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eXpendit

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Licensing Fees and Occupation Taxes

A state agency may pay a licensing fee or an occupation tax for an officer or employee of the agency if the agency determines the:

  • Payment would be directly and substantially related to the agency’s governmental functions
    –and–
  • Agency would receive an adequate return for the payment

A state agency may consider the following factors (among others) when determining if the agency would be receiving an adequate return if the:

  • Employee in question works full-time or part-time.
  • Employee uses their professional credentials in working outside the confines of their state employment.
  • Eemployee’s professional credentials are required or merely useful in performing the employee’s state duties.

Documentation Requirements [+]

  1. A state agency must retain documentation in its files that shows:
    1. how the payment is directly and substantially related to the state agency’s governmental functions, and
    2. how the state agency is receiving an adequate return on the payment.
  2. Comptroller object 7210 must be used.

Sources [+]

Graves v. Morales, 923 S.W.2d 754, 757 (Tex. App.—Austin 1996, writ denied) (discusses only occupation taxes); Opinion of the Texas Attorney General No. JM-1063 (1989); Texas Attorney General LO-88-79 (1988).