                   THE    AITORNEY                GENERAL

                               OF      TEXAS

                              AUSTIN    ~~.‘X%ZUAS

  WVII.L   WILSON
ATTORNEY      CENERAL


                                    November 12, 1959

     Honorable Robert S. Calvert            Opinion No. ww-721
     Comptroller of Public Accounts
     Capitol Station                        Re:      Whether items purchased
     Austin, Texas                                   by the Board of Control
                                                     for use by State Agencies
                                                     are subject to the tax
                                                     levied by Chapter 20,
                                                     H.B. 11, 56th Leg., 3rd
     Dear Mr. Calvert:                               C.S. and related questions.
          You have requested an opinion on the following questions
     pertaining to the taxes imposed by Chs. 20 and 23 of H.B. 11,
     3rd C.S. of the 56th Legislature:
                   "1 . Are items purchased by the Board of
                 Control for use by State Agencies or for use
                 by the State in any form subject to the tax
                 levied by this Article B.B. 11, Ch. 2q?
                   "2. Some State Agencies are not required
                 to make the purchases through the Board of
                 Control. Are items purchased by these Boards
                 or Agencies for the use of this Agency or
                 for the use of the State or Its employees
                 subJect to the tax levied under this Article?
                   "3. Is a state  employee traveling at state
                 expense required to pay the hotel occupancy
                 tax levied under Chapter 23 of this Article?
                   "In the event you hold that items sold under
                 questions 1 and 2 of this request are taxable,
                 then is the seller of such item6 required to
                 obtain a permit?"
           Ch. 20 of H.B. 11 levies certain excise taxes upon users of
      the products specified therein. Article 20.07, Sec. (a) provides:
                   "Every retailer who makes a sale or distri-
                 bution of an Item taxable under this Chapter
                 In Texas to the user shall rdd thn amount cf
                 said tax-to the selling pri'e of such item which
                 said tax shall be collected +'romthe nurchaeer
                 or recipient or' such item at the time of such
                 saie or dlstr,lbdtiol.,and said tax shit11be
Hon. Robert S. Calvert, Page 2     Opinion No. ww-721


         reported and paid to the State of Texas as
         hereinafter provided."
     'User" is defined in Article 20.01(p):
           "'User' shall mean and include every
         person who purchases, uses or acquires In
         any other manner any item taxable under
         this Chapter for his own use in Texas and
         who does not purchase or acquire same for
         the purpose of resale."
     "Person" is defined by Article 20.01(a):
           "'Person' shall mean and include any
         individual, firm, co-partnership, joint
         venture, association, social club, fraternal
         organization, corporation, estate, trust,
         business trust, receiver, assignee for the
         benefit of creditors, trustee, trustee in
         bankruptcy, syndicate, the United States,
         any agency, institution or instrumentality
         of the United States, this State, any agency,
         institution, political subdivision or ln-
         strumentality of this State, or any other
         group or combination acting as a unit."
     The conclusion that the tax Imposed by Ch. 20 applies to
items purchased by the State of Texas is inescapable; there~
is no exemption from such tax either in the statutes or the
Constitution of the State of Texas.l

1
 In this connection, attention Is directed to the case of
State v. City of El Paso, 143 S.W.2d 366 (Tex.Sup.Ct. 1940)
I   hi h it     h Id that the City of El Paso was not exempt
f:oi p&mentwty eicise taxes upon gasoline used by the city
purchased in the state of New Mexico. The holding was based
upon the fact that since the Texas Constitution exempted munlcl-
pal corporations only from ad valorem, Income, and occupation
taxes, the city was not exempt from the payment of an excise
tax. The contention of the city that it was not a corporation
or agency within the meaning of the word "person" contained In
the motor fuel excise tax law was over-ruled by the Court in
the following language:
           "We think the statutory definition of 'person'
         as contained in subdivision (e) of Article 7065a-1
         covers all corporations or agencies which actually
Hon. Robert S. Calvert, Page 3      Opinion No. ww-721


     However, even though the State is subject to the taxes
imposed by Ch. 20, it cannot pay them.~ Article VIII, Section
6 of the Texas Constitution states:

           "No money shall be drawn from the Treasury
         but in pursuance of specific appropriations
         made by law; nor shall any appropriation of
         money be made for a longer term than two years,
         except by the first Legislature to assemble
         under this Constitution, which may make the
         necessary appropriations to carry on the govern-
         ment until the assemblage of the sixteenth
         Legislature."
     In reference to this Section, Attorney General's Opinion
No. O-6794 (1945) held that in the absence of a specific
appropriation providing for payment of taxes due counties and
school districts on prison land, the Texas prison system could
not pay such taxes from prison Income. Under the authority of
this opinion, it is obvious that agencies of the State of Texas
may not pay the taxes imposed by Ch. 20 unless a specific appro-
priation for such purpose is made by the Legislature. (In this
connection, it does not matter whether state agencies make
purchases independently or through the Board of Control.) No
such appropriation has been made.
     Article 20.11 of H.B. 11 states:
           "(a) From and after the effective date of
         this Chapter, a11 retailers of items taxable
         under Articles 20.02, 20.03 and 20.04 of this
         Chapter in this State, now engaged or who desire
         to become engaged in the sale, use or distri-
         bution of items taxable under Articles 20.02,
         20.03 and 20.04 of this Chapter, fihall obtain
         a permitJ. . .No retailer shall make a sale, use

