days.

"Transient" means any person who exercises occupancy or is entitled to occupancy for any rooms, lodgings or accommodations in a hotel for a period of less than thirty days. (Code of Ordinance 5.12.010)

"Short Term Rental Property (STRP)" means a residential dwelling unit containing not more than four sleeping rooms that is used and/or advertised for rent for transient occupancy by guests as those terms are defined in Section 5.12.010 of the metropolitan code. Residential dwelling units rented to the same occupant for more than 30 continuous days, Bed and breakfast establishments, boarding houses, hotels, and motels shall not be considered Short Term Rental Property. (Ordinance No. BL2014-951)

Legal Basis of Tax

There is levied a privilege tax upon the privilege of occupancy in any hotel of each transient in an amount of six percent of the consideration charged by the operator. The tax so imposed is a privilege tax upon the transient occupying such room and is to be collected and distributed as provided in this chapter. The proceeds from such tax shall be retained by the metropolitan government and distributed in accordance with T.C.A. § 7-4-110(b). The tax so imposed is a privilege tax upon the transient occupying the room of a hotel located within the territory of the metropolitan government. (Code of Ordinance 5.12.020)

In addition to any other tax or fee imposed pursuant to this chapter on the occupancy of the hotel room, there is hereby authorized an additional privilege tax of two dollars and fifty cents upon the occupancy of each hotel room within the territory of the metropolitan government. The tax so imposed is a privilege tax upon each occupied room for each night of occupancy and needs to be collected and distributed as provided in this article. (Code of Ordinance 5.12.120)

The occupancy privilege tax shall be added by each and every operator in each invoice prepared by the operator for occupancy of his hotel, such invoice to be given directly or transmitted to the transient, and shall be collected by such operator from the transient and remitted to the metropolitan department of finance. (Code of Ordinance 5.12.040)

Taxes collected by an operator which are not remitted to the tax collection official on or before the due dates are delinquent. An operator shall be liable for interest on such delinquent taxes from the due date at the rate of eight percent per year, and in addition, a penalty of one percent for each month or fraction thereof such taxes are delinquent. Such interest and penalty shall become a part of the tax required in this chapter to be remitted. Willful refusal of an operator to collect or remit the tax or willful refusal of a transient to pay the tax imposed is unlawful and shall constitute a misdemeanor. Any fine levied herein shall be applicable to each individual transaction involving lodging services paid by a customer to the operator in those cases when the operator fails or refuses to pay the tax payable. (Code of Ordinance 5.12.090)

Exemptions

The law provides for only two classes of exemptions. (1) A tenant who has occupied room space for thirty or more continuous days is not required to pay the tax after the thirtieth day. (2) Local, state or federal governmental agencies, when fees are paid by those agencies.

However, the law does NOT exempt private schools, corporations, fraternal organizations, religious groups, hospitals, private universities, members of military or representatives of foreign governments.

Hotel Occupancy Tax Audits

Based on a review of Hotel Occupancy Tax audits conducted from July 2013 thru June 2014, hotel operators are encouraged to implement the following recommendations.

  1. Documentation for room revenue, number of rooms rented, adjustments to revenue, justification for out of service rooms, and exemption claims should be retained for 36 months.
  2. Solicit independent Service Organization Control 1 Reports from computer lodging system service providers. This will help ensure the accuracy of financial and statics reports used to prepare hotel occupancy tax returns.

Both recommendations will assist in ensuring accuracy of information used to calculate and verify tax filings. (Hotel Occupancy Taxes - Fiscal Year 2013)

Frequently Asked Questions

Do I really have to collect and pay hotel occupancy taxes if I rent my residence short term (rental period of time under 30 days)?

State and local laws obligate a person who is renting a residential property or portion thereof for lodging for a period of time less than 30 days to pay a tourist accommodation tax,also called a hotel occupancy tax. The rate in Davidson County is 6% of the accommodation fee plus $2.50 per night of the stay.

If I rent my residence out for short term rental, am I required to obtain a business license?

You may be required to obtain a business license and pay an annual business tax. Please contact the Davidson County Clerk for more information:

http://www.nashvilleclerk.com/business/obtaining-a-business-license/

While you should consult with your attorney and your accountant for specific advice, the Tennessee Department of Revenue provides a wealth of resources for starting a small business in the State of Tennessee.

http://www.tn.gov/revenue/businessstartingnewbus.shtml

If I rent my residence out for a short term rental, am I required to collect and pay sales tax?

You may be required to collect and pay sales tax on the accommodation fee charged to your renters. Please contact the Tennessee Department of Revenue for more information:

http://www.tn.gov/revenue/faqs/salesandusefaq.shtml

While you should consult with your attorney and your accountant for specific advice, the Tennessee Department of Revenue provides a wealth of resources for starting a small business in the State of Tennessee.

http://www.tn.gov/revenue/businessstartingnewbus.shtml

I am a STRBO and I only rent my home as a whole unit. What should I put in Section 2 of the Hotel Occupancy Tax Return?

In Section 2 of the return form you are to list how many nights during the month you rented your property. That number multiplied by $2.50 is your total for Section 2.

If I am a church, a foundation or other tax exempt organization, am I exempt from hotel occupancy taxes?

No. There are only 2 classes of exemptions that DO NOT pay the hotel occupancy tax. (1) A tenant who has occupied room space for thirty or more continuous days is NOT required to pay the tax after the thirtieth day. (2) Local, state or federal governmental agencies, when paid by those agencies.

Does the Collections Office mail out monthly returns for Hotels?

No, monthly returns and exemption reports are available for download on the Hotel Occupancy page.

Is the exemption report required when submitting a hotel occupancy report?

Yes, if the exemption report is not submitted with the monthly return the exemption amount will not be allowed and a debit will be issued for the difference.

Forms

NOW ACCEPTING CREDIT CARDS!

A 2.3% convenience fee will be charged on all credit and debit card transactions. This fee is collected by a third party processor. Metro does not receive any portion of this fee.

Credit Card Authorization Form

All hotel returns are due to the Collections Office by the 20th of each month. The monthly returns are no longer mailed out so we have made them available for you to download. The returns and exemption reports must be filled out in its entirety and returned to the Collections Office. Please click on the links below to access the returns and exemption reports.

Hotel Occupancy Form

Hotel Occupancy Exemption Report

Hotel Interest Penalty Calculator

Mailing Address

Collections Office
P.O. Box 196300
Nashville, TN 37219-6300