h 

August 3, 1989 

Honorable Ralph R. Wallace, III Opinion No. JM-1080 

Chairman 

Cultural and Historical Resources Re: Whether federal emCommittee 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 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 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 

Shurlock, 347 U.S. 

314 U.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. 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 

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. 

I -. 

p. 5644 
Honorable Ralph R. Wallace, III - Page 3 (JM-1080) 

SUMMARY 

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 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