1 (Cont'd.)
         sell motor fuel In Texas. This being true the
         statute also
         which use motor fuel
         sale in this State." (Raphasis added.)
 It Is apparent that any attempt to extend the constitutional
exemption of municipal corporations from occupation, income
and ad valorem taxes so as to relieve the State from payment of
the taxes in question would be mollified by the reasoning and
language of the foregoing case. (The Texas Constitution contains
no other exemption provision applicable to the facts in issue.)
Hon. Robert S. Calvert, Page 4     Opinion No. WW-721


          or distribution of an item taxable under Articles
          20.02, 20.03 and---f-
                           20.0 of this Chapter until
          such application has been filed and a permit
          has been obtained."
     Though the State has no authority to pay the taxes imposed
upon the items specified in Chapter 20, such items, when sold
to the State, are technically "taxable" within the meaning of
Article 20.11. Therefore, persons making sales of such Items'
to the State are required to obtain a permit.
     Your last question is directed to whether or not state
employees traveling at state expense are required tomy the
hotel occupancy tax levied under Chapter 23 of H.B. 11, 3rd
C.S. of the 56th Legislature.
     State employees renting hotel rooms in the course of
travel at State expense may be compensated in two ways:
     1.   By a per diem reimbursement in lieu of actual expenses.
     2.   Reimbursement of actual expenses incurred.
In neither situation does the State of Texas contract directly
with the hotel. Regardless of how the state employee is
reimbursed when he rents a hotel room, he is acting in his
private capacity and incurs the tax in such capacity. Payment
of the tax and the price of occupancy is made out of the
employee's private funds; the employee does not act as the agent
of the State in renting the hotel room, and payment for occu-
pancy of the room is not made out of state funds. The employee
is (within practical limits) at liberty to stay in the hotel
of his choice, or not to stay Fn a hotel at all. The employee's
expenses are reimbursed according to his contract2 with the
State. Under these facts, the tax is not imposed upon the
2
 Expense reimbursement is part of the employment contract with
the State. To illustrate, an employee compensated on a per
diem basis receives the same amount for each day's travel re-
gardless of the price of any hotel room that might have been
rented (and regardless of whether a hotel room was actually
rented) in the course of such travel. Obviously In this situa-
tion there is no direct connection between the State and the
hotel. Likewise, In cases where the employee is paid for actual
expenses, reimbursement is made pursuant to the employement con-
tract. The State merely contracts with the employee to reimburse
him for actual expenses incurred. The price of occupancy of a
hotel room is merely one of such expenses, as is the hotel occu-
pancy tax. The State does not contract directly withtie hotel,
and does not act through the employee as agent when the employee
rents a hotel room.
      .   I




Hon. Robert S. Calvert, Page 5      Opinion No. WW-721


State, consequently, there is no question as to whether the
State is liable for payment thereof. The tax is a llablllty
of and must be paid by the employee.
                        SUMMARY
          Though agencies of the State of Texas are
      subject to the taxes imposed by Chapter 20 of
      H. B. 11, 3rd C.S., 56th Leg., there is no appro-
      priation specifically for the purpose of paying
      the taxes; therefore, the State may not pay them.
      But even though the State is prevented from pay-
      ing the taxes, the items specified in Chapter 20
      are technically "taxable"; consequently persons
      selling such items to the State are required to
      obtain the permit required by Article 20.11 of
      said Chapter.
          A State employee traveling at state expense
      is required to pay the hotel occupancy tax; the
      employee acts in his private capacity in con-
      tracting for the hotel room and incurs the tax
      in such capacity. The State does not contract
      with the hotel for payment of the price of occu-
      pancy, but only reimburses the employee, either
      on a per diem basis, or by paying him for actual
      expenses Incurred (in which latter case the tax
      paid by the employee is one of such actual expenses).
      Under these circumstances, there is no question of
      whether the State is liable for payment of the tax.
                           Yours very truly,
                           WILL WILSON
                           Attorney General of Texas


                           BY
JNP:CM
APPROVED:
OPINION COMMITTEE:
John Reeves, Chairman
Milton Richardson
Henrx Braswell
L,inwardShivers
REVIEWED FOR THE ATTORNEY GENERAL
By:   W. V. GEPPERT
