taxes

Texas Emissions Reduction Plan (TERP) – Off-Road, Heavy-Duty Diesel Equipment Surcharge

Who is responsible for this tax?

The Texas Emissions Reduction Plan (TERP) Off-Road, Heavy-Duty Diesel Equipment Surcharge applies to the sale, use, lease or rental of off-road, heavy-duty diesel equipment and is based on the sale, lease or rental amount. The seller collects the surcharge along with the sales tax and remits it to the Comptroller.

Equipment Subject to the Surcharge

The surcharge is due on diesel-powered equipment of 50 horsepower or more, including mobile or stationary equipment used in construction, mining and other activities. Examples include:

  • bore/drill rigs
  • cement and mortar mixers
  • concrete pavers
  • concrete/industrial saws
  • cranes
  • crawler tractors/dozers
  • crushing/processing equipment
  • dumpsters/tenders
  • excavators
  • graders
  • mining equipment
  • off-highway tractors
  • off-highway trucks
  • pavers
Equipment Not Subject to the Surcharge
  • repair or replacement parts or accessories related to the equipment, unless sold or leased with equipment;
  • equipment used in oil and gas exploration and production at an oil or gas well site;
  • equipment eligible for the agricultural use exemption;
  • equipment eligible for the timber operations exemption;
  • processing equipment eligible for manufacturing exemptions; and
  • equipment that qualifies for exemption from sales or use tax for any other reason.

Who Must Collect and Report the Surcharge

If you sell, lease or rent off-road, heavy-duty diesel equipment of 50 horsepower or more, you must collect this surcharge on the sale, lease or rental amount. The surcharge is in addition to sales and use tax.

Use Form 01-142, Texas Off-Road, Heavy-Duty Diesel Equipment Surcharge Return (PDF), to report and pay.

Buyers who do not pay the surcharge to the seller or lessor must pay and report the surcharge directly to the Comptroller’s office on or before the 20th day of the month following the month when the purchase was made or when the equipment subject to the surcharge was brought into Texas.

Rates

TERP Off-Road, Heavy-Duty Diesel Equipment Surcharge Rates*
Effective DateRate
Sept. 1, 20151.5 percent
July 1, 2003 – Aug. 31, 20152 percent
Sept. 1, 2001 – July 1, 20031 percent

*There was no surcharge before Sept. 1, 2001.

The surcharge rate on a lease contract is based on the date the contract was entered into. The surcharge rate on a lease renewal or extension is based on the date the contract is renewed or extended.

Due Date

Due dates are based on the surcharge collection amount:

  • less than $1,500 collected per month: file quarterly
  • $1,500 or more collected per month: file monthly

Returns must be filed or postmarked on or before the 20th day of the month following the end of each reporting period (for example, April 20 for March activity).

Penalties and Interest

Penalties
  • A $50 penalty is assessed on each report filed after the due date.
  • If tax is paid 1-30 days after the due date, a 5 percent penalty is assessed.
  • If tax is paid over 30 days after the due date, a 10 percent penalty is assessed.
Interest

Reporting and Payment Requirements

Select the amount of taxes you paid in the preceding state fiscal year (Sept. 1 – Aug. 31) to find the reporting and payment methods to use.

Less than $100,000

Less than $100,000

Select one of these reporting methods:

Select one of these payment methods:

  • Web Electronic Funds Transfer (EFT) or credit card via WebFile (American Express, Discover and MasterCard)
  • TEXNET
  • Check
$100,000 or more

$100,000 or more

Select one of these reporting methods:

TEXNET is the only acceptable payment method.

Discounts

There is a 0.5 percent discount for filing and paying on time.

Additional Resources