ILLINOIS REGISTER 4024
09
DEPARTMENT OF REVENUE
NOTICE OF ADOPTED AMENDMENTS
object of this transaction is deemed to be the rental of the room and any food and
beverages provided are incidental to the renting of the room. In this transaction,
the hotel incurs Retailers' Occupation Tax on the charge for sale of the coffee, tea,
soft drinks and cookies. The gross receipts subject to Retailers' Occupation Tax
do not include the separate charge for the rental of the room.
EXAMPLE 3: A person rents a room for a wedding reception from a hotel, but
that person separately contracts for the food and beverages with a caterer instead
of the hotel. The contract between the hotel and the customer did not specify any
particular caterers. The true object of the transaction is deemed to be the rental of
the room since the caterer and not the hotel provides the food and beverages. No
Retailers' Occupation Tax is incurred on the hotel's rental charges in this instance.
g) True Object – Sale of Food and Beverages
The Department deems the providing of any food other than snacks to be the true
object of the transaction and not the rental of the room. If alcoholic beverages are
either provided or sold by the rentor to the persons attending the event for which
the room is rented, the true object of the transaction will always be deemed the
sale of food or beverages and not the rental of the room. If the rental contract
requires that the alcoholic beverages or the food and other beverages be provided
or sold by a specific third party or from a choice of providers specified by the
rentor, the rentor shall be deemed to be the provider of those alcoholic beverages,
food and other beverages for purposes of determining the taxation of the room
rental charge.
EXAMPLE 1: A person contracts for the rental of a meeting room at a hotel for a
business luncheon. As part of the contract, the hotel agrees to provide coffee, tea,
soda, soup, sandwiches and various desserts to the participants of the luncheon
meeting for no extra charge. The true object of this transaction is deemed to be
the sale of food and beverages and not the rental of the room. The hotel incurs
Retailers' Occupation Tax on its gross receipts from the sale of the food and
beverages, including the charges for the rental of the room.
EXAMPLE 2: A person contracts for the rental of a meeting room at a hotel for a
business after hours gathering with a speaker from a local business group. The
hotel provides snacks and non-alcoholic beverages for a separately stated charge
as part of the contract. The hotel provides for a bartender and agrees to sell
alcoholic beverages to the participants at the gathering. The true object of this
transaction is deemed to be the sale of food and beverages and not the rental of
