Could federal credit union employees and volunteer directors claim Texas tax exemption while traveling on official business?

Plain-English summary

Federal credit unions organized under 12 U.S.C. Section 1768 were exempt from Texas limited sales and use tax. A purchase voucher presented to the vendor was sufficient evidence.

An employee or volunteer director traveling on official business could not claim exemption merely because the credit union would reimburse the expense. The exempt credit union had to pay the vendor directly.

The state hotel-occupancy-tax law exempted governmental entities. City and county hotel tax could also be exempt if a controlling federal statute prohibited it, but the credit union had to request relief from the particular locality.

What this means for you

The exemption followed the entity's direct purchase, not the traveler's eventual reimbursement. Local hotel-tax treatment required a separate jurisdiction-specific request.

Common questions

Were federal credit union purchases exempt from Texas sales and use tax? Yes.

What documentation could the vendor accept? A purchase voucher.

Could an employee pay personally and claim exemption because of reimbursement? No.

Was city or county hotel tax automatically exempt? No automatic conclusion was given; the credit union had to identify controlling federal law and request exemption locally.

Citations and references

• 12 U.S.C. § 1768 (federal credit union tax exemption)
• Tex. Tax Code ch. 151 (limited sales and use tax)
• Tex. Tax Code ch. 156 (state hotel occupancy tax)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9010L1047E13

Original ruling text

October 9, 1990

Dear ***:

This is in response to your recent letter requesting information concerning the
tax exempt status of employees and volunteer members of the Board of Directors
of FEDERAL CREDIT UNION.

You specifically asked for information on how the exemption should be
handled by the employees and Board of Directors when traveling on official
business.

Federal credit unions organized under 12 U.S.C. Section 1768 are exempt by
statute from payin g the limited sales and use tax (Chapter 151 of the Texas
Tax Code). A purchase voucher presented to the vendor is sufficient evidence
of the exemption. A person traveling on official business cannot claim an
exemption based on the fact that the person will be reimbursed by the exempt
entity. All purchases must be paid for directly by the exempt entity.

The state hotel occupancy tax law (Chapter 156 of the Texas Tax Code) provides
an exemption for governmental entities. A federal credit union may be exempt
from the city and county hotel occupancy tax if there is a prevailing federal
statute that prohibits such taxation. If so, you should request exemption from
the specific city or county imposing the tax.

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

If you have any questions or need additional information, you may call me toll
free at 1-800-252-5555, extension 5-0330. The regular number is 512/463-4600,
or write me at Tax Correspondence.

Sincerely,

Bettie U. Peterson
Tax Correspondence Division