Federal Travel Regulation; Texas State Court Decision Overturning Texas House Bill 2129 That Imposed a Hotel Occupancy Tax on the Federal Government and Federal Employees For Official Travel Performed in the State of Texas

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The attached bulletin informs agencies of the recent Texas State court decision which overturned a recently enacted Texas State hotel occupancy tax. The Texas State legislature enacted Texas House Bill 2129, effective September 1, 1995, which imposed a 6 percent hotel occupancy tax on the use or possession of a hotel room in the State of Texas on the Federal Government and on Federal employees lodging in the state while performing official government travel. On April 30, 1996, a Texas State court ruled that Texas House Bill 2129 was unconstitutional on the basis that the provisions taxing the Federal Government and Federal employees performing official travel violated Article VI, clause 2, of the U.S. Constitution (the Supremacy Clause), as well as Article VIII, section 1 and Article I, section 3 of the Texas State Constitution (the Equal Protection Clause). Agencies and their employees must no longer be assessed this tax while lodging in Texas on official government business.