Frequently Asked Questions
- When may uniformed members/DoD civilian employees be granted exemption from local tax (i.e., hotel, meals, rental car, etc.) under federal law?
- Are uniformed members/DoD civilian employees ever authorized an exemption from hotel or occupancy taxes when payment is not made directly by a Federal Agency?
1. When may uniformed members/DoD civilian employees be granted exemption from local tax (i.e., hotel, meals, rental car, etc.) under federal law?
Uniformed members/DoD civilian employees may be granted exemption from local tax when direct payment is made by the Federal Government to a vendor to directly purchase goods or services. The Comptroller General of the United States has ruled consistently that indirect payments (including traveler credit cards or other reimbursed payments) are not tax exempt when paid by the traveler directly to the vendor.
Federal employees are often issued an individually-billed Government travel charge card with a 5, 6, 7 or 8 as the fifth digit. These digits distinguish cardholders as Government civilian employees or uniformed members. When charges are made to the accounts of these civilian employees or uniformed members, the bills are typically sent to their home addresses.
An account that has a "9" as its fifth digit is a centrally-billed account. Centrally billed travel card account charges are provided to the agency for direct payment by the government. Centrally billed accounts, as a rule, are typically "cardless" accounts. There are rare occasions, particularly with the uniformed services, when a centrally billed account card is issued. Centrally billed account cards are typically used when a group or organized unit of people are traveling with a lead person as the cardholder. The card is issued to the lead individual and payment is made by the cardholder's agency.
2. Are uniformed members/DoD civilian employees ever authorized an exemption from hotel or occupancy taxes when payment is not made directly by a Federal Agency?
Yes. Several states and cities have specifically exempted uniformed members/Federal employees from paying a hotel occupancy tax when that municipality's requirements are met. As such, federal employees and uniformed members may be authorized a tax exemption by the hotel, BUT IT IS NOT REQUIRED; the hotel can choose not to participate. These specific exemptions usually apply regardless of the payment method, but use of the individually-billed travel charge card is often a key. An individual traveling on an individually billed government travel charge card (one that was issued to that person for that person's official travel) should ask about exemption from state taxes when making reservations with hotels or rental car companies. Since the individually billed card is provided to the government traveler for official use only, the charges made to the card are not paid by the government but rather are the individual's responsibility. When an individual procures a hotel room while traveling on official business, it is the individual incurring the tax, not the Federal Agency. The Federal Agency is not a party to the transaction. The fact that the Federal Agency reimburses the individual for the expenses, and thereby assumes the economic burden of the total cost of the lodging, including the tax, does not mean that the Federal Agency is being taxed.
For more information and locations offering tax exemptions, please visit the GSA website (www.gsa.gov) or you may access the GSA list from our website by clicking on State Tax Exemption Listings.