Hotel Occupancy Tax, Agency Refunds

Applicable to

State agencies and institutions of higher education.

Policy

State Agencies

Except as noted below, state employees who incur lodging expenses when traveling on state business in Texas and state agencies that pay for employee and prospective state employee lodging in Texas by direct billing must pay the state, county and municipal hotel occupancy taxes.

The hotel occupancy tax paid by state employees is reimbursable as an in-state incidental expense. This in-state incidental expense is in addition to the maximum lodging rate allowed by law.

Individuals Exempt From Paying Hotel Occupancy Taxes

Certain individuals who present a hotel tax exemption photo identification card when traveling on official state business are exempt from paying the hotel occupancy taxes, including:

• Judicial officers
• Agency heads
• Executive director of the Legislative Council
• Secretary of the Senate
• Legislators
• Legislative employees
• Members of state boards and commissions
• Department of Public Safety personnel when transporting and providing security for the governor, governor-elect and his or her spouse and immediate family

The following individuals are exempt on a trip-by-trip basis:

• The designated state officer or employee who represents:
  • A member of the Legislature
  • Judicial officers
  • State agency chief administrators
  • The executive director of the Legislative Council
  • The secretary of the Senate
  • Members of state boards and commissions at a meeting or conference, if the person making the designation is unable to attend
• State employees traveling with:
  • Members of the Legislature
  • Judicial officers
  • State agency chief administrators
  • The executive director of the Legislative Council
  • The secretary of the Senate
  • Members of state boards and commissions if the employees are designated to receive reimbursement of their actual travel expenses

Agency-issued ID Cards for Exempted Individuals

Individuals exempt from paying hotel occupancy taxes should be issued a photo identification card (ID) specifying the hotel tax exemption. Without a photo ID, an up-front exemption cannot be claimed with the hotel.

Each state agency is responsible for issuing ID cards noting the exemption from the hotel occupancy tax. The ID must state, “Exempt from Hotel Occupancy Tax, Section 156.103(d), Tax Code.” However, these individuals may pay the tax and be reimbursed, as is the case for all other state employees.

Agency Refunds

State agencies that reimburse their employees for the hotel tax, or pay the tax by direct billings, are entitled to a refund of the tax. The following comptroller objects must be used to identify the state portion of the hotel occupancy tax:

• 7135 – Travel in-state – state hotel occupancy tax expense outside Galveston, Port Aransas, South Padre Island, Corpus Christi, Quintana and Surfside Beach city limits
• 7136 – Travel in-state – state hotel occupancy tax expense inside Galveston city limits
• 7137 – Travel in-state – state hotel occupancy tax expense inside South Padre Island city limits
• 7138 – Travel in-state – state hotel occupancy tax expense inside Port Aransas city limits
• 7139 – Travel in-state – state hotel occupancy tax expense inside Corpus Christi city limits
• 7140 – Travel in-state – state hotel occupancy tax expense inside Quintana city limits
• 7141 – Travel in-state – state hotel occupancy tax expense inside Surfside Beach city limits

Note: For detailed descriptions of travel-related comptroller objects, see Travel in the Texas Comptroller Manual of Accounts.

The hotel occupancy tax cannot be levied on motel banquet halls or meeting rooms located in buildings separated from other buildings in which the public could obtain sleeping accommodations. Bullock vs. Ramada Texas, Inc., 586 Southwest Reporter, Second Series page 651 (Texas Civil Appeals – Austin 1979, writ refused, no reversible error).

Local Portion of Hotel Occupancy Taxes

The local portion of the hotel occupancy taxes (county and municipal) must be charged to comptroller object 7105 (incidental in-state expense).

If state agencies choose to request a refund of local hotel occupancy taxes, they should use their internal accounting systems to identify the local portions of the hotel occupancy taxes paid to counties and municipalities. Each county or municipality collecting the tax may establish its own rules for the agencies to follow when claiming a refund. Agencies should contact the applicable county or municipality with specific questions about refunds.

Institutions of Higher Education

As defined by Texas Education Code Annotated, Section 61.003 (Vernon Supplement 1995), employees of institutions of higher education must provide an exemption certificate to claim exemption from the state portion of the hotel occupancy taxes. These institutions are not eligible for refunds of local hotel tax from the local taxing jurisdictions.