Could a hotel manager make tax-free purchases for Resolution Trust Corporation property by showing vendors only the RTC's general tax-exemption form letter?

Plain-English summary

A manager operated a hotel belonging to a financial institution in federal receivership. The Resolution Trust Corporation sent a form letter asserting exemption from state and local taxes and asked the manager to present it to vendors instead of paying tax.

The Comptroller said the form letter was not enough. The manager needed documentation showing that title to the hotel had transferred to the RTC and a written agreement appointing the manager as RTC's agent for tax-free purchases.

With both documents on file for audit, the manager could issue exemption certificates for items incorporated into or used on the managed property. The certificate could be signed by an authorized management-company or RTC representative.

What this means for you

An exempt principal's general status did not automatically establish an agent's purchase exemption. The relationship to the specific property and purchasing authority had to be documented.

Common questions

Was the RTC's general form letter sufficient? No.

What ownership document was required? Proof that title to the hotel transferred to the RTC.

What agency document was required? A written agreement authorizing the manager to make tax-free purchases for the RTC.

Citations and references

The letter did not identify a numbered statute or administrative rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9108L1129D12

Original ruling text

August 26, 1991

Dear **:

Thank you for your recent letter. As I understand it, you manage
a hotel that belongs to a financial institution that is in federal
receivership. The Resolution Trust Corporation (RTC) has sent you
a form letter stating that they are not required to pay state or
local taxes, and the RTC has asked you to present this letter to
vendors from whom you purchase goods or services instead of paying
tax.

The RTC letter is not sufficient documentation to enable you to
make tax-free purchases.

To comply with our current policy, you would need:

1. Documentation from the RTC showing that title to the HOTEL A has
   been transferred to the RTC; and

2. A written agreement between the RTC and you that designates you
   as the RTC's agent for the purpose of making tax-free purchases on
   its behalf.

If you had this type of documentation on file and available for
inspection by our auditors, then you would be able to issue an exemption
certificate (blank copy enclosed) to purchase, tax free, items
that are incorporated into or used on the property that you manage.
You or another authorized representative of the management company,
or an authorized representative of the RTC, could sign the certificate.

This opinion is based on the facts presented. Different facts,
though similar, might lead to different answers. If you have further
questions, feel free to write or call me at 1-800-252-5555,
ext. 3-3889.

Sincerely,

John Christian
Attorney
Tax Administration