Connecticut State Department of Revenue Services

Upcoming CT DRS webinar: Select to register for the upcoming Withholding Forms W-2 and 1099 Annual Filing Webinar on Wednesday, January 15, 2025, at 10:00 a.m.

Ruling 93-16, Room Occupancy Tax

FACTS:

A facility was formed as a for-profit health care provider, to provide rooms and beds on a short-term basis for patients recovering from diagnostic or surgical procedures, or who are receiving medical, chemical and/or radiological treatments (the "Medical Hotel"). Under the Standards of Operation adopted by the Connecticut Department of Health Services and the Medical Hotel, the Medical Hotel is administered by a physician and provides 24-hour nursing care along with a diet for each patient, serving at least three meals a day at regular hours. The Medical Hotel is also required under the Standards to provide a social work consultant, infection control procedures, emergency preparedness, and pharmaceutical services, as well as to meet structural specifications set forth in the Standards.

The Medical Hotel received a Certificate of Need from the Connecticut Commission on Hospitals and Health Care, as required under Conn. Gen. Stat. § 19a-154, but a delay of several years ensued before the Medical Hotel received a license under Conn. Gen. Stat. § 19a-490 from the Department of Health Services to operate one floor of the facility as a health care institution. During the period of such delay, the Medical Hotel collected and remitted the room occupancy tax.

ISSUE:

Whether the Medical Hotel, having received both a Certificate of Need from the Connecticut Commission on Hospitals and Health Care and a license to operate one floor of the facility as a health care institution from the Department of Health Services, must continue to collect and remit Connecticut room occupancy tax from patients on such floor pursuant to Conn. Gen. Stat. § 12-407(2)(h).

DISCUSSION:

Conn. Gen. Stat. § 12-407(2)(h) includes in the definition of "sale" and "selling" "a transfer for a consideration of the occupancy of any room or rooms in a hotel or lodging house ... for a period of thirty consecutive calendar days or less." Conn. Gen. Stat. § 12-407(16) defines "hotel" as:

any building regularly used and kept open as such for the feeding and lodging of guests where any person who conducts himself properly and who is able and ready to pay for such services is received if there are accomodations for him and which derives the major portion of its operating receipts from the renting of rooms and the sale of food. "Hotel" shall include any apartment hotel wherein apartments are rented for fixed periods of time, furnished or unfurnished, while the keeper of such hotel supplies food to the occupants thereof, if required.

Conn. Gen. Stat. § 12-407(17) defines "lodging house" as:

any building or portion of a building, other than a hotel or apartment hotel, in which persons are lodged for hire with or without meals, including, but not limited to, any motel, motor court, motor inn, tourist court or similar accommodation; provided the terms "hotel", "apartment hotel" and "lodging house" shall not be construed to include: (a) Privately owned and operated convalescent homes, homes for the aged, infirm, indigent or chronically ill; (b) religious or charitable homes for the aged, infirm, indigent or chronically ill ...

A "health care facility or institution" is required under Conn. Gen. Stat. §19a-154 to be granted a Certificate of Need from the Commission on Hospitals and Health Care before either undergoing a change in ownership prior to initial licensing by the Department of Health Services or adding additional services to its program of health care. Conn. Gen. Stat. § 19a-145 defines "health care facility or institution" as:

any facility or institution engaged primarily in providing services for the prevention, diagnosis or treatment of human health conditions, including, but not limited to, ... hospitals; personal care homes; nursing homes; nonprofit health centers; diagnostic treatment facilities; rehabilitation facilities...

Conn. Gen. Stat. § 19a-490 provides definitions for the various types of health care facilities, or "institutions," required by Conn. Gen. Stat. § 19a-491 to be licensed by the Department of Health Services. Included in the definition of an "institution" for which a license is required are "nursing homes" or "rest homes." Those terms are defined in Conn. Gen. Stat. § 19a-490(c) as "an establishment which furnishes, in single or multiple facilities, food and shelter to two or more persons unrelated to the proprietor and, in addition, provides services which meet a need beyond the basic provisions of food, shelter and laundry."

A nursing home or rest home which has been granted a Certificate of Need under Conn. Gen. Stat. § 19a-154 and a license under Conn. Gen. Stat. § 19a-49 as a health care facility or institution is also a "home for the aged, infirm or chronically ill" which is excluded from the definitions of the terms "hotel" or "lodging house" by Conn. Gen. Stat. § 12-407(17). Prior to the grant of such a Certificate of Need and license, a health care facility remains a "hotel or lodging house" within the meaning of Conn. Gen. Stat. § § 12-407(16) and (17) which must collect the room occupancy tax from its guests. Once a nursing home or rest home has been both granted a Certificate of Need by the Commission on Hospitals and Health Care and licensed by the Department of Health Services, it is no longer required to collect and remit the room occupancy tax imposed by Conn. Gen. Stat. § 12-407(2)(h).

RULING:

As a health care institution granted a Certificate of Need by the Commission on Hospitals and Health Care and licensed by the Department of Health Services, the Medical Hotel is a "home for the aged, infirm or chronically ill" which is excluded from the definitions of the terms "hotel" or "lodging house" by Conn. Gen. Stat. § 12-407(17). As such, the Medical Hotel is not required to collect the room occupancy tax imposed by Conn. Gen. Stat. § 12-407(2)(h).

LEGAL DIVISION

Issued: September 17, 1993