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Handbook of Operating Procedures

Payment of Taxes

Policy Number: 73


Payment of taxes using University funds



Date Reviewed:
March 2019
Responsible Office:
Finance and Business Services
Responsible Executive:
Senior Vice President, Finance and Business Services and Chief Financial Officer


As an agency of the State of Texas, The University of Texas Health Science Center at Houston ("University") is exempt from payment of certain taxes, including but not limited to Federal Excise Tax, State of Texas Sales Tax, and State of Texas Hotel Occupancy Tax. Accordingly, it is the policy of the University that such taxes should not be paid by any representative of the University. Goods and services procured through the normal procurement process should not require the requesting department to obtain tax exemption; however, employees and residents who obtain goods and services through the petty cash process, procurement card, or otherwise legitimately outside the normal procurement process, must advise vendors of the tax-free status of the University.


Various taxability issues should be handled as follows:

A. Purchase Orders and Petty Cash or Non-PO Voucher Payment Requests

In-state vendors should not charge sales tax. If a State of Texas Sales Tax Exemption is not on file with the vendor, the processing department should provide one to the vendor. Copies are available from Finance or any dean's office.

B. Payments for Lodging

Before traveling within Texas, a University representative should obtain a State of Texas Hotel Occupancy Tax Exemption Certificate from Expense Reimbursement, or their dean's office. The traveler should present it to the lodging establishment when he or she checks in.

University travelers cannot be reimbursed for State of Texas Hotel Occupancy Taxes they paid if the travel is being paid for by state funds, service department accounts, or from federal contract or grant funds. 

C. Petty Cash Reimbursement

Before making a purchase through the petty cash process, or otherwise legitimately outside the normal procurement process, individuals should obtain a copy of the institution's tax-exempt documentation from the Expense Reimbursement website or any dean's office. In order to confirm the vendor will honor the documentation, the individual should contact the vendor prior to making the purchase to determine the vendor's guidelines. (Note: Some vendors typically require the purchase to be made with a company check in order for the purchase to qualify for the tax-exemption. Others will require the purchaser's institutional ID.) The individual should present the documentation to the vendor at the time of purchase.

If the vendor indicates they will not or cannot honor the exemption, the individual is responsible for identifying an eligible account to which the state sales tax may be charged.

If a request to reimburse state sales tax is presented to the custodian of the petty cash fund or the Bursar's Office, the reimbursement should be reduced by the amount of the state sales tax unless it has been coded appropriately and will be charged to an eligible account.