When a Texas state employee travels for work on the state's dime, do they still owe the hotel occupancy tax on their room?

Texas AG Opinion JM-972: State Employees and the Hotel Occupancy Tax

Plain-English summary

When a Texas state employee travels for work and stays in a hotel, the state is footing the bill. So a reasonable person might assume that the hotel occupancy tax, the extra charge added to the room rate, gets waived, the same way many state purchases are tax-free. The Commissioner of the Department of Mental Health and Mental Retardation wanted to know if that assumption was right. The Attorney General's answer: no. A state official or employee traveling at state expense on official business still owes the hotel occupancy tax.

This applies at every level. Chapter 156 of the Tax Code is the state hotel occupancy tax, charged on any room costing $2 or more a day. Chapters 351 and 352 let cities and certain counties add their own local hotel taxes. The opinion held that none of them exempt state-business travelers.

The reasoning rests on a basic rule of tax law: exemptions are read narrowly, and if the Legislature did not spell one out, courts assume it was left out on purpose. The Attorney General pointed out that these very statutes do list some exemptions. Someone who stays 30 days or more is exempt, and chapter 156 exempts certain religious, charitable, or educational organizations. Because the Legislature took the trouble to name those exemptions and did not name state employees, the logical inference (lawyers call it the expressio unius rule, "the expression of one thing excludes another") is that state-employee travel is deliberately not exempt.

There is a bit of history behind this opinion. Six years earlier, in 1982, the office had already answered the same question the same way in Opinion MW-528, saying no exemption exists. But in May 1988 it pulled that opinion back for another look through a letter opinion. After studying it again, the office reaffirmed the 1982 answer and went a step further, confirming that the local city and county hotel taxes have no such exemption either.

The Attorney General was candid about one weak spot in the older 1982 opinion. That opinion had leaned partly on a 1959 opinion about Federal Reserve Bank employees, which raised its own complicated questions about whether states can tax federal instrumentalities (the classic issue from McCulloch v. State of Maryland). The office said that Federal Reserve analogy was not the best support, but that plenty of other authority backed up the conclusion. It cited its own recent Opinion JM-865, which had relied on City of Wichita Falls v. Cooper for the settled principle that under Texas law a tax exemption exists only if the constitution or a statute specifically provides for it. Finding no such provision for state-business travelers anywhere in chapters 156, 351, or 352, or in the constitution, the office concluded the exemption simply does not exist.

Currency note

This opinion was issued in 1988. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The hotel occupancy tax statutes in chapters 156, 351, and 352 of the Tax Code have been amended many times since 1988, and the exemptions and administrative rules have changed. Notably, later law and Comptroller rules address how governmental entities and their employees handle the tax, including refund and exemption procedures for certain government travel. Anyone dealing with hotel occupancy tax on government travel today should consult the current Tax Code and the Comptroller's current rules rather than relying on the 1988 framework described here.

Who this opinion affected (as of 1988)

State agencies and their traveling employees: The opinion told them that hotel occupancy tax is a legitimate part of a room bill on state travel and is not waived just because the state pays.

Hotels: The opinion confirmed that hotels should collect the state and local occupancy taxes on rooms rented to state-business travelers.

Cities and counties: The opinion clarified that their local hotel occupancy taxes likewise contain no exemption for state employees.

Common questions

Are Texas state employees exempt from the hotel occupancy tax when traveling for work?
No. In this opinion the Attorney General concluded that state officials and employees traveling at state expense on official business are not exempt from the state hotel occupancy tax or from the local city and county hotel taxes.

Why isn't state travel exempt when so many state purchases are tax-free?
Because the hotel occupancy tax statutes list specific exemptions and do not include state-employee travel. Under the rule that exemptions are narrowly construed and that naming some exemptions implies excluding others, the omission is treated as intentional.

Which stays or organizations are exempt?
The statutes exempt persons who use a room for 30 days or more, and chapter 156 exempts certain religious, charitable, or educational organizations. State-business travel is not among the listed exemptions.

Did this opinion change earlier guidance?
It reaffirmed it. The office had reached the same result in 1982 (Opinion MW-528), briefly withdrew that opinion for study in 1988, then reaffirmed it and extended the conclusion to the local hotel taxes.

