THE AITORNEY GENERAL 

OF TEXAS 

AUSTIN ~~.‘X%ZUAS 

WVII.L WILSON 

ATTORNEY CENERAL 

November 12, 1959 

Honorable Robert S. Calvert Opinion No. ww-721 

Comptroller of Public Accounts 

Capitol Station Re: Whether items purchased 

Austin, Texas by the Board of Control 

for use by State Agencies 

are subject to the tax 

levied by Chapter 20, 

H.B. 11, 56th Leg., 3rd 

Dear Mr. Calvert: C.S. and related questions. 

You have requested an opinion on the following questions 

pertaining to the taxes imposed by Chs. 20 and 23 of H.B. 11, 

3rd C.S. of the 56th Legislature: 

"1 . Are items purchased by the Board of 

Control for use by State Agencies or for use 

by the State in any form subject to the tax 

levied by this Article B.B. 11, Ch. 2q? 

"2. Some State Agencies are not required 

to make the purchases through the Board of 

Control. Are items purchased by these Boards 

or Agencies for the use of this Agency or 

for the use of the State or Its employees 

subJect to the tax levied under this Article? 

"3 . Is a state employee traveling at state 

expense required to pay the hotel occupancy 

tax levied under Chapter 23 of this Article? 

"In the event you hold that items sold under 

questions 1 and 2 of this request are taxable, 

then is the seller of such item6 required to 

obtain a permit?" 

Ch. 20 of H.B. 11 levies certain excise taxes upon users of 

the products specified therein. Article 20.07, Sec. (a) provides: 

"Every retailer who makes a sale or distribution of an Item taxable under this Chapter 

In Texas to the user shall rdd thn amount cf 

said tax- to the selling pri'e of such item which 

said tax shall be collected +'rom the nurchaeer 

or recipient or' such item at the time of such 

saie or dlstr,lbdtiol., and said tax shit11 be 
Hon. Robert S. Calvert, Page 2 Opinion No. ww-721 

reported and paid to the State of Texas as 

hereinafter provided." 

'User" is defined in Article 20.01(p): 

"'User' shall mean and include every 

person who purchases, uses or acquires In 

any other manner any item taxable under 

this Chapter for his own use in Texas and 

who does not purchase or acquire same for 

the purpose of resale." 

"Person" is defined by Article 20.01(a): 

"'Person' shall mean and include any 

individual, firm, co-partnership, joint 

venture, association, social club, fraternal 

organization, corporation, estate, trust, 

business trust, receiver, assignee for the 

benefit of creditors, trustee, trustee in 

bankruptcy, syndicate, the United States, 

any agency, institution or instrumentality 

of the United States, this State, any agency, 

institution, political subdivision or lnstrumentality of this State, or any other 

group or combination acting as a unit." 

The conclusion that the tax Imposed by Ch. 20 applies to 

items purchased by the State of Texas is inescapable; there~ 

is no exemption from such tax either in the statutes or the 

Constitution of the State of Texas.l 

1 

In this connection, attention Is directed to the case of 

State v. City of El Paso, 143 S.W.2d 366 (Tex.Sup.Ct. 1940) 

I hi h it h Id that the City of El Paso was not exempt 

f:oi p&mentwty eicise taxes upon gasoline used by the city 

purchased in the state of New Mexico. The holding was based 

upon the fact that since the Texas Constitution exempted munlclpal corporations only from ad valorem, Income, and occupation 

taxes, the city was not exempt from the payment of an excise 

tax. The contention of the city that it was not a corporation 

or agency within the meaning of the word "person" contained In 

the motor fuel excise tax law was over-ruled by the Court in 

the following language: 

"We think the statutory definition of 'person' 

as contained in subdivision (e) of Article 7065a-1 

covers all corporations or agencies which actually 
Hon. Robert S. Calvert, Page 3 Opinion No. ww-721 

However, even though the State is subject to the taxes 

imposed by Ch. 20, it cannot pay them.~ Article VIII, Section 

6 of the Texas Constitution states: 

"No money shall be drawn from the Treasury 

but in pursuance of specific appropriations 

made by law; nor shall any appropriation of 

money be made for a longer term than two years, 

except by the first Legislature to assemble 

under this Constitution, which may make the 

necessary appropriations to carry on the government until the assemblage of the sixteenth 

Legislature." 

In reference to this Section, Attorney General's Opinion 

No. O-6794 (1945) held that in the absence of a specific 

appropriation providing for payment of taxes due counties and 

school districts on prison land, the Texas prison system could 

not pay such taxes from prison Income. Under the authority of 

this opinion, it is obvious that agencies of the State of Texas 

may not pay the taxes imposed by Ch. 20 unless a specific appropriation for such purpose is made by the Legislature. (In this 

connection, it does not matter whether state agencies make 

purchases independently or through the Board of Control.) No 

such appropriation has been made. 

