Skip navigation
Glenn Hegar
Texas Comptroller of Public Accounts
Glenn Hegar
Texas Comptroller of Public Accounts
Glenn Hegar
Texas Comptroller of Public Accounts

taxes

Tax Policy News

July 2017

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

Previous issues are available through the Tax Policy News Index.

In This Issue...

Cigarette Tax

Cigarette and Tobacco Products Distributors – Due Date Change

Recent legislation changed the due date from the last day of month to the 25th day of the month for submitting Form 69-100, Texas Distributor Monthly Report of Cigarettes and Stamps (PDF), and Form 69-133, Texas Distributor Monthly Report of Cigar and/or Tobacco Products (PDF).

Because of this, the monthly reports for August 2017 are due Sept. 25, 2017, instead of Oct. 2. We are updating the monthly report forms to show the new date.

See Senate Bill 1390, passed by the 85th Legislature, Regular Session (2017).

Motor Fuel Taxes and Fees

International Fuel Tax Agreement Filers – Online Filing

If you haven't already, consider filing your Form 56-101, International Fuel Tax Agreement (IFTA) Fuel Tax Report (PDF), electronically using WebFile, our online filing system.

Filing online gives you many benefits, including faster report processing with real-time updates; a variety of payment options (electronic check, select credit cards and TEXNET (PDF)); as well as allowing you to file early and postdate your electronic check payment for the due date.

Using WebFile

If you are a first-time WebFile user, you need to create a profile and set up a WebFile account before you can file your report. We have a helpful two-minute video that shows you how to set one up, or you can select the "First-time User? Sign up" button on the WebFile page and follow the instructions.

Filing Your Report

Once you create your WebFile account, you will be on the eSystems menu page and can file your report. Be sure to have both your 11-digit Texas taxpayer number and your WebFile number before you follow these steps to file:

  1. From the eSystems Menu, select "WebFile/Pay Taxes and Fees."
  2. Enter your Texas taxpayer number.
  3. Select "IFTA" from the "Available Taxes" column.
  4. Enter your WebFile number.
  5. Select "Create Access" and review and agree to the terms and conditions.
  6. Select "IFTA" in the "Assigned Taxes" column.
  7. Select "File Original Report" and follow the prompts.

If you need help with WebFile, call our Electronic Reporting team at 800-442-3453.

For help with IFTA, call our Fuels Tax team at 800-531-5441, ext. 3-3678.

Sales Tax

Back-to-School Sales Tax Holiday – Tips for Sellers

This year's sales tax holiday begins Friday, Aug. 11, and goes through Sunday, Aug. 13.

Here we explain which items are exempt and instruct sellers on handling special situations, such as rain checks, advertising and tax reporting.

Qualifying Items

During this sales tax holiday certain school supplies, clothing, shoes and backpacks priced under $100 are exempt from state and local sales tax.

Customers do not have to give an exemption certificate unless they buy school supplies using a business account or they buy more than 10 backpacks as explained below.

These lists have examples of items, which may, depending on price, be exempt during the sales tax holiday:

Non-Qualifying Items

The following items do not qualify for exemption during the sales tax holiday:

  • textbooks
  • computers
  • software
  • clothing and footwear used primarily for athletic activities or for protective wear such as basketball uniforms, baseball cleats, football pads
  • clothing or footwear rentals
  • dry cleaning or laundry services
  • alterations (including embroidery)
  • items used to make or repair clothing, such as fabric, thread, yarn, buttons, snaps, hooks and zippers
  • jewelry, handbags, purses, briefcases, luggage, umbrellas, wallets, watches and other accessories

Backpacks

Student backpacks, including backpacks with wheels and messenger bags, priced under $100 are exempt.

You can sell up to 10 backpacks tax-free at one time without requiring an exemption certificate (PDF) from the customer.

The following bags are not exempt:

  • framed backpacks
  • luggage
  • briefcases
  • athletic, duffle or gym bags
  • computer bags
  • purses

School Supplies

The following items, if priced under $100, are exempt:
  • Binders
  • Book bags
  • Calculators
  • Cellophane tape
  • Blackboard chalk
  • Compasses
  • Composition books
  • Crayons
  • Erasers
  • Folders; expandable, pocket, plastic, and manila
  • Glue, paste and paste sticks
  • Highlighters
  • Index cards
  • Index card boxes
  • Legal pads
  • Lunch boxes
  • Markers (including dry erase markers)
  • Notebooks
  • Paper; loose leaf ruled notebook paper, copy paper, graph paper, tracing paper, manila paper, colored paper, poster board, and construction paper
  • Pencil boxes and other school supply boxes
  • Pencil sharpeners
  • Pencils
  • Pens
  • Protractors
  • Rulers
  • Scissors
  • Writing tablets

For kits of school supplies that contain both exempt and taxable items, the taxability of the kit depends on the cost of the exempt and taxable items in it. There is no limit to the number of school supplies in a kit. If the cost of the exempt items is more than the taxable items, the kit is exempt. If the cost of the taxable items is more than the exempt items, the kit is taxable.

School Supplies Bought Using a Business Account – Exemption Certificate Required

If a customer buys qualifying school supplies using their business account, they must give you a properly completed exemption certificate (PDF).

"Under a business account" means the customer is:

  • using a business credit card or business check and not a personal credit card or personal check;
  • being billed under a business account you maintain; or
  • using a business membership, if you are a membership-based retailer.

Layaways

During the sales tax holiday, your customers do not have to pay tax on qualifying items when they:

  • put qualifying items on layaway; or
  • make the final payment on something already on layaway.

Advertising Non-Qualifying Items

During the holiday weekend if you offer your own sales at the same time, keep these guidelines in mind.

