What tax exemptions applied to Texas university employees' hotel stays and vehicle rentals on official business?

Plain-English summary

The 1988 letter addressed both hotel occupancy tax and motor vehicle rental tax for university and other state employees traveling on official business.

For hotels, it allowed an employee to give the hotel an exemption certificate instead of paying state hotel occupancy tax, while stating that local hotel tax remained due. It approved the reduced-size certificate submitted with the request.

The original motor vehicle discussion said an employee renting in the employee's own name could not claim exemption, while a rental agreement directly between the rental company and university was exempt. STAR partially superseded the employee portion in 2005: an employee on official state business may issue an exemption certificate when the rental is under a state master contract, including the listed individual, corporate-liability individual, or central billing arrangements.

What this means for you

University and state travel programs

The hotel and vehicle rules were not identical. For vehicle rentals, use the later master-contract clarification rather than the original categorical employee denial.

Rental companies and hotels

Confirm the official-business certificate and the current contract or tax requirements. The hotel letter distinguished exempt state tax from local hotel tax still due.

Common questions

Q: Did the letter exempt local hotel occupancy tax?

A: No. It expressly said local tax remained due.

Q: Is an employee's official-business vehicle rental always taxable?

A: No. The official supersession notice allows an exemption under a state master contract with the specified billing arrangements.

Q: Was a direct university rental exempt under the original letter?

A: Yes. It said no motor vehicle tax was due when the agreement was directly between the rental agency and university.

Citations and references

• The letter cites no numbered statute or rule.
• STAR 200509306L is identified by the official supersession notice; no unverified internal link is supplied.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=MVT
• Opinion: https://star.comptroller.texas.gov/view/8809L0898G11

Original ruling text

STAR SUPERSEDED INFORMATION
Accession No.(s):
Supersede type: Partial
Document superseded on: 10/27/2005
Issue that caused the document to be superseded: Rental of a motor vehicle
to a state employee on official state business.
Reason for superseding the document: Policy clarification - An employee on
official business of the state may issue an exemption certificate for the
rental of a motor vehicle provided the rental is made under a master contract
with the state. This applies to a rental paid for by the employee with an
Individual Bill Account (IBA), a Corporate Liability Individual Bill Account
(CLIBA) and a Central Bill Account (CBA) See Accession No.: 200509306L

September 9, 1988

Dear **:

Please accept this statement as this agency's position on the taxability of the
rental of motor vehicles and hotel occupancy by university and other state
employees.

A university or other state employee may issue a hotel operator an exemption
certificate indicating that they are on official state business in lieu of
paying State Hotel Occupancy Tax. Local tax will be due. The exemption
certificate you enclosed with your correspondence to Mr. Ledford Kelly of this
agency is acceptable.

The motor vehicle tax statue or administrative rules do not allow a university
or other state employee who rents or contracts for a motor vehicle in their own
name while traveling on official business to issue an exemption certificate in
lieu of paying the motor vehicle tax.

In situations where the rental agreement is between the rental agency and the
university directly, no motor vehicle tax is due.

If you have any questions please feel free to write or call. My phone number
is 463-4684.

Sincerely,

Curt Swenson
Tax Correspondence

cc: Mr. Ledford Kelly
Audit Division

August 16, 1988

Mr. Ledford Kelly
Audit Division - Technical Support
State of Texas
P.O. Box 13528
Capitol Station, Texas 78711

Re: Tax Exempt Certificates
Reduced Size Approval

Dear Ledford:

This is a confirmation of our conversation earlier this month on "miniature"
tax-exempt certificates for efficient use by UNIVERSITY employees traveling on
official business.

The sample of a combination Rental Car and Hotel Tax Exempt certificate slip is
enclosed and attached to a sample ticket copy for your review. This is only a
sample draft and is presented for further comment, correction, or amendment.

Our objective is to funnel the certificates through a controlled source (our
contracted travel agency) and to routinely distribute them. In the past, we
have mailed master copies to department directors, and requested that a
distribution be made. Travelers found the size of the certificate an
inconvenience, and frequently the form was forgotten altogether. As a result
tax-exemption was not always requested or granted.

With a certificate being placed on all issued tickets, we may assure
possession/receipt from the beginning of the trip, but we need a
reduced-approved-certificate to accomplish our objective.

Would you please phone me with comments following your review? Thank you.

Sincerely,