University of Illinois System
Policies & Procedures

18.7 Hotel Operators' Occupation Tax

Note: The purpose of this policy is to inform University of Illinois System employees and other system-related individuals about relevant tax issues. This policy does not constitute legal or tax advice. Individuals should consult with their attorneys or tax professionals for advice on personal issues.

This policy applies to both the State of Illinois Hotel Operators' Occupation Tax, and to local taxing authority requirements, when University of Illinois System housing facilities are rented, leased, or let to individuals, and occupied by them for less than 30 consecutive days. The system is not exempt from paying state and local hotel operators' occupation tax assessed by governmental entities. 

The Hotel Operators' Occupation Tax is imposed on receipts from the business of renting, leasing, or letting room as described above. As of October 1, 2011, this state tax is collected from customers at a rate of 6%. University Accounting Services (UAS) reports this tax to the Illinois Department of Revenue at a rate of 6% of 94% of the total gross receipts that includes the tax (i.e. 5.64%).

In accordance with 65 Illinois Compiled Statutes (ILCS) 80, the system is subject to municipal hotel room tax. Local Hotel/Motel Use taxes, which are imposed on these same receipts, are paid directly to the local taxing authority (i.e., the City of Urbana). As of May 1, 2016, the City of Urbana Hotel/Motel Use tax is 7%. Municipal tax is not imposed on the rental of living quarters in dormitories, which includes rentals for conferences whether or not it is a system-related event or other scenarios where individuals rent dormitory space.

If payment is collected when services are rendered, units must use the Report of Cash Sales/Money Received form to report cash sales and deposit the tax directly into the appropriate system tax clearing fund. The amount of each sale, and the tax collected, by location and amount, must be listed individually on the form.

Units with approval to extend credit and bill customers on account must process these transactions through Banner General Accounts Receivable (GAR), using unique detail codes to record each sale and report the tax collected by location and amount. Approval to conduct business on account is granted by contacting University Bursar Accounts Receivable Operations with a request for creation of a new detail code.

State and municipal hotel taxes for housing accommodations are not imposed on:

  • Individuals occupying the accommodations for more than 30 consecutive days.
  • Students attending summer camps and programs operated by the system and for which the system issues credit or other recognition, regardless of the length of the program.
  • Other units using the housing accommodations for system business purposes. Transfers within the system from one unit to another are generally not considered sales of rooms for use by employees or guests (for example, lodging for a system recruit), and are, therefore, not taxable. The Illinois Department of Revenue (IDOR) refers to this type of situation as a "wash-out."

    However, transfers to departmental self-supporting funds in situations where the system is not the end-user (for example, lodging that is included in a conference registration fee where an outside individual is the end user, or lodging provided to the general public) are generally taxable transactions. Units are responsible for identifying whether or not the system is the end user.

UAS reports and remits collected hotel taxes to the IDOR monthly (via Electronic Funds Transfer (EFT) payment), and to any other state, county, or municipality (monthly check sent to the City of Urbana) as required by law. IDOR Form RHM-1, Hotel Operators' Occupation Tax Return , is filed monthly and is due the last day of the following month. The City of Urbana Hotel-Motel Tax Return is also filed monthly and is due the fifteenth day of the following month.

Helpful Resources - Additional information can be found at the Hotel Operators' Occupation Tax Act: 35 ILCS 145 ; 65 ILCS 80; the IDOR Regulations: 86 Ill. Adm. Code 480 ; IDOR's Web site; and, the Urbana Municipal Code Chapter 22 Article V.

Contact Office of Treasury Operations, Tax Compliance and Analysis 217-244-8359 or University Accounting Services 217-333-4568 with questions.

Last Updated: April 3, 2020 | Approved: Senior Associate Vice President for Business and Finance | Effective: October 2011