Palatine, IL Hotels & Lodging: Transient Occupancy Tax (2026)

Village Code § 24-64 sits in chapter 24's Article IV, 'Hotel and Motel Occupancy Tax,' and imposes the tax at 5 percent of gross rental receipts on 'the use and privilege of renting, leasing or letting of rooms in a motel or hotel in the village,' with the guest, lessee or tenant bearing the ultimate cost. Section 24-65 defines what counts as a taxable hotel or motel: any building held out to the public for lodging with five or more rooms, apartments, suites or similar accommodations, and it carves out an exemption for any occupant who leases the same accommodation for more than 30 consecutive days.

That 30-day line matters because Village Code § 12-88 separately makes it unlawful in the Village of Palatine to operate, offer, or advertise any residential property as a short-term residential rental (one rented for 30 days or less) at all, so the occupancy tax in practice reaches only licensed hotels and motels rather than short-term rentals, which the village bans outright rather than taxes. Section 24-66 puts the duty to collect the tax on the hotel or motel's owner, operator and licensee jointly. Section 24-67 designates the finance director as the tax's administration and enforcement officer, requires a sworn monthly return showing the prior month's room receipts, and lets the director or a designee inspect a hotel's books and records.

Section 24-68 lets the village prosecutor sue to collect unpaid tax and lets the village manager suspend or revoke a hotel or motel's village licenses after a hearing if the operator willfully evaded collecting the tax. Section 24-69 adds one percent interest per month on unpaid tax plus a 50 percent penalty for willful evasion, and § 24-70 sends all proceeds to the village's general fund.