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Tax Policy News

A monthly newsletter about Texas tax policy



The Comptroller’s office publishes this online newsletter to keep you informed about Texas taxes and what’s happening in the Tax Policy Division. Tax Policy News provides general information and is not a substitute for legal or other professional advice.


ROUNDTABLE DISCUSSIONS COMING SOON

Sales Tax – Rule 3.284, Drugs, Medicines, Medical Equipment, and Devices

The Tax Policy Division will host a sales tax roundtable discussion on proposed rule changes to Rule 3.284, Drugs and Medicine. The division will post registration information online as soon as the date has been set.


INDEPENDENT AUDIT REVIEW

Program Update

The Taxpayer Bill of Rights allows taxpayers to request review of an audit assessment or denial of a refund claim by an independent audit reviewer (IAR). Information about the IAR program can be found in the agency publication Contesting Disagreed Audits.

The agency’s four IARs are now being supervised by Nancy Prosser, Assistant Director of Tax Administration, and we are reviewing all aspects of the program to make sure it provides a timely and helpful alternative to resolving disputes between the agency and taxpayers.

We welcome feedback from taxpayers and their representatives as part of this review. Please direct any comments to tax.help@cpa.state.tx.us, and put “Comments on the IAR Program” in the subject line. We appreciate your time and look forward to receiving your feedback.


REMINDER

Insurance Tax Deadline

The 2013 annual insurance premium tax, maintenance, assessment and retaliatory, automobile burglary and theft prevention authority assessment reports, as well as the first semi-annual premium tax payment for 2014, are due and payable either on or before March 1 or on the filing date of the National Association of Insurance Commissioner’s Annual Statement. Since March 1 is a Saturday, the due date falls on the next business day of March 3.

The Comptroller mailed insurance report forms the last week in January. Forms are also available on our website.


PUBLIC OUTREACH

Cigarette Tax Stamping Facility Visit

The Comptroller’s office orders and distributes over a billion cigarette tax stamps each year and recently awarded a new contract to produce cigarette tax stamps to Meyercord Revenue, Inc. The company incorporated additional security features and a new design for the cigarette tax stamps.

On Jan. 13, Tax Policy and Account Maintenance Division staff toured a San Marcos cigarette stamping facility testing these new cigarette stamps under real-world conditions. The new stamps exceeded expectations and the Comptroller will issue these new stamps to cigarette distributors once older stock is depleted later this year.


Presentations by the Tax Policy Division

Members of the Tax Policy Division often receive requests to discuss taxability issues with various interested organizations.

Recent events include these presentations:

  • V.G. Young Institute of County Government School for County Tax Assessor-Collectors in College Station, Texas – office security for motor vehicle dealers
  • National Association of Tax Professionals Austin regional meeting – information on a variety of tax topics
  • Texas Ground Water Association in Lubbock, Texas – sales and use tax responsibilities for water well contractors
  • Associated Plumbing-Heating-Cooling Contractors of Texas in Buda, Texas – sales and use tax responsibilities
  • Texas Motorcycle Dealers Association in Austin, Texas – taxation of off-road and on-road vehicles

FORMS – NEW AND REVISED

Franchise Tax

Franchise tax report forms and instructions for report year 2014 are now available. WebFile filing for the 2014 franchise tax period will be available on Feb. 24.

Mixed Beverage Taxes

The Comptroller has created or revised these forms for filing mixed beverage gross receipts tax and mixed beverage sales tax:

Motor Vehicle Tax

The Comptroller has updated the Affidavit of Motor Vehicle Gift Transfer (Form 14-317) to include certain revocable trusts that qualify for the $10.00 gift tax and to clarify the instructions.

Sales Tax

The Comptroller has created these forms for use by qualifying data centers:

The Comptroller has created these forms for the qualified research and development sales tax exemption:


PUBLICATIONS

Boat and Boat Motor Taxes

The Comptroller has updated the publication Boat and Boat Motor Taxes (Pub. 94-170) to include the definition of a boat amended by the 2013 legislature in House Bill 1106.


WEBSITE UPDATES

Franchise Tax – Requesting Account Status Certificates and Clearance Letters

Taxpayers or tax preparers who need a Certificate of Account Status to terminate a business, or a Tax Clearance Letter to reinstate a business, can now request those forms directly from a new Web page.

Persons must have a franchise tax WebFile (XT) number or must have previously filed franchise tax using WebFile to request these forms online.

