Taxes & Fees

Created by Alex Savchuk, Modified on Fri, Mar 15 at 7:05 PM by Alex Savchuk

innRoad allows you to configure the taxes and fees that are applicable for your property. While taxes and fees both enable a property to collect money, there are significant differences:

Tax:
1. A charge imposed by an authority on goods
2. Taxes are applied to “charges” or “items” within the innRoad system and are added to existing rows in a folio
3. Taxes are typically used for items such as State tax, Local tax, Occupancy tax or VAT tax
4. Example: A room charge of $100 might have an occupancy tax of 10% for a total price of $110
Fee:
1. A fee is revenue and is represented as a line item in a folio
2. A fee can also be taxed
3. Fees can be automatically added to a reservation for each night of the stay (per night) or once for the entire reservation (per stay)
4. Fees are typically used for items such as daily resort fees, service fees or cleaning fees
5. Example: A daily resort fee of $25 is charged for each night of a stay and has a 10% tax for a total of $27.50, per night

Ledger Accounts

Most businesses like to account for their taxes and fees in their general ledger. To do so, go to setup→ Ledger Accounts and create a ledger account for each tax and fee that you plan to create in your system.

Note: You can NOT convert an existing ledger account’s type from “Tax” to “Fee”, because it will create issues with reporting. Instead, you can Create a new Ledger Account for the “Fee”

Taxes & Fees List

View existing taxes and fees in Setup→Taxes & Fees. This screen allows you to search by keyword or filter by Type, Category or Status.

Pencil Icon: Click to edit an existing tax or fee
Trash can icon: Click to delete a tax or fee. Please note that deleting a tax or fee does not affect existing reservations, to which the tax or fee was previously applied.

Taxes

Create a new Tax by clicking Create→Tax

The “Create new tax” screen allows you to configure a tax.

Explanation of fields:

Tax Name- The name used in the “Taxes & Fees” list to quickly recognize the tax
Display Name- The text that will be displayed in the registration form and statement, when printed with tax breakdown
Type- Automatically set to “Tax” when working with taxes
Ledger Account- Select the ledger account that this tax should be mapped to
Status
- Active or Inactive
  - Please note that marking a tax as inactive, does not affect existing reservations, to which the tax was previously applied
Description- Long form field to describe the tax
Amount- the amount of the tax
Flat/Percent
- Flat: When this option is selected, the amount will be applied as a flat, nominal tax. (i.e. $10)
- Percentage:
  - When this option is selected, the tax value will be determined by multiplying the percent value against the item amount.
  - Example: a 10% tax on a room charge of $200 = $20, for a total charge of $220.
Exclude When Tax Exempt- Select this box, if you want this tax to be waived for any reservations that are marked as tax exempt
VAT- This field is used to configure a tax as Value Added Tax, which means an item’s price already includes the tax.
- Example: For a $100 room charge with 10% VAT, the VAT Amount is $9.09, and the base price is $90.91.
- How is this calculated?
- For VAT %, the system takes the item’s price ($100) and then determines what the pre-tax price would need to be, to reach the item’s price, when the 10% tax is applied.
  - $90.91 * 10% = $9.09
  - $90.91 + $9.09 = $100 room charge
  - Formula
    - Pre-Tax Price = Item Price / (1 + (tax value/100))→$100 / 1.1 = $90.91
    - VAT Tax = Item Price – Pre-Tax Price→$100 - $90.91 = $9.09
Ledger Account
- Select the Ledger accounts, for which this tax should apply.
- If “Select All” is chosen, the tax will be applied to all items/ledger accounts, including ledger accounts that are created in the future. This option is recommended for any taxes that should always be applied, so that you don’t need to update your tax settings, any time a new ledger account is added.
- Note: If you create fees (covered later in this document), they can be taxed by including the “fee” ledger accounts in this field or by choosing “Select All”.
Apply to items in account folio
- Select this option if you want the tax to be applied to items in an account folio.
- This toggle should typically be set to ON, unless you are creating a tax, for example, that only applies to a specific room type.
Restrict this tax to 1 or more room classes, rate plans or sources
- Turning this toggle ON, allows you to target a given tax to a specific Room Class, Rate Plan and/or Source. If this toggle is turned OFF, the tax will apply to ALL room classes, rate plans and sources.
Room Class
- Specify the room class(es) that the tax applies to.
- Select All: Tax will be applied to reservations for ALL room classes, including any future room classes that are created.
- If 1 or more specific room classes are selected, the tax will only apply to reservation nights that are stayed in the selected room classes.
- For split room reservations, the tax will apply to the nights that are stayed in the selected room classes but will NOT be applied to the nights that a guest stays in a room class that is NOT selected.
Rate Plan
- Specify the rate plan(s) that the tax applies to.
- Select All: Tax will be applied to reservations for ALL rate plans, including any future rate plans that are created.
- If 1 or more specific rate plans are selected, the tax will only apply to a reservation that was created with one of the selected rate plans.
Source
- Specify the source(s) that the tax applies to.
- Select All: Tax will be applied to reservations for ALL sources, including any future sources that are created.
- If 1 or more specific sources are selected, the tax will only apply to a reservation that was created from one of the selected sources.
Exclude this tax if the reservation is tied to any of the following accounts
- Specify the accounts for which the tax will be excluded, on reservations that are made for the selected accounts. For example, if a property is using Expedia Collect and Expedia is remitting taxes for the property, the property could add the Expedia Corporate account to this selection, to ensure that taxes are NOT applied to reservations that are tied to the Expedia Corporate account.