Background and statutory framework

Chapter 156 of the Tax Code imposes a state tax on a person who, under a lease, concession, permit, right of access, license, contract, or agreement, pays for the use or possession of a room or space in a hotel costing $2 or more each day (section 156.051). Chapters 351 and 352 authorize a municipality and the commissioners courts of certain counties to impose hotel occupancy taxes in similar language.

The office had addressed this question as to the chapter 156 state tax six years earlier in Attorney General Opinion MW-528 (1982), ruling that no exemption exists. On May 16, 1988, the office issued Letter Opinion No. LO-88-58 withdrawing that opinion for further study. After reconsideration, the office reaffirmed MW-528's conclusion that state officials and employees traveling at state expense on official business are not exempt from the chapter 156 state hotel occupancy tax, and concluded there is likewise no exemption from the local hotel occupancy taxes in chapters 351 and 352.

MW-528 had based its conclusion in part on Attorney General Opinion WW-738 (1959), which held that officers and employees of the Federal Reserve Bank traveling on official business are not exempt from the state hotel occupancy tax. The opinion observed that WW-738 may not have been the best analogy, because it involved possible issues regarding taxation of federal instrumentalities that are not relevant to the state-employee question (see, e.g., McCulloch v. State of Maryland, 17 U.S. (4 Wheat.) 316 (1819)). It found ample support elsewhere.

At the outset, claims for tax exemptions are strictly and narrowly construed (Davies v. Meyer, 541 S.W.2d 827 (Tex. 1976)). The statutes expressly exempt persons using a room 30 days or more, and chapter 156 exempts religious, charitable, or educational organizations (Tax Code sections 156.101, 156.102, 351.002(c), 352.002(c)); under the expressio unius rule of statutory construction, exemptions not expressly provided are deemed excluded by the Legislature from the statutory scheme.

In Attorney General Opinion JM-865 (1988), the office concluded that counties and home-rule cities were without authority to grant hotel occupancy tax exemptions to certain religious, charitable, and educational organizations. That opinion quoted City of Wichita Falls v. Cooper, 170 S.W.2d 777 (Tex. Civ. App. - Fort Worth 1943, writ ref'd), which held that cities could not by ordinance provide tax exemptions on homesteads beyond those authorized by state law or constitutional provision, and which stated the settled rule that all property should be subject to taxation on an equal and uniform basis except property the governing document specifically exempts or that the Legislature, under constitutional restrictions, declares exempt by explicit language (170 S.W.2d at 780). Although JM-865 and Cooper involved property taxation, the general rule is that under Texas law tax exemptions exist only if specifically provided in the constitution or by statute. Finding no specific provision in chapters 156, 351, 352, or elsewhere in state law or the constitution exempting state officials or employees traveling on state business, the office concluded, as MW-528 had, that no such exemption exists.

Citations

Statutory authority:

• Section 156.051, Tax Code (state hotel occupancy tax)
• Sections 156.101 and 156.102, Tax Code (chapter 156 exemptions)
• 351.002(c), Tax Code (municipal hotel occupancy tax exemption)
• 352.002(c), Tax Code (county hotel occupancy tax exemption)

Cases:

• Davies v. Meyer, 541 S.W.2d 827 (Tex. 1976)
• City of Wichita Falls v. Cooper, 170 S.W.2d 777 (Tex. Civ. App. - Fort Worth 1943, writ ref'd)
• McCulloch v. State of Maryland, 17 U.S. (4 Wheat.) 316 (1819)

Prior Attorney General opinions referenced: MW-528 (1982), WW-738 (1959), H-380 (1974), JM-865 (1988), Letter Opinion LO-88-58 (1988).

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-972
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1988/jm0972.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor OCR errors may remain; the linked PDF is authoritative.

October 26, 1988

Honorable James A. Adkins
Commissioner
Texas Department of Mental Health and Mental Retardation
P. O. Box 12668
Austin, Texas 78711-2668

Opinion No. JM-972

Re: Whether a state official or employee traveling at state expense on official state business is exempt from the hotel occupancy tax imposed by chapter 156 of the Tax Code (RQ-1470)

Dear Mr. Adkins:

You ask whether a state official or employee traveling at state expense on official business for a state agency is exempt from the hotel occupancy taxes provided for in chapters 156, 351 and 352 of the Tax Code.

