h
August 3, 1989
Honorable Ralph R. Wallace, III Opinion No. JM-1080
Chairman
Cultural and Historical Resources Re: Whether federal em-
Committee ployees are subject to
Texas House of Representatives the local hotel/motel
P. 0. Box 2910 occupancy tax (RQ-1740)
Austin, Texas 78769
Dear Representative Wallace:
YOU ask whether federal employees travelling on
official business are exempt from the local hotel occupancy
tax. Chapters 351 and 352 of the Tax Code authorize cities
and certain counties to impose a local hotel occupancy tax
on a person who, under a lease, concession,
permit, right of access, license, contract,
or agreement, pays for the use or possession
or for the right to the use or possession of
a room that is in a hotel, costs $2 or more
each day, and is ordinarily used for sleep-
ing.
Tax Code 55 351.002(a), 352.002(a).
Attorney General Opinion WW-738 (1959) concluded in
response to a similar question that officers and employees
of the federal reserve bank while travelling on official
business are subject to the state hotel occupancy tax now
provided for in chapter 156 of the Tax Code. The opinion
reasoned that under either of the two methods by which
federal employees are reimbursed for their travel expenses
-- per diem or actual expenses -- an employee contracting
for a hotel room would do so in his private capacity and it
would be upon the employee and not his employer, the federal
reserve bank, that the hotel tax would be imposed. In
contrast, the opinion noted, if the federal reserve bank
had contracted directly with the hotel, imposition of the
tax would violate the prohibition -- based on the Supremacy
Clause of the United States Constitution, article VI,
section 2 -- on a state's taxation of the federal government
p. 5643
Honorable Ralph R. Wallace, III - Page 2 (JM-1080)
or its instrumental .ities. See, e.cf., Kern-Limerick, Inc. v.
Shurlock, 347 U.S. 110 (1954); Alabama v. Kina and Boozer,
314 U.S. 1 (1941) i McCulloch v. Maryland, 17 U.S. 316
(1819).
A 1976 decision of the United States comptroller
general accords with the reasoning and result of Attorney
General Opinion WW-738. 55 Comp. Gen. 1278, 1279 (1976).
That ruling concluded that employees of the United States
Department of the Interior, Bureau of Indian Affairs, were
not exempt from a local hotel tax in Anchorage, Alaska.
Ordinarily, a Federal employee on official
duty rents a hotel or motel room directly
from the proprietor. The Government is in no
sense a party to this arrangement with the
establishment. In the absence of a specific
State or local statute exempting room rentals
to Federal employees from this tax, that
employee is liable to pay it. That the
government, via statute and regulations, may
be obligated to reimburse that person for I -.
expenses incurred while away on official
business does not affect that individual's
liability for this tax. In this regard it is
clear that the legal incidence of the tax is
on the employee, and not on the Government,
and that when the Government pays a per diem
or actual expenses allowance, it is not
paying the tax but reimbursing the employee
for the employee's total expenses. That is,
by statute and regulation the Government has
agreed, in effect, to accept the economic
burden of a tax imposed not on it but on its
employees. We therefore conclude that under
such circumstances, Government employees may
not assert the Government's exemption from
the payment of State and local taxes levied
upon motel and hotel rooms.
Accordingly, we conclude that a federal employee
travelling on official business whose travel expenses are
reimbursable by his employer, either on a per diem or actual
expenses basis, is not exempt from a local hotel occupancy
tax imposed under chapters 351 or 352 OP the Tax Code when
he rents hotel accommodations.
p. 5644
Honorable Ralph R. Wallace, III - Page 3 (JM-1080)
SUMMARY
A federal employee travelling on official
business whose travel expenses are reimburs-
able by his employer, either on a per diem or
actual expenses basis, is not exempt from a
local hotel occupancy tax imposed under
chapters 351 or 352 of the Tax Code when he
rents hotel accommodations.
J/by~
MATTOX
Attorney General of Texas
MARY KELLER
First Assistant Attorney General
LOU MCCREARY
Executive Assistant Attorney General
JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by William Walker
Assistant Attorney General
p. 5645