ILLINOIS REGISTER 4025
09
DEPARTMENT OF REVENUE
NOTICE OF ADOPTED AMENDMENTS
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 3: A person contracts with a hotel for the rental of a banquet room
for a wedding reception. As part of the contract, the hotel charges that person a
specific amount for each individual who attends the reception in exchange for
providing beverages and a buffet meal to those individuals. 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, which includes the specific charge for each
individual who attends the reception, along with any charges for the rental of the
room.
EXAMPLE 4: A person contracts with a hotel for a room for a cocktail reception.
The hotel's rental contract requires that all alcoholic beverages and food be
provided by a restaurant located on the hotel premises. The restaurant is a
separate legal entity from the hotel. Because the hotel's rental contract requires
the restaurant to provide the food and beverages, the hotel is considered to be the
provider of the food and beverages, for purposes of determining taxation of the
room charge. The true object of the transaction is the provision of food and
beverages, since alcoholic beverages and food are provided. As a result, the
hotel's charge for the room rental is subject to Retailers' Occupation Tax. The
restaurant is subject to Retailers' Occupation Tax on the sale of the alcoholic
beverages and food. If the hotel's rental contract had not required a specific third
party to provide food and beverages, the charges for the room rental would not be
subject to tax.
h) Other Charges
Charges that are related to the provision of food or beverages are always part of
the gross receipts from the sale of the food or beverages. The reason the charges
are part of the gross receipts subject to tax is because those charges are part of a
seller's costs of doing business and are not deductible from a seller's gross
receipts. See Section 130.410 of this Part. Examples of charges that are related to
the provision of food and beverages include, but are not limited to, fees for food
serving or carving and corkage, and charges for linens, chairs, tables, dishes,
glassware, flowers and centerpieces. Examples of charges that are not related to
the provision of food or beverages include, but are not limited to, charges for
