The Illinois Department of Revenue determined that the redemption of rewards points by a hotel patron was generally not subject to the state’s Hotel Operators’ Occupation Tax (HOOT) because the rewards program was operated by the hotel, and the HOOT was remitted upon a patron’s initial stays at the hotels. Illinois imposes the HOOT on persons engaged in the business of renting, leasing or letting rooms in a hotel. The taxpayer, a global hotel company that owned, operated and franchised hotels throughout the world, operated a loyalty program through a wholly owned subsidiary whereby patrons earned rewards points that could be exchanged for complimentary lodging by staying at the taxpayer’s hotels. Upon a patron’s initial paid stay, a percentage of the proceeds was placed in the subsidiary’s fund for reimbursement of gross charges by persons utilizing the rewards points program. The taxpayer argued that the redemption of points was akin to a promotion that offers a fourth night free when a patron pays for a three-night stay; in such a situation, as argued by the taxpayer, the HOOT operates by effectively reducing the per-night price because the cost of the fourth night has been borne by the price paid for the three nights. Similarly, when a patron redeems its accumulated rewards points for complimentary lodging, the consideration for the free night has been paid by the guest at the time the points were earned. The Department agreed with the taxpayer, but caveated that the redemption would be subject to the HOOT “should a third party pay any reimbursement of the gross charges to the franchised hotels or if the operator upon the initial stay or stays did not remit [HOOT].” Ill. Dept. of Rev. Gen. Info. Ltr. ST 13-0043-GIL (Aug. 23, 2013).