You cannot advertise that you will pay the sales tax for your customers or that you will not collect sales tax on non-qualifying items.

You can, however, advertise that tax is included in the sales price of the taxable items you sell.

Reporting Tax

When you report sales for the qualifying items you sold tax-free during the sales tax holiday, only include the amount in "Total Sales" on your sales tax return. Do not include your tax-free sales in "Taxable Sales."

If you sold and collected sales tax on qualifying exempt items during the holiday, you must remit it to our office.

More Information

Insect Repellent and Sunscreen – Taxable or Exempt?

Insect Repellent

Sales tax is due on the following:

If your insect repellent contains sunscreen, and is required by the Food and Drug Administration (FDA) to be labeled with a drug facts panel, it is exempt from sales tax.

Sunscreen

Sunscreen (lotions, sprays, creams, gels, etc.) is exempt from sales tax if it is required by the FDA to be labeled with a drug facts panel. See Texas Tax Code Section 151.313 (a)(3).

Private Letter Rulings

Motor Vehicle Sales and Use Tax

Motor Vehicle Replacement Membership
Feb. 9, 2017

This private letter ruling discusses the treatment of a membership fee that is purchased from a dealer in connection with the purchase a new vehicle.

The membership fee provides a benefit that is paid to a participating dealer on a replacement vehicle if the new vehicle is deemed a total loss or is stolen.

The requestor asked if the membership fee was a taxable insurance service or other taxable service subject to sales tax and if the membership fee or benefit was part of the total consideration of the vehicles and subject to motor vehicle tax.

The membership fee is not subject to sales tax as an insurance service or other taxable service under Chapter 151. When a customer purchases the membership along with a new vehicle, the membership fee is not part of the total consideration paid for the vehicle and is not subject to motor vehicle tax under Chapter 152.

The membership benefit paid to the dealer on the purchase of a replacement vehicle is part of the replacement vehicle's total consideration and is subject to motor vehicle tax under Chapter 152.

See State Tax Automated Research (STAR) System letter 201702007L.

Sales and Use Tax

Taxability of Notification Center Services
Feb. 9, 2017

This private letter ruling addresses if a notification center's services are taxable as information services.

The notification center acts as a conduit between persons who dig, drill, or otherwise disturb the soil to a depth of sixteen inches or more (Excavators) and the entities that operate underground facilities (Operators. Notification centers are open year-round to receive and distribute information to Operators and Excavators.

Operators subscribe to the notification center and provide geo-coded information data files identifying desired areas of notification to the notification center. Before starting a project Excavators contact the notification center to compare their project location against the base maps generated by the notification center. The notification center alerts Operators near the excavation site, giving the Operators time to mark their lines.

The Comptroller's office found that the notification center is not providing a taxable information service as they are not providing the information for consideration.

See State Tax Automated Research (STAR) System letter 201702006L.

Publication Update

Rules of Practice & Procedure

We have updated Publication 96-145, The Rules of Practice and Procedure (PDF), to reflect changes to certain rules that became effective July 13, 2017. See the Rules section for a list of the effective rules.

Rules

Proposed

The Comptroller's office proposed the following rule for public comment through the Texas Register:

State and Local Sales and Use Tax

Rule 3. 308 – Computers--Hardware, Computer Programs, Services, and Sales
Publication date – June 30, 2017
Comment period ends – July 30, 2017

Adopted

The Comptroller's office filed the following rule for adoption with the Secretary of State for publication in Texas Register:

Insurance Tax

Rule 3.834 – Volunteer Fire Department Assistance Fund Assessment
Publication date – June 30, 2017
Effective date – July 9, 2017

The Comptroller's office filed the following rules for adoption with the Secretary of State for publication in the July 7, 2017, issue of the Texas Register to be effective July 13, 2017:

Chapter 1, Subchapter A, Division 1

Rule 1.18 – Filing Documents
Rule 1.28 – Comptroller's Decisions and Orders
Rule 1.29 – Motion for Rehearing
Rule 1.31 – Computation of Time
Rule 1.32 – Service of Documents on Parties
Rule 1.39 – Dismissal of Case
Rule 1.4 – Representation and Participation
Rule 1.41 – Ex Parte Communications
Rule 1.8 – Resolution Agreements

Repeals – Chapter 1, Subchapter A, Division 1

Rule 1.18 – Filing of Documents
Rule 1.28 – Comptroller's Decision
Rule 1.29 – Motion of Rehearing
Rule 1.31 – Computation of Time
Rule 1.32 – Service
Rule 1.39 – Dismissal of Case
Rule 1.41 – Ex Parte Communication

More Information

Our website is the main source of information about Texas taxes for everyone. The links below take you to specific webpages to help individuals, businesses and practitioners take care of business, from updating contact information to how to report tax. Help is just a click away!

Taxes

The Taxes webpage has links to:

  • all Texas taxes and fees
  • resources for taxpayers
  • filing and paying taxes
  • tax laws and rules
Practitioners’ Corner

The Practitioners’ Corner is a one-stop resource for information about filing and paying taxes, links to tax research sources and searchable databases.

Taxpayer Seminars and Videos

We host free taxpayer seminars across the state about the tax responsibilities of buyers, sellers and service providers.

Our Webfile How-To Videos show you step-by-step how to file and pay taxes online.

HB855 Browser Statement

In 2015, the Texas Legislature passed House Bill 855, which requires state agencies to publish a list of the three most commonly used Web browsers on their websites. The Texas Comptroller’s most commonly used Web browsers are Google Chrome, Microsoft Internet Explorer and Apple Safari.

We support: