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Hotel transient taxes were first instituted in New York City in 1946 to help the city recover from the effects of World War Two and was originally planned for two years only. Since then nearly every major city in America has levied a transient room tax, most of these are to raise funds to stimulate the tourism industry.

In Kentucky, the state legislature has to pass a statute (KRS91A) authorizing counties to

impose a transient tax. Next the county government must levy the tax. The table below shows how Jefferson County defined the uses for the Transient Tax. Because the tax is imposed on the proprietor, it is considered part of the Total Sale Price of the room. When calculating your sales tax gross receipts you must include the amount of money you collected for Jefferson County Transient Tax.

This tax is imposed on the proprietor of the motel, hotel, etc., not the guest-occupant, for all persons or companies who rent a suite or room for a period of less than 30 consecutive days. The return is due the last day of the month that follows the month of the tenancy. (Note: The Transient Room Tax was increased from 6% to 7.5% by Jefferson County Court Ordinance 21, series 2002 with an effective date of July 15, 2002.)

(Below is a message from the Kentucky Hotel and Lodging Association concerning the new 1% tax:)

A new section of KRS Chapter 142 creates the transient room tax which is imposed at a rate of 1% of rent, on every occupancy of any suite, room, rooms, or cabins charged by all persons, companies, corporations, groups, or organizations doing business as motor courts, motels, hotels, inns, TOURIST CAMPS or like or similar accommodation businesses. (Note the addition of Tourist Camps, a new category for the statewide tax). Tax receipts from this tax will be deposited into the Tourism, Meeting and Convention Marketing Fund which is administered by the Commerce Cabinet.

The Transient Room Tax is in addition to the current 6 percent sales tax and any locally assessed transient room tax and will be reported separately each month on Form 73A850 Transient Room Tax Monthly Return. The 1% Transient Room Tax will be reported for sales and use tax purposes just as the locally assessed transient room tax is currently reported.

The tax became effective June 1, 2005. The tax on receipts up to June 30 will be due at the Revenue Cabinet by July 20. Thus taxes calculated at the end of each month will be due by the 20th of the month following.

Funds collected will be put into a separate restricted fund and the funds will be made available to the Commerce Cabinet for the express purpose of promoting tourism and conventions. We are advised by the Revenue Cabinet that this is a permanent fund.


Tax as of June 2005

• 4.50% funding to LVCB
• 2.00% to pay off bonds – for 30 years or the retirement of all bonds
• 1.00% for operating funds - forever
  
• 1.00% Tourism, Meeting and Convention Marketing Fund
  
• 6.00% sales tax applies to the room rental plus any of the fees or taxes listed above.
  
  14.5% Total Tax