Additional Notes

Room Class, Rate Plan and Source fields

For a tax to be applied, a given reservation must match all the criteria specified in the Room

Class, Rate Plan and Source fields.

Example: A “Sales Tax” is created for the “King” and “Queen” room classes and “Rack Rate” rate plan.

Multiple taxes can apply to a reservation

If a state tax and local tax are created that apply to the “Room Charge” ledger account, when a “Room Charge” is added, both taxes will be applied
Similarly, if you have multiple taxes, including room class, rate plan or source specific taxes, all applicable taxes will be applied to the reservation.
Example:
- State Tax @ 5.5%: applies to all room charges
- Local Tax @ 4.5%: applies to all room charges
- Luxury Tax @ 10%: applies to room charges for “Suite” room class

Fees

Fee Details

Create a new Fee by clicking Create→Fee

The “Create new fee” screen allows you to configure a fee.

Explanation of fields:

Fee Name- The name used in the “Taxes & Fees” list to quickly recognize the fee
Display Name- The text that will be displayed in the description field of the folio, registration form and statement
Type- Automatically set to “Fee” when working with fees
Ledger Account- Select the ledger account that this fee should be mapped to
Status-
- Active or Inactive
- Please note that marking a fee as inactive, does not affect existing reservations, to which the fee was previously applied
Description- Long form field to describe the fee
Amount- The amount of the fee
Flat/Percent
- Flat: When this option is selected, the amount is a flat fee. (i.e. $10)
- Percentage: When this option is selected, the fee value will be determined by multiplying the percent amount to the room charge amount.
  - Example: a 10% per night Resort fee
    - Night 1 room charge of $200; Fee = $20
    - Night 2 room charge of $250; Fee = $25
Per Night/Per Stay
- Per Night: A fee row, is added to the folio, for each night of the reservation
- Per Stay: A single row is added to the folio for the entire stay.
  - The folio row’s date for per stay fees = check in date.
Restrict this fee to 1 or more room classes, rate plans or sources
- Turning this toggle ON, allows you to target a given fee to a specific Room Class, Rate Plan and/or Source. If this toggle is turned OFF, the fee will apply to ALL room classes, rate plans and sources
Room Class
- Specify the room class(es) that the fee applies to.
- Select All: Fee will be added to reservations for ALL room classes, including any future room classes that are created.
- If 1 or more specific room classes are selected, the fee will only be added for reservation nights that are stayed in the selected room classes.
- For split room reservations, the fee will be added for the nights that are stayed in the selected room classes but will NOT be applied to the nights that a guest stays in a room class that is NOT selected.
  - If the fee is a percentage, per stay fee, the fee amount will only be calculated off the total room charges for the nights stayed in applicable room classes.
Rate Plan
- Specify the rate plan(s) that the fee applies to.
- Select All: Fee will be added to reservations for ALL rate plans, including any future rate plans that are created.
- If 1 or more specific rate plans are selected, the fee will only be added to a reservation that was created with one of the selected rate plans.
Source
- Specify the source(s) that the fee applies to.
- Select All: Fee will be applied to reservations for ALL sources including any future sources that are created.
- If 1 or more specific sources are selected, the fee will only be added to a reservation that was created from one of the selected sources.

Additional Notes

Room Class, Rate Plan and Source fields

For a fee to be automatically added to a reservation, a given reservation must match all the criteria specified in the Room Class, Rate Plan and Source fields.
Example: Fee is created for the“King”and“Queen”room classes and“Rack Rate”rate plan.

If you associate a tax to the fee’s ledger account, the tax will be applied to the fee
- Example: Sales tax of 5% is configured to apply to a per night “Resort Fee” of $10 for a total of $10.50
Multiple fees can apply to a reservation
- All fees that apply to a reservation will be added to the folio according to the fee configuration

Fee Examples with Taxes

Tax & Fee Setup

Daily Resort Fee: $25 per night (applied to all rate plans, room classes, sources)
Cleaning Fee – Standard: $50 per stay (applies to “Standard” room class)
Cleaning Fee – Premium: $100 per stay (applies to “Premium” room class)
State/Local Tax of 10% applies to all ledger accounts
Luxury Tax of 10% applies to “Room Charges” ledger account, for “Premium” room class only

When a guest books a reservation for a “Standard” room:

When a guest books a reservation for a “Premium Room”:

Policies

If you want fee amounts to be included in policy calculations, the policy should be set to “Total Charges”:

Document Templates

If you would like to include the total fee amount in any custom doc templates (confirmation emails, custom guest registration forms, etc.), add the new <> field to the template:

Note: changing taxes does not back date to reservation charges. If you set up a 10% tax and then make 100 reservations, then change the tax to 9%, only reservations made after the change will update