Sherman, TX Hotels & Lodging: Transient Occupancy Tax (2026)

Article 11.03 of the Sherman Code of Ordinances levies the hotel occupancy tax. Section 11.03.002 imposes a tax on the cost of occupancy of any room or space furnished by any hotel at the rate of two dollars ($2.00) or more per day, equal to seven (7) percent of the consideration paid by the occupant. Consideration is the cost of the room only; it excludes food served, personal services not related to cleaning and readying the room, and any tax assessed by another governmental agency.

Section 11.03.001 sets who is covered. A hotel is a building in which members of the public can obtain sleeping accommodations for a consideration, and the term includes hotels, motels, tourist homes, houses or courts, lodginghouses, inns and roominghouses. Hospitals, sanitariums and nursing homes are excluded. The article never uses the words short-term rental, so its reach over a given rental turns on that definition of hotel. Two exemptions apply: a permanent resident, meaning an occupant with the right to occupy a room for at least thirty (30) consecutive days during the calendar year or preceding year, owes no tax, and a person or entity exempt under Texas Tax Code section 156.103 is exempt as well.

Collection runs through the operator. Under Section 11.03.005, every person owning, operating, managing or controlling a hotel collects the tax for the city. A purchaser of a hotel must withhold enough from the purchase price to pay all taxes due, and the city issues a certificate of no tax due or a statement of the amount due within sixty (60) days of a written request. Under Section 11.03.006, reports go to the city tax collector on or before the last day of the month following each quarterly period, with payment at filing, and each hotel gives the city a copy of its quarterly report filed with the state comptroller. Operators register as hotel tax collectors within thirty (30) days after commencing business under Section 11.03.010, update the registration within thirty (30) days of any change, and keep records for not less than three (3) years under Section 11.03.009.