Are purchases made by federal employees using a Government Visa (I.M.P.A.C.) credit card exempt from Texas sales tax?

Plain-English summary

A taxpayer asked the Comptroller's office about the taxability of purchases of taxable items made by federal government employees using a Government Visa credit card, known as I.M.P.A.C. (the letter's short name for the card, related to the GSA SmartPay program referenced in the file's title). The Comptroller explained that these credit cards state on their face "UNITED STATES OF AMERICA I.M.P.A.C. - FOR OFFICIAL USE ONLY - U.S. GOVT TAX EXEMPT."

The ruling holds that purchases made by cardholders are exempt if the cardholders are authorized only to make purchases for official government purposes, and because the purchases made on the credit cards are paid directly by the US Government. The Comptroller concluded that Texas retailers may exempt purchases made with these credit cards.

The letter notes this opinion is based on the facts presented, and if there are additional or different facts, the opinion may change.

What this means for you

Texas retailers accepting government credit cards

If a customer presents a Government Visa I.M.P.A.C. card bearing the "FOR OFFICIAL USE ONLY - U.S. GOVT TAX EXEMPT" language, this letter indicates you may treat the purchase as exempt from Texas sales tax, because the charge is paid directly by the US Government and the cardholder is authorized only to make purchases for official government purposes.

Federal government employees and purchasing agents

This letter indicates that purchases you make with an I.M.P.A.C. Government Visa card for official government purposes, paid directly by the US Government, are treated as exempt from Texas sales tax.

Accountants and tax professionals

This letter ties the exemption to two specific facts stated on the card and in the letter: (1) the cardholder is authorized only for official government purchases, and (2) the US Government pays the charge directly. The letter does not cite a specific statute, so it should be read as a narrow, facts-based conclusion rather than a full explanation of the underlying legal basis for the federal government purchase exemption.

Common questions

Q: Are purchases made with a Government Visa I.M.P.A.C. card exempt from Texas sales tax?
A: Yes, according to this letter, as long as the cardholder is authorized only to make purchases for official government purposes and the purchase is paid directly by the US Government.

Q: Can a Texas retailer treat these credit card purchases as tax-exempt at the point of sale?
A: The letter states that Texas retailers may exempt purchases made with these credit cards.

Q: Does the letter explain the legal basis (statute) for this exemption?
A: No. The letter does not cite a specific statute or rule by number; it states the conclusion based on the facts described (official-use-only card, paid directly by the federal government).

Q: Would this exemption still apply if the facts were different — for example, if the cardholder could use the card for personal purchases?
A: The letter says the opinion is based on the facts presented, and if there are additional or different facts, the opinion may change. So the exemption described here depends on the card being restricted to official government use and paid directly by the government.

Citations and references

The original letter does not cite any specific statute or rule by number.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9404L1295D08

Original ruling text

April 8, 1994

Dear**:

Thank you for your letter of March 18, 1994, to Ms. Jo Ann
Dieck concerning the taxability of purchases of taxable items
made by federal government employees using a Government Visa
credit card (I.M.P.A.C.).

The credit cards state on their face "UNITED STATES OF
AMERICA I.M.P.A.C. - FOR OFFICIAL USE ONLY - U.S. GOVT TAX
EXEMPT". Purchases made by cardholders will be exempt if
the cardholders are authorized only to make purchases for
official government purposes. The purchases made on the credit
cards are paid directly by the US Government.

Texas retailers may exempt purchases made with these credit
cards.

This opinion is based on the facts presented. If there are
additional or different facts, the opinion may change.

You may call toll free 1-800-531-5441, extension 3-4683 if
you have any questions or need more information. You may
write to Tax Administration Division, Comptroller of Public
Accounts.

Sincerely,

Eddie C. Washington
Tax Administration Division

NOTE: Previous Accession Number 9404228L