Payment by Federal Government of Hotel-Motel Tax Imposed by Anchorage, Alaska

B-172621: Jul 16, 1976

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A decision was requested concerning the legality of including a Hotel-Motel Rental Tax imposed by Anchorage, Alaska, in billings to the Bureau of Indian Affairs (BIA) for housing to Indian students on travel. When BIA contracts with a hotel or motel to provide housing to Indian students, it is the renter, and the tax falls on the federal agency which is constitutionally immune from state and local taxes. However, in the case of BIA employees on official business, the tax is on the employees, and even though the government reimburses the expenses, the constitutional exemption does not apply.