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Hotel Industry Overview - August 2007 - Introduction


"This document is not an official pronouncement of the law or the position of the Service and cannot be used, or cited, or relied upon as such."


A. Purpose of Industry Overview

This overview is designed to provide industry-related information to the Large Business & International (LB&I) Division. This is the first step in the effort of LB&I to develop a greater level of expertise in the industry or industries to which you will be assigned.   This overview is one of a series of industry specific overviews.  See the Appendix for a complete listing of available overviews.

B.  Use of the Intranet and Internet

Each Technical Advisor has established a web site on the LB&I Intranet.  These web sites contain more detailed information on each Technical Advisor area.  Topics that have been included in this Industry Guide are sometimes expanded upon and new topics may be added.  Each web site also has a section where Technical Advisors can highlight the latest developments such as new court cases, new technical advice memorandums, new revenue rulings, etc.  There is a new section called “Forum” where individuals are able to address any questions they have about various issues.  Others reading the question may be able to help you with your issue.

C.  Acknowledgment

This guide was primarily drafted by:
James Johnston, Senior Program Analyst, RFPH
Phil Hofmann, Technical Advisor for Food, Restaurants and Hospitality
Paul Knap, Counsel, Milwaukee, WI
John Lelko, Team Coordinator, Chicago, Illinois
Cindy S. Kim, Senior Program Analyst, RFPH

We appreciate all their hard work and also that of others that were contacted for their input into this document.

D.  General History of Industry Specialization Program (ISP)




The Service was restructured in 1952 into a highly decentralized organization consisting of seven regions and 58 districts.  This reorganization was implemented in part to achieve greater sensitivity and responsiveness to pubic needs.  District Directors were given wide latitude and authority in administering the Service's policies, procedures and programs.  While decentralization of the Service proved to be a progressive action, communication between the regions and districts was made more difficult because of their quasi‑autonomy.  Positions taken by the Service on industry issues could differ significantly from one region to another on the same issues.


The Service implemented the Industry Wide Examination Program to concurrently examine the major taxpayers in a given industry, coordinate selected issues common to that industry and to resolve those issues uniformly and consistently among all the industry taxpayers.   Under the direction of project coordinators (usually large case branch chiefs), the industry wide examinations were largely successful in achieving uniform and consistent treatment of issues.  Industry wide examinations were conducted in several industries between 1971 and 1979 and the ability to communicate freely across district and regional lines proved to be invaluable to the success of these examinations.


The Industry wide Examination Program had one major drawback.  Since they existed for only two or three tax years and were then terminated, the program failed to provide continuity.  To correct this situation, a major study group was created in 1977 to review the Service's Coordinated Examination Program.  The study recommended that permanent positions be established for several Industry Specialists and a National Industry Coordinator.  In addition, the study group identified basic industries to which it recommended specialists be assigned.  The duties and responsibilities of the Specialists and the Coordinator were to be much broader than the former Project Coordinators whom they replaced.


The recommendations of the study group were implemented greatly expanding the scope and depth of the Industry wide Examination Program.  The term, Industry Specialization Program, eventually evolved as a name that could encompass the varied concepts of Industry Specialists, National Industry Coordinator, Coordinated Issues, and the many refinements suggested by the study group.


As part of the Internal Revenue Service’s restructuring, the Industry Specialists were assigned to Pre-Filing and Technical Guidance which is part of LMSB.  The “Industry Specialists” are now called “Technical Advisors.”  Each of them was placed in one of the five industry areas and is managed by a Technical Advisor Manager. 

E.  History of Hotel ISP



Pre 1984 to 2006

There was no formal Hotel Industry Specialist.  However, the Food & Beverage TA and the Gaming TA have been involved in some Hotel cases.

1984 - 1986

Conducted study of food industry, 55 cases in 7 regions included in the program study. 


Food industry approved for inclusion in ISP

1987 - 1992

Coordinated issue papers and appeals settlement guidelines developed.


Established an Industry Specialist for Gaming.


Audit Guidelines established.


Gaming Audit Technique Guide published.


First gaming coordinated issue approved – The applicable recovery period under IRC § 168(a) for slot machines, video lottery terminals and gaming furniture, fixtures and equipment.


The Food & Beverage TA adds the Hotel Industry to that program

F.  Industry Specialist Staffing (Technical Advisors in LB&I)

Name of Specialist

Telephone #


Email Address

Philip Hofmann, Food



Eric Lacher, Gaming



G.  LB&I Industry Staffing

The Industry Specialist is assigned to the Pre-Filing and Technical Guidance Division that is part of LB&I Headquarters.  Each industry is assigned to one of the five LB&I Industry Functional Divisions.  Industry Specialists will be known as technical advisors in LB&I and will be supervised by a Manager, Technical Advisors.  Management and other appropriate personnel for this industry are as follows:




Sergio Arellano

Industry Director, RFPH

Downers Grove, IL

Jim Roosey

Field Operations Director West, RFPH

Downers Grove, IL

Lori Nichols

Field Operations Director East, RFPH

Louisville, KY

Greg Zielinski

Manager, Technical Advisors, RFPH

Chesterfield, MO

Kathleen Follis

Manager, Technical Advisors, CTM

King of Prussia, PA 

Paul Knap

Industry Counsel

Milwaukee, WI

Jessica Yip

Senior Program Analyst, RFPH

Downers Grove, IL

H.  Description of the Hotel Industry

The Hotel Industry program covers taxpayers that develop, own, manage, and/or operate lodging facilities, including motels and full-service hotels.    

This industry is comprised of several sub-industries.  The following is a compilation of statistical data for these sub-industries sorted by NAICS codes:

  • 721100 – Travel Accommodations
  • 721110 – Hotels (except casinos) & Motels
  • 721120 – Casino Hotels
  • 721191 – Bed & Breakfast Inns
  • 721199 – All Other Traveler Accommodation
  • 721210 – RV (Recreational Vehicle) Parks & Recreation Camps
  • 721310 – Rooming & Boarding Houses

The hotel industry may also have related activities including restaurants and cafes, gambling, sports and recreation, theme parks, retail operations, and other entertainment.  Additionally, some members of the industry have expanded into long-term care.

Table of Contents | Chapter 2

Page Last Reviewed or Updated: 05-Mar-2015