Under City Ordinance 2020-04 (Codified as Chapter 33, Hotel Occupancy Tax), the hotel occupancy tax rate is seven percent (7%) inside of the city limits of Tool and in it’s ETJ (Extraterritorial Jurisdiction).

Every person owning, operating, managing or controlling any "hotel" shall collect the tax imposed and remit to the City. Hotel Occupancy Tax (HOT) must be reported for each calendar month even if there are no Taxable Room Receipts.

A "hotel" is any building in which members of the public obtain sleeping accommodations for consideration. The term includes, but is not limited to a:

• Hotel

• Motel

• Short Term Rentals (STR)

• Bed and Breakfast (B&B)

The term does not include hospitals, sanitariums, or nursing homes; or a dormitory or other housing facility owned or leased and operated by an institution of higher education, or a private or independent institution of higher education.

Gross Receipts from rentals - Exemptions = Taxable HOT Receipts

Taxable HOT Receipts * .07 = Hotel Occupancy Tax for City of Tool, TX

Note: The State and County’s HOT is calculated in the same manner as local HOT; however, the rate is at 6% instead of 7%. Accordingly, Henderson County’s HOT rate is calculated at 2%.

Taxable revenue includes your gross taxable receipts, cleaning fees and pet fees.   When calculating the hotel occupancy tax due, seven percent (7%) is multiplied by the gross taxable receipts amount, cleaning fees and pet fees.

For example, if the nightly rate is $300 per night, a cleaning fee of $100 is charged, a pet fee of $50 is charged and the guest stays two nights, the total taxable receipts amount is $750.

$300 X 2 nights = $600 plus $100 cleaning fee + $50 pet fee = $750 total taxable receipts

$750 X 0.07 (7%) = $52.50 tax due

Note: Taxpayers that multiply seven percent (7%) by the amount of revenue deposited to their bank account after service fees are deducted by their reservation service (AirBnB, VRBO, etc.) are not calculating the correct amount of tax due.  A 15% penalty and interest charge will be assessed on the additional hotel occupancy tax due.

Gross Receipts is the total of all charges (rates charged to customer) for sleeping accommodations including any sleeping accommodations claiming an exemption. Charges received from use of meeting rooms and/or banquet space is included only for State HOT and not local HOT.

You must still file your report, but do not declare any taxable receipts on the remittance form. 

Please file using the Hotel Occupancy Tax Collection form. You may pay by cash, check, credit card or money order. If paying by in-person methods, you can visit Tool City Hall located at 701 N. Tool Dr., Tool, TX 75143.  If paying by check, you may make those payments to: 

City of Tool

C/O Hotel Occupancy Taxes

701 N. Tool Dr.

Tool, TX 75143

During business hours, you may drop off your remittance form and payment with the City Controller at City Hall.  After business hours, you may drop off your remittance form and payment in the drop box located at the front of City Hall, adjacent to the front entry doors. 

Failure to remit HOT in a timely manner will result in delinquent payments, subject to interest as classified in Section III. Reporting, Penalties and Interest, Subsection D. 

The City of Tool collects 7%, the State of Texas collects 6% and Henderson County collects 2% in relation to Hotel Occupancy Taxes.

State and Local HOT Exemption

• Federal government G6 their employees traveling on official business
• Foreign diplomats issued a tax exemption card by the U.S. Department of State, unless the card - specifically excludes hotel tax
• Texas State officials with a special hotel tax exemption card
• Some nonprofit entities and their employees traveling on official business

State Exemption Only

• Exempt religious organizations
• Qualified charitable organizations
• Educational organizations including independent school districts, public and private elementary and secondary schools, and in-state higher education institutions

First Quarter

Period: Jan 1 - Mar 31

Due Date: April 30

Second Quarter

Period: Apr 1 - Jun 30

Due Date: July 31

Third Quarter

Period: Jul 1 - Sep 30

Due Date: October 31

Fourth Quarter

Period: Oct 1 - Dec 31

Due Date: January 31

YES.  You will remit HOT to the City of Tool.   

Properties not located within the Tool City Limits or ETJ will remit HOT to the Henderson County Treasurer’s Office at a rate of seven percent 2%.  Click here for more information.

You may use the City Limit Boundary/1-Mile ETJ Map on this page to perform an address search to determine if your property is within the Tool ETJ. 

No. Reservation services like AirBnB and VRBO do not remit HOT to the City on your behalf.  In most cases, these reservation services will only remit HOT to the State on your behalf and make it your responsibility to remit HOT to the local municipality.

Always verify the services your reservation service should perform on your behalf to ensure there is not any miscommunication between you and the service.

If you use or plan to use a reservation service, they usually remit State HOT under their taxpayer number on your behalf.  However, you should always verify what services your reservation service is performing for you. This is especially important as it relates to remitting HOT.  

It is a good idea to obtain documentation from your reservation service showing the Hotel Occupancy Tax has been remitted on time and the Taxable Receipts have been calculated appropriately so the correct amount of tax is remitted.  If you are selected for audit by the State or our municipality, the property owner may be held liable for any discrepancies despite using a reservation service under Texas State Law.

If you do not plan to use a reservation service, you will need to set up an account with the Texas Comptroller’s office to pay State Hotel Occupancy Tax.  For more information, see the section titled Hotel Occupancy Tax Rates., through the Texas Comptroller’s website. 

Yes, depending on your VRBO and Airbnb account type (3 options):

• Individual Owners – VRBO and/or Airbnb takes payment from the traveler and is responsible under the terms of their agreement with the City of Tool to remit tax on the owner’s behalf. (File a zero dollar tax form monthly)
• Property Managers – VRBO and or Airbnb takes payment from the traveler and is responsible under the terms of their agreement with the City of Tool to remit tax on the owner’s behalf. (File a zero dollar tax form monthly)
• Integrated Property Manager (IPM) – VRBO and or Airbnb does not take payment from the traveler for a booking at an IPM property. The IPM takes the traveler payment and therefore the IPM is responsible for collection and remittance of hotel occupancy tax to the City of Tool.

** Please note that while there are collection agreements in place with VRBO and AirBNB, the owners are ultimately responsible for making sure that the HOT is paid to all taxing entities. **

Customers claiming an exemption from Hotel Occupancy Tax must present a Hotel Occupancy Tax Exemption Certificate.  Please read the exemption certificate to determine if a customer qualifies for an exemption from paying hotel occupancy tax.

The only customer not required to provide a Hotel Occupancy Tax Exemption Certificate are customers who stay in a hotel, motel, bed and breakfast or short-term rental for longer than 30 consecutive days.

Common Exemptions from Hotel Occupancy Tax: 

1. Guest stays over 30 consecutive days, 

2. State & Federal Officials or Employees,

3. Charitable Entities – 501 (c)(3) or nonprofit organizations,

4. Educational Entities (exempt from State hotel tax, but NOT local hotel tax), and

5. Religious organizations

It is important to read the exemption certificate for details.  This will help you determine if your customer qualifies for an exemption from paying hotel occupancy tax.

For more information on taxable services and items, please visit the Texas Comptroller’s website.