Sales Tax Refund for Providers of Cable Television, Internet Access or Telecommunications Services
Frequently Asked Questions
I am a direct payment permit holder. Do I have to pay sales and use tax on items that are eligible for refund of state tax under this program, or can I just take a credit on my return?
You must report and remit state and local sales and use tax before you can apply for a refund. The law provides for a refund of taxes paid on qualifying items, not a credit. The statute requires payment of the tax and not merely an accrual.
The refund applies only to Texas state tax. Local tax will not be refunded.
Will interest be paid on the refunded tax?
Interest will not be paid on the refunds because the tax being refunded was not tax paid in error under Tax Code Chapter 111. Tax was due at the time of the transaction.
What is a subsidiary of a provider?
A subsidiary of a provider is a subsidiary, as defined in Texas Business Organizations Code, Section 1.002(85), for which a cable television provider, Internet access provider, or telecommunications provider is the parent, as that term is defined in Texas Business Organizations Code, Section 1.002(65).
The law provides for a refund of Texas state sales and use tax paid on qualifying purchases. What are qualifying purchases?
A qualifying purchase is tangible personal property:
- purchased, leased or rented by a provider or its subsidiary on which Texas state sales and use tax was paid by the provider or subsidiary;
- directly used or consumed by the provider or subsidiary in or during the:
- distribution of cable television service;
- provision of Internet access service; or
- transmission, conveyance, routing or reception of telecommunications services; and
- on which Texas state sales and use tax was paid in the calendar year immediately preceding the calendar year in which the request for refund is submitted.
Our company made a qualifying purchase in August 2013, but paid the Texas sales and use tax in September 2013. Can we apply for a refund of the tax? I noticed the effective date of the new law was Sept. 1, 2013.
The refund does not apply to purchases invoiced before Sept. 1, 2013, regardless of when the tax was paid.
The law is clear that any tax liability accruing before the effective date is under the authority of the former law. The former law did not provide for the $50 million refund. To be eligible for the refund, a qualifying purchase must be invoiced on or after Sept. 1, 2013, thus creating a tax liability after the effective date.
The $50 million refund issued in 2014 will apply to purchases made on or after Sept. 1, 2013, and Texas state sales and use taxes paid Sept. 1, 2013, through Dec. 31, 2013. The deadline to file a claim for refund for this first period is Sept. 2, 2014.
For subsequent years, the refund periods will run on a full calendar year basis (Jan. 1 through Dec. 31). The deadline for filing a claim for refund will be March 31 of the year immediately following the calendar year when the tax was paid.
When would we apply for a refund if our company made a qualifying purchase in December 2013, but paid the tax in January 2014?
For a qualifying purchase invoiced at the end of one calendar year, with the tax paid in the following calendar year, the refund request should be submitted for the calendar year when the tax was paid.
In your situation, because the tax was not paid on or before Dec. 31, 2013, a refund of that tax is not eligible for this first period of refunds. The deadline for filing the claim for your purchase will be March 31, 2015, since the tax was paid during the 2014 calendar year.