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Compliments of the house (but not the state)
Compliments of the house (but not the state)
That free breakfast at Holiday Inn? Might not be free much longer.

In Tennessee, the General Assembly is considering applying the state's sales tax to complimentary meals provided at hotels as part of its "sale for resale" initiative, which would tax items included as part of a service.

Customers would receive their free breakfast, but might be surprised to see a tax charge added onto their bill, if that hotel decides to pass along the cost.

The tax on complimentary meals is projected to bring in $1 to $2 million annually, and "sets Tennessee back in line with the majority of states collecting this revenue," said Sarah Houghland, a spokeswoman for the Tennessee Department of Revenue.

Opponents of the tax argue that meals could actually end up being double-taxed, according to the Tax Foundation, since the cost of providing them is usually taken into account when a hotel determines its room rates, which are already subject to the state's sales tax.

NEXT: Paper or plastic?
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Last updated May 06 2010: 5:38 PM ET
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