Mixed Beverage Taxes – Lower 6.7 Percent Mixed Beverage Gross Receipts Tax; New 8.25 Percent Mixed Beverage Sales Tax

As of Jan. 1, 2014, a new law lowered the Texas mixed beverage gross receipts tax rate to 6.7 percent, and created a new 8.25 percent mixed beverage sales tax. The Comptroller has updated the Mixed Beverage Gross Receipts Tax section of our website, and created a new Mixed Beverages Sales Tax section, to provide information about the changes.

Sales Tax/Franchise Tax – Sales Tax Exemption or Franchise Tax Credit for Qualified Research

A new law, effective Jan. 1, 2014, allows persons engaged in qualified research to claim either a sales tax exemption on certain property directly used in qualified research, or a franchise tax credit based on qualified research expenses. Find out more from the new Sales Tax Exemption or Franchise Tax Credit for Qualified Research Web page.

Sales Tax – State Sales Tax Exemption for Qualified Data Centers

A new law, effective Sept. 1, 2013, provides a temporary exemption from state sales and use tax on certain items necessary and essential to the operation of a qualified data center. The exemption is for state sales tax only. Local sales taxes are due on purchases of these qualifying items. Find out more from the new State Sales Tax Exemption for Qualified Data Centers Web page.

Sales Tax – Refund for Providers of Cable Television, Internet Access or Telecommunications Services

As of Sept. 1, 2013, the law allows providers of cable television, Internet access or telecommunications services to claim a refund of the 6.25 percent Texas state sales and use tax paid on qualifying purchases. Find out what purchases qualify and how to claim the refund on the new Web page.


OTHER NEWS

Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is a special federal credit for certain persons who work. The credit reduces the amount of income tax a qualifying taxpayer owes (if any) and is intended to offset some of the increases in living expenses and Social Security taxes.

As part of the Comptroller’s campaign to publicize the federal EITC program, we are asking employers to share the Earned Income Tax Credit section of our website with their employees. For more information about the credit, call the Internal Revenue Service at 1-800-829-1040.


RULES – PROPOSED, ADOPTED AND EFFECTIVE

Proposed Rules

For information about a proposed rule, submit a request via Texas Tax Help, or check the Secretary of State’s website.

Sales Tax

Amendments to Rule 3.338, Multistate Tax Credits and Allowance of Credit for Tax Paid to Suppliers, were proposed for public comment through the Texas Register on Jan. 3, 2014. The 30-day comment period has expired and comments received are being reviewed.

Adopted Rules

The following rule adoption was filed with the Secretary of State on Feb. 6, 2014. The effective date is Feb. 26, 2014, 20 days after filing.

Sales and Use Tax

  • Rule 3.335 – Property Used in a Qualifying Data Center; Temporary State Sales Tax Exemptions

The following rule adoption was filed with the Secretary of State on Feb.07, 2014. The rule is effective Feb. 27, 2014, 20 days after filing.

Motor Fuel Tax

  • Rule 3.442 – Bad Debts or Accelerated Credit for Non-payment of Taxes

The following rule adoption was filed with the Secretary of State on Feb. 11, 2014. The rule is effective March 3, 2014, 20 days after the filing date.

Sales and Use Tax

  • Rule 3.365 – Sales Tax Holiday – Clothing, Shoes, and School Supplies

Effective Rules

The following amended rules became effective on the dates indicated:

Nov. 14, 2013

Motor Vehicle Sales Tax

  • Rule 3.72 – Trailers, Farm Machines, and Timber Machines

State Sales and Use Tax

  • Rule 3.306 – Sales of Mobile Offices, Portable Buildings, Prefabricated Buildings, and Ready-Built Homes

Manufactured Housing Sales and Use Tax

  • Rule 3.481 – Imposition and Collection of Manufactured Housing Tax

Nov. 28, 2013

Motor Fuel Tax

  • Rule 3.431 – Refund on Gasoline and Diesel Fuel Tax to Transit Company
  • Rule 3.433 – Incidental Highway Travel

Dec. 2, 2013

Motor Fuel Tax

  • Rule 3.438 – Signed Statements for Purchasing Dyed Diesel Fuel Tax Free
  • Rule 3.439 – Motor Fuel Transportation Documents

Dec. 31, 2013

Fireworks Tax

  • Rule 3.1281 – Fireworks Tax

State Sales and Use Tax

  • Rule 3.281 – Records Required; Information Required

Feb. 16, 2014

Motor Fuel Tax

  • Rule 3.434 – Liquefied Gas Tax Decal
  • Rule 3.447 – Reports, Due Dates, Bonding Requirements, and Qualifications for Annual Filers

State Sales and Use Tax

  • Rule 3.313 – Cable Television Service and Bundle Cable Service

RESOURCES

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