Article 20.11 of H.B. 11 states: 

"(a) From and after the effective date of 

this Chapter, a11 retailers of items taxable 

under Articles 20.02, 20.03 and 20.04 of this 

Chapter in this State, now engaged or who desire 

to become engaged in the sale, use or distribution of items taxable under Articles 20.02, 

20.03 and 20.04 of this Chapter, fihall obtain 

a permitJ. . .No retailer shall make a sale, use 

1 (Cont'd.) 

sell motor fuel In Texas. This being true the 

statute also 

which use motor fuel 

sale in this State." (Raphasis added.) 

It Is apparent that any attempt to extend the constitutional 

exemption of municipal corporations from occupation, income 

and ad valorem taxes so as to relieve the State from payment of 

the taxes in question would be mollified by the reasoning and 

language of the foregoing case. (The Texas Constitution contains 

no other exemption provision applicable to the facts in issue.) 
Hon. Robert S. Calvert, Page 4 Opinion No. WW-721 

or distribution of an item taxable under Articles 

20.02, 20.03 and ---f- 20.0of this Chapter until 

such application has been filed and a permit 

has been obtained." 

Though the State has no authority to pay the taxes imposed 

upon the items specified in Chapter 20, such items, when sold 

to the State, are technically "taxable" within the meaning of 

Article 20.11. Therefore, persons making sales of such Items' 

to the State are required to obtain a permit. 

Your last question is directed to whether or not state 

employees traveling at state expense are required tomy the 

hotel occupancy tax levied under Chapter 23 of H.B. 11, 3rd 

C.S. of the 56th Legislature. 

State employees renting hotel rooms in the course of 

travel at State expense may be compensated in two ways: 

1. By a per diem reimbursement in lieu of actual expenses. 

2. Reimbursement of actual expenses incurred. 

In neither situation does the State of Texas contract directly 

with the hotel. Regardless of how the state employee is 

reimbursed when he rents a hotel room, he is acting in his 

private capacity and incurs the tax in such capacity. Payment 

of the tax and the price of occupancy is made out of the 

employee's private funds; the employee does not act as the agent 

of the State in renting the hotel room, and payment for occupancy of the room is not made out of state funds. The employee 

is (within practical limits) at liberty to stay in the hotel 

of his choice, or not to stay Fn a hotel at all. The employee's 

expenses are reimbursed according to his contract2 with the 

State. Under these facts, the tax is not imposed upon the 

2 

Expense reimbursement is part of the employment contract with 

the State. To illustrate, an employee compensated on a per 

diem basis receives the same amount for each day's travel regardless of the price of any hotel room that might have been 

rented (and regardless of whether a hotel room was actually 

rented) in the course of such travel. Obviously In this situation there is no direct connection between the State and the 

hotel. Likewise, In cases where the employee is paid for actual 

expenses, reimbursement is made pursuant to the employement contract. The State merely contracts with the employee to reimburse 

him for actual expenses incurred. The price of occupancy of a 

hotel room is merely one of such expenses, as is the hotel occupancy tax. The State does not contract directly withtie hotel, 

and does not act through the employee as agent when the employee 

rents a hotel room. 
. I 

Hon. Robert S. Calvert, Page 5 Opinion No. WW-721 

State, consequently, there is no question as to whether the 

State is liable for payment thereof. The tax is a llablllty 

of and must be paid by the employee. 

SUMMARY 

Though agencies of the State of Texas are 

subject to the taxes imposed by Chapter 20 of 

H. B. 11, 3rd C.S., 56th Leg., there is no appropriation specifically for the purpose of paying 

the taxes; therefore, the State may not pay them. 

But even though the State is prevented from paying the taxes, the items specified in Chapter 20 

are technically "taxable"; consequently persons 

selling such items to the State are required to 

obtain the permit required by Article 20.11 of 

said Chapter. 

A State employee traveling at state expense 

is required to pay the hotel occupancy tax; the 

employee acts in his private capacity in contracting for the hotel room and incurs the tax 

in such capacity. The State does not contract 

with the hotel for payment of the price of occupancy, but only reimburses the employee, either 

on a per diem basis, or by paying him for actual 

expenses Incurred (in which latter case the tax 

paid by the employee is one of such actual expenses). 

Under these circumstances, there is no question of 

whether the State is liable for payment of the tax. 

Yours very truly, 

WILL WILSON 

Attorney General of Texas 

JNP:CM 

APPROVED: 

OPINION COMMITTEE: 

John Reeves, Chairman 

Milton Richardson 

Henrx Braswell 

L,inward Shivers 

BY 

REVIEWED FOR THE ATTORNEY GENERAL 

By: W. V. GEPPERT