Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 540.0332

540.0332 Pay Per View Movies Over Hotel's Television System. A hotel has a service whereby hotel guests can view movies on a pay-per-view basis in their hotel rooms by turning the guest room's television to the appropriate channel. The hotel's agreement with the provider of the movies calls for the provider to install certain equipment on the hotel's premises for use in showing movies to hotel guests over the hotel's television system. The movies, on cassettes, will be provided to the hotel, loaded into the equipment by the hotel.

Tax does not apply to the pay-per-view charges by the hotel to their guest for viewing the movies. This is because there is no tangible personal property transferred to the hotel guests. Instead, they merely tune the hotel's television set to the channel on which the movies are showing. Under the Sales and Use Tax Law, a taxable sale or lease requires the transfer of tangible personal property. Tax will apply only to the provider's lease of the equipment and the cassettes to the hotel, unless the provider has paid tax measured by the purchase price and leased the equipment in the same form as it acquired them. 11/24/86.