THE 

### AITORNEY GENERAL OF TEXAS

AUSTIN ~~.‘X%ZUAS WVII.L WILSON **ATTORNEY** CENERAL

November 12, 1959

Honorable Robert S. Calvert OpinionNo. 

### ww-721 Comptroller of PublicAccounts Capitol Station Re: Whether itemspurchased 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 imposedby Chs. 20 and 23 of H.B. 11, 3rd C.S. of the 

### 56thLegislature:

"1

. Are itemspurchased by the Board of Control for use by StateAgencies or for use by the State in any form subject to the tax leviedby thisArticleB.B. 11, Ch. 2q? "2. Some State Agencies are not required tomake the purchases through the Board of Control. Are items purchasedby theseBoards or Agencies for the use of thisAgency or for the use of the State or Its employees subJect to the tax leviedunder thisArticle? 

### "3

. Is a state employee travelingat state expense required to pay the hotel occupancy tax levied under Chapter 23 of thisArticle?
"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:

"Everyretailerwho 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 sellingpri'e of such item which said tax shallbe collected +'rom the nurchaeer or recipientor'such item at the time of such saie or dlstr,lbdtiol., and said tax shit11 beHon. Robert S. Calvert, Page 2 OpinionNo. ww-721

reported and paid to the State of Texas as hereinafterprovided."
'User" is defined in Article 20.01(p):
"'User' shallmean and includeevery person who purchases,uses or acquires In any othermanner any item taxableunder this Chapter for his own use in Texas and who does not purchase or acquire same for the purpose of resale."
"Person" is definedby Article 20.01(a):
"'Person' shallmean 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, institutionor instrumentality of the United States, this State, any agency, institution,political subdivisionor lnstrumentalityof this State, or any other group or combinationacting as a unit." The conclusion that the tax Imposedby Ch. 20 applies to itemspurchased by the State of Texas is inescapable;there~ is no exemption from such tax either in the statutes or the Constitutionof the State of Texas.l

1In 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 Constitutionexemptedmunlclpal corporationsonly from ad valorem, Income, and occupation taxes, the citywas not exempt from the payment of an excise tax. The contention of the city that it was not a corporation or agency within themeaning of the word "person" contained In themotor fuel excise tax law was over-ruledby the Court in the following language:

"We think the statutorydefinition of 'person' as contained in subdivision (e)of Article 

### 7065a-1 covers all corporationsor agencieswhich actuallyHon. Robert S. Calvert, Page 3 OpinionNo. ww-721

However, even though the State is subject to the taxes imposedby Ch. 20, it cannotpay them.~ArticleVIII, Section 6 of the Texas Constitution states:

"Nomoney shallbe drawn from the Treasury but in pursuance of specificappropriations made by law; nor shall any appropriationof 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 appropriationsto 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 appropriationproviding 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 imposedby Ch. 20 unless a specificappropriation for suchpurpose ismade by the Legislature. (In this connection, it does not matter whether state agenciesmake purchases independentlyor through the Board of Control.) No such appropriationhas beenmade. Article 20.11 of H.B. 11 states: "(a) From and after the effectivedate 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 taxableunder Articles 20.02, 20.03 and 20.04 of this Chapter,fihall obtain a permitJ.

. .Noretailer shallmake a sale, use

1 (Cont'd.)

sellmotor fuel In Texas. This being true the statute also which use motor fuel sale in this State." (Raphasisadded.)
It Is apparent that any attempt to extend the constitutional exemption of municipal corporationsfrom occupation, income and ad valorem taxes so as to relieve the State from payment of the taxes in questionwould be mollified by the reasoning and language of the foregoing case. (TheTexas Constitution contains no other exemptionprovision applicable to the facts in issue.)Hon. Robert S. Calvert, Page 4 OpinionNo. WW-721

or distributionof an item taxableunder Articles

---f- 20.02, 20.03 and 20.0 of this Chapteruntil such applicationhas 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 themeaning of Article 20.11. Therefore,personsmaking 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 

### 56thLegislature. State employeesrenting hotel rooms in the course of travel at State expensemay be compensated in two ways: 1. By a per diem reimbursement in lieu of actual expenses. 2. Reimbursementof actual expenses incurred.
In neither situationdoes the State of Texas contractdirectly with the hotel. Regardless of how the state employee is reimbursedwhen he rents a hotel room, he is acting in his private capacityand incurs the tax in such capacity. Payment of the tax and the price of occupancy ismade out of the employee'sprivate 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 (withinpractical 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 contract2with the State. Under these facts, the tax is not imposedupon the 2Expense reimbursement ispart of the employment contractwith the State. To illustrate,an employee compensatedon a per diem basis receives the same amount for each day's travel regardless of the price of any hotel room thatmight have been rented (andregardless of whether a hotel room was actually rented) in the course of such travel. Obviously In this situation there is no direct connectionbetween the State and the hotel. Likewise, In caseswhere the employee is paid for actual expenses, reimbursement ismade pursuant to the employement contract. The Statemerely contractswith the employee to reimburse him for actual expenses incurred. The price of occupancy of a hotel room ismerely one of such expenses, as is the hotel occupancy tax. The State does not contractdirectlywithtie hotel, and does not act through the employee as agent when the employee rents a hotel room.. I

Hon. Robert S. Calvert, Page 

### 5 OpinionNo. WW-721

State, consequently,there is no question as to whether the State is liable for payment thereof. The tax is a llablllty of andmust be paid by the employee. SUMMARY Though agencies of the State of Texas are subject to the taxes imposedby Chapter 20 of H. B. 11, 3rd C.S., 

### 56thLeg., there is no appropriation specificallyfor the purpose of paying the taxes; therefore, the Statemay not pay them. But even though the State is prevented from paying the taxes, the items specified in Chapter 20 are technically "taxable";consequentlypersons selling such items to the State are required to obtain the permit requiredby Article 20.11 of said Chapter.
A State employee travelingat 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 (inwhich 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 AttorneyGeneral 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