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Financial Assistance 13


Recommendation

The Comptroller’s office will publicize various tax breaks and Comptroller services already available that may be of interest to the public as it copes with disasters.


Summary

The Texas Tax Code includes several tax breaks for taxpayers affected by disasters. These tax breaks include deadline extensions for tax returns and exemptions from sales tax for the cost of the labor to repair damaged property, including appliances, office equipment, furniture, warehouses, office buildings, and stores that are damaged during a declared disaster.

Many Texans are unaware they can purchase items tax-free if they want to donate these items to the Red Cross, Salvation Army, churches, schools and other exempt organizations for use in aiding families of armed services personnel on active duty or to aid victims or families of victims of the conflict.[1] To claim this exemption, a purchaser will give the seller an exemption certificate stating that the items will be donated to the exempt organization.

Taxable services, such as security and investigation services, data processing services and insurance services performed in Texas but that are intended to provide help to victims, to assist in rescue efforts, or aid investigations of terrorist attacks in New York, Washington, Pennsylvania and elsewhere are not taxable because the benefit of those services is outside the state of Texas.

The Comptroller’s office has the authority to grant an extension of up to 90 days to file tax returns when an area has been declared a disaster area.[2]

In addition to extending tax-filing deadlines, Texas law allows an exemption from sales taxes for the cost of labor to repair property damaged in a disaster, including appliances, office equipment, furniture, warehouses, office buildings and stores.[3] Labor charges must be separately stated on the repair bill. (The tax law does not impose a sales tax on labor for residential repairs.) Services to restore damaged property include dry cleaning of clothing and draperies, rug and carpet cleaning and appliance repairs.

Comptroller field offices are ready to assist in preparation of most state tax reports for armed services personnel (or their families or authorized representatives).

Additionally, Comptroller field offices will work with service personnel who own businesses and may have problems with meeting state tax obligations while called away on active duty.

Texas citizens also have the ability to receive a prorated motor vehicle registration fee credit if the motor vehicle is destroyed and/or cannot operate on a public highway.[4]


Recommendations

  1. The Comptroller’s office will work closely with television and radio stations as well as print media to publicize the public service announcements the Comptroller releases following a disaster.
  1. The Comptroller’s office will work closely with retailers to have exemption certificates available upon request for use by taxpayers who want to contribute to the Red Cross and other efforts. The Comptroller’s office will send packets of exemption certificates to organizations like the Red Cross for dispersal, and also place copies of exemption certificates in the Assessor-Collectors’ offices and county courthouses.
  1. The Comptroller’s office will place notices in Enforcement field offices that enforcement officers will assist armed services personnel and their families with completing state returns for taxes and fees administered by the Comptroller’s office.
  1. The Comptroller’s office will place notices on the Comptroller web page, in Sales Tax Update and in returns stating that assistance with preparation of tax returns is available at local field offices. Information regarding available services will be provided through the toll-free number, 1-800-531-5441.
  1. The Comptroller’s office will allow the Enforcement Officers to earn compensatory time after business hours when they assist military personnel or their families with their state returns for taxes and fees administered by the Comptroller’s office.


Fiscal Impact

These recommendations will have minimal administrative costs. No additional staff will be required.


[1] TEX. TAX CODE ANN. Chapter 151.155(e).

[2] TEX. TAX CODE ANN. Chapter 111.058.

[3] TEX. TAX CODE ANN. Chapter 151.350.

[4] TEX. TAX CODE ANN. Chapter 502.182.