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August 3, 1989

Honorable Ralph R.Wallace, III Opinion No. JM-1080 Chairman Cultural andHistorical Resources Re: Whether federal emCommittee ployees are subject to Texas House ofRepresentatives 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 localhotel occupancy tax. Chapters 351 and 352of the Tax Code authorize cities and certain counties to impose a local hotel occupancy tax

on aperson who, under a lease, concession, permit, right of access, license, contract, or agreement, pays for theuse or possession or forthe right to the use orpossession of a room that is in ahotel, costs $2or more each day, and is ordinarily used for sleeping.
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 inchapter 156of the Tax Code. The opinion reasoned that under either of the twomethods by which federal employees are reimbursed fortheir travel expenses
--per diem or actual expenses --an employee contracting forahotel roomwould do so inhis private capacity and it would beupon the employee andnothis employer, the federal reserve bank, that thehotel tax would be imposed. In contrast, the opinion noted, ifthe federal reserve bank had contracted directly with thehotel, imposition of the taxwould violate theprohibition --based on the Supremacy Clause of the United States Constitution, article VI, section 2 --on a state's taxation of the federal government

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or its instrumental Shurlock, 347U.S. 314U.S. 1 (1941) (1819). .ities. See, e.cf.,Kern-Limerick, Inc.v. 110 (1954); Alabama v. Kina and Boozer, i McCulloch v. Maryland, 17 U.S. 316

A 1976 decision of the United States comptroller general accords with the reasoning and result of Attorney General Opinion WW-738. 55Comp. Gen. 1278, 1279 (1976). That ruling concluded that employees of theUnited States Department of the Interior, Bureau of Indian Affairs, were not exempt from a local hotel tax inAnchorage, Alaska.

Ordinarily, a Federal employee on official duty rents ahotel ormotel room directly from the proprietor. The Government is inno sense aparty to this arrangement with the establishment. Inthe 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 expenses incurred while away on official business does not affect that individual's liability forthis tax. In this regard it is clear that the legal incidence of the tax is on the employee, and not on the Government, and thatwhen the Government pays aper diem or actual expenses allowance, it is not paying the tax but reimbursing the employee forthe employee's total expenses. That is, by statute and regulation the Government has agreed, in effect, to accept the economic burden of atax imposed not on itbut 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 andhotel rooms. Accordingly, we conclude that a federal employee travelling on official business whose travel expenses are reimbursable byhis employer, either on aper diem or actual expenses **basis, is**  not exempt froma local hotel occupancy tax imposed under chapters 351or 352 OP the Tax Code when he rents hotel accommodations. I -.

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SUMMARY
A federal employee travelling on official business whose travel expenses are reimbursable byhis employer, either on aper diem or actual expenses basis, is not exempt from a local hotel occupancy tax imposed under chapters 351 or 352 of the Tax Codewhen 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 byWilliam Walker Assistant Attorney General

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