Reminder – State Employees Not Exempt from Hotel Occupancy Tax

Reminder – State Employees Not Exempt from Hotel Occupancy Tax
Hotel tax reimbursed through travel vouchers

State employees traveling on official business are not exempt from state or local hotel occupancy tax, unless an exception applies. State employees should therefore not issue a hotel occupancy tax exemption certificate to a hotel. See Tax Code Sections 156.103(c), 351.006(d) and 352.007(d).

Certain state employees – mainly judicial officials, heads of state agencies, members of state boards and commissions and members of the Texas legislature, who are issued a hotel occupancy tax exemption photo identification or card, are exempt from state and local hotel occupancy tax and are not entitled to a refund. The photo ID or card should be presented to the hotel with a completed Texas Hotel Occupancy Tax Exemption Certificate (Form 12-302) during the check-in process.

Employees of Texas institutions of higher education who travel on official business may claim exemption from the six percent state hotel occupancy tax. A completed Texas Hotel Occupancy Tax Exemption Certificate (Form 12-302) should be presented to the hotel at check in to claim the exemption. Any local hotel occupancy tax imposed, however, must be paid.

Unlike sales tax, Texas state agencies are not exempt from hotel occupancy tax. State employees are entitled to be reimbursed for hotel occupancy taxes paid when traveling on official business of the state. Hotel taxes are reimbursed through employee travel vouchers for most state agencies. The tax is an incidental expense and does not apply to the maximum lodging reimbursement rate.

State agencies that have submitted a blanket refund request are refunded each fiscal quarter for hotel tax that the agency reimbursed to employees. For state agencies not on the state’s accounting system, separate quarterly refund requests must be made with the Comptroller’s office and with each local taxing authority that collected hotel tax.

If you have any questions, please call 1-800-252-1385.