Chapter 156 of the Tax Code imposes a state 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 or space in a hotel costing $2 or more each day.

Tax Code section 156.051. Additionally, chapters 351 and 352 of the Tax Code in similar language authorize a municipality and the commissioners courts of certain counties, respectively, to impose hotel occupancy taxes.

This office was asked this question with respect to the chapter 156 state hotel occupancy tax six years ago. In Attorney General Opinion MW-528 (1982), this office ruled that "no such exemption exists" from the chapter 156 state hotel occupancy tax. On May 16, 1988, however, this office issued Letter Opinion No. LO-88-58, withdrawing MW-528 for further study and consideration. Having carefully considered the question, we now reaffirm the conclusion of MW-528 that state officials or employees traveling at state expense on official business for a state agency are not exempt from the state hotel occupancy tax under chapter 156 of the Tax Code. We also conclude that there is no such exemption to the local hotel occupancy taxes provided for in chapters 351 and 352 of the Tax Code.

Attorney General Opinion MW-528 based its conclusion in part on the ruling in Attorney General Opinion WW-738 (1959), that officers and employees of the Federal Reserve Bank traveling on official business are not exempt from the state hotel occupancy tax. The situation addressed in WW-738 may not have been the best analogy in support of the result of MW-528, involving as it did possible issues with respect to taxation of federal instrumentalities not relevant to the question in MW-528. See, e.g., McCulloch v. State of Maryland, 17 U.S. (4 Wheat.) 316 (1819). There is ample support elsewhere, however, for the conclusion reached in MW-528.

We would note at the outset, the well settled rule that claims for tax exemptions are strictly and narrowly construed. See, e.g., Davies v. Meyer, 541 S.W.2d 827 (Tex. 1976). Also, we note that the express exemptions in chapters 156, 351 and 352 for persons using a room thirty days or more, and in chapter 156 for religious, charitable or educational organizations, indicate, under the expressio unius rule of statutory construction, that any exemptions not expressly provided for are to be deemed as expressly excluded by the legislature from the statutory scheme. See Tax Code sections 156.101, 156.102, 351.002(c), 352.002(c).

In Attorney General Opinion JM-865 (1988), we concluded that counties and home rule cities were without authority to grant hotel occupancy tax exemptions to certain religious, charitable, and educational organizations. That opinion quoted the court in City of Wichita Falls v. Cooper, 170 S.W.2d 777 (Tex. Civ. App. - Fort Worth 1943, writ ref'd), which held that cities could not by ordinance provide for tax exemptions on homesteads beyond those authorized by state law or constitutional provision.

It is clear to us that it was intended by the framers of our Constitution that all property should be subject to taxation, upon an equal and uniform basis for the purpose of defraying the governmental expense, with the exception only of such property as the document specifically exempts therefrom and such as the Legislature shall, under Constitutional restrictions, by explicit language, declare to be exempt. (Emphasis added in Attorney General Opinion JM-865 (1988), at 3.)

Cooper, 170 S.W.2d 777, 780.

Though JM-865 did not deal with property taxation exemptions as did the Cooper case, it reached its conclusion based on the general rule enunciated there that, under Texas law, tax exemptions exist only if specifically provided for in the constitution or by statute. We follow here the rule followed in JM-865. We find no specific provision in chapters 156, 351, 352, or elsewhere in state law or in the constitution to the effect that state officials or employees traveling on state business are exempt from the hotel occupancy taxes provided for in those chapters. Hence, we conclude, as did Attorney General Opinion MW-528, that no such exemption exists.

SUMMARY

State officials or employees traveling at state expense on state business are not exempt from the hotel occupancy tax provided for in chapters 156, 351 and 352 of the Tax Code.

JIM 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

[Footnote 1] We do not mean here to reconsider Attorney General Opinion WW-738. But see Attorney General Opinion H-380 (1974) (Motor Vehicle Retail Sales and Use Tax not applicable to federal employee renting vehicle on official business).