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Tax Policy News

A monthly newsletter about Texas tax policy


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HOTEL OCCUPANCY TAX

Hotel Tax is Due on Short-Term Rentals

Individual homeowners and leasing companies that rent a furnished house or a room in a house, apartment or condominium for less than 30 consecutive days are required to collect hotel occupancy tax from the renter.

Individuals and companies renting sleeping accommodations to members of the public who have not registered for the 6 percent state hotel occupancy tax must submit a completed Texas Hotel Occupancy Tax Questionnaire. Learn more about Hotel Occupancy Tax.


SALES TAX

Relief for Disaster Victims – Tax Exemption for Labor to Restore Property Damaged in a Disaster

There is an exemption from sales tax on labor to restore property damaged in a disaster, if the Governor or President declares the area to be a “disaster area.” The exemption applies to separately stated charges for labor to restore real or personal property damaged in the disaster.

For the purposes of this exemption, “restore” means to repair damage caused by the event which caused the area to be declared a disaster and includes such services as drapery, upholstery and carpet cleaning; laundry and dry cleaning services; and the repair of nonresidential real property. (Labor to repair residential real property is always exempt.)

The exemption does not extend to materials, equipment, supplies or other tangible personal property used in the restoration. For example, although no tax is due on the labor to install new carpet in an office damaged by the disaster, tax is due on the replacement carpet and the padding. And, if the restoration labor is not separated from other charges on the bill, the total bill is presumed taxable.

To claim an exemption on the restoration of property damaged by the disaster, a purchaser must give the repairman a properly completed exemption certificate for the labor portion of the bill. The exemption certificate must show both the seller’s and the purchaser’s names and addresses, the item(s) being repaired and give the reason for claiming the exemption. Example: “Repair due to tornado on May 15, 2013, in Ellis County.”

See Comptroller’s Disaster Resources for more information.

Recent Disaster Declarations

The following areas in Texas were recently declared disaster areas. Residents in these affected areas may claim an exemption from tax on charges for labor to restore property damage caused by the indicated events:

  • Ellis, Hood, Johnson and Parker Counties – Gov. Perry declared these four counties a disaster area due to the severe storms and tornado outbreak that occurred on May 15, 2013.
  • West, Texas – West, Texas (McLennan County) was declared a disaster area due to the explosion that occurred on April 17, 2013.

See the Governor's Office Disaster Center for more information.


SALES TAX

GPS Equipment, GPS Services and the Agricultural Sales Tax Exemption

Texas Tax Code Section 151.316(a)(7) provides an exemption for machinery and equipment exclusively used or employed on a farm or ranch in the production of agricultural products for sale. Accordingly, GPS equipment used exclusively in this manner can be purchased tax-free if the purchaser holds an Ag/Timber number issued by the Comptroller.

Services do not qualify for the agricultural exemption. Therefore, sales tax is due on the purchase of GPS subscription (telecommunications) services used by GPS equipment installed on tractors or other agricultural equipment.

For more information, see Tax Exemptions for Agriculture, Taxable Services and STAR document 200502997L.


PUBLIC OUTREACH

Motor Vehicle Taxes

The Comptroller’s office was asked to provide a speaker to present an overview of motor vehicle taxes to the Nueces County Tax Assessor-Collector’s office. Lavonne Key gave a talk on May 16 covering topics such as gift transfers and seller’s signature requirements.


WEBSITE UPDATE

Our New One-Stop Tax Resource

We have a new Window on State Government Web page that you will want to bookmark: Practitioners’ Corner, a time-saving resource aimed at tax professionals and research specialists.

The page provides direct links to filing and research tools.


ROUNDTABLE DISCUSSIONS COMING SOON

Franchise Tax: Roundtable Discussion on Cost of Goods Sold and Printers

The Tax Policy Division will hold a roundtable discussion regarding the cost of goods sold deduction and the printing industry. A date has not been set for the roundtable, but we are looking at the month of June.

If you would like to be involved in the development of our future policies in this area by attending the roundtable meeting, please email Teresa Bostick.

Sales Tax: Roundtable Discussion on Internet Hosting and Nexus

The Tax Policy Division will hold a roundtable discussion regarding House Bill 1841 (passed during the 82nd Legislature) and how the change in the law should impact our policies on Internet hosting and nexus. A date has not been set for the roundtable, but it will likely take place after the 83rd Legislature adjourns.

If you would like to be involved in the development of our future policies in this area by attending the roundtable meeting, please email Bryant Lomax.


DISTRICT COURT RULING

Rule 3.325 – Refunds and Payments under Protest

Portions of Rule 3.325, Refunds and Payments under Protest, were found to be invalid as exceeding Comptroller authority in a recent District Court ruling. The Comptroller plans to appeal this decision, and as such, it is not effective until the issue is fully litigated.


RULES

Proposed Rules

The following rules were submitted for filing with the Secretary of State with a publication date of April 26, 2013. The comment period ends 30 days after publication.

Insurance Tax

The following rule was submitted for filing with the Secretary of State with a publication date of May 3, 2013. The comment period ends 30 days after publication.

Rule 3.811 – Election by Reciprocal or Interinsurance Exchange Pursuant to Insurance Code, Chapter 224

State Sales and Use Tax

The following rule was submitted for filing with the Secretary of State with a publication date of May 10, 2013. The comment period ends 30 days after publication.

Rule 3.282 – Auditing Taxpayer Records

Adopted Rules

Franchise Tax

The following rule adoption was filed with the Secretary of State on May 16, 2013. The rule is effective June 5, 2013, 20 days after the filing date.

Rule 3.588 – Margin: Cost of Goods Sold

Effective Rules

Cigarette Tax

The following rule became effective May 21, 2013:

Rule 3.102 – Applications, Definitions, Permits, and Reports

Natural Gas

The following rules became effective June 3, 2013:

Rule 3.1 – REPEAL Penalty and Interest

Rule 3.12 – REPEAL Purchaser and/or Processor Reporting Requirements

Rule 3.14 – REPEAL Exemption of Certain Interest Owners from Gas Occupation Taxes

Rule 3.16 – REPEAL Reports, Payments, and Due Dates

Rule 3.25 – Penalty and Interest

Rule 3.26 – Purchaser and/or Processor Reporting Requirements

Rule 3.27 – Exemption of Certain Interest Owners from Gas Occupation Taxes

Rule 3.28 – Reports, Payments, and Due Dates


RESOURCES

Need More Information?

Find answers to your questions about Texas taxes on our website, Window on State Government (WOSG). You can also sign up to be notified when WOSG pages of interest to you are updated.


ABOUT THE NEWSLETTER

The Comptroller’s office publishes this online newsletter to keep you informed about Texas taxes. Tax Policy News provides general information on the subjects covered and is not a substitute for legal advice.

For a Copy of a Proposed Rule

For a copy of a proposed rule or information about a proposed rule, write to Bryant Lomax, Tax Policy Division, 1700 North Congress Avenue, Austin, Texas, 78701-1436, or submit a request via Texas Tax Help.


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