taxes

Tax Policy News

October 2013

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

In This Issue...

Coin-Operated Amusement Machines Tax

Renewal Applications Are Due by Dec. 2

In September, the Comptroller mailed renewal applications for the 2014 coin-operated machine General Business License, Registration Certificate, Import License and Repair License.

The applications are pre-printed with a due date of Nov. 30, but since that day is a Saturday this year, the due date is actually Dec. 2, the next business day. Applications postmarked by Dec. 2 will be considered timely filed.

Also due by Dec. 2 is a $60 Occupation Tax for each coin-operated amusement machine that is "exhibited or displayed on location." An Occupation Tax Permit decal must be affixed to each machine in use.

Coin-operated amusement machine operators who have not received renewal packets by Oct. 31 should contact our office.

Insurance Tax

All Captives Are Not the Same

Rule 3.835 was effective Oct. 16 and concerns the premium tax reporting responsibilities of nonadmitted captive insurers. These insurers are subject to premium tax at a rate of 4.85 percent, but are exempt from regulatory sanctions by the Texas Department of Insurance (TDI) as long as their premium writings are restricted to their parent and affiliated companies. For more information on unlicensed captives, see Chapter 226 and Sections 101.053(b)(6) and (c), Insurance Code.

Texas law now allows for the licensing of captive insurers. Licensed captives are subject to premium tax at a rate of 0.5 percent, with a minimum premium tax of $7,500 and a maximum premium tax of $200,000. The TDI is writing rules and developing forms to begin accepting applications for the redomestication and licensing of captive insurers. We are developing a new tax form for these licensed captives. For information on licensed captives, see Chapters 223A and 964, Insurance Code.

Public Outreach

Texas Bar and Nightclub Alliance

On Sept. 9, 2013, Donald Dillard presented information to the Texas Bar and Nightclub Alliance about legislative changes to mixed beverage taxes. Topics included the lower mixed beverage gross receipts tax rate of 6.7 percent and the new 8.25 percent mixed beverage sales tax.

A "Briefing with the Texas Comptroller of Public Accounts"

On Sept. 27, 2013, the agency hosted its annual "Briefing with the Texas Comptroller of Public Accounts" for members of the Taxation Section of the State Bar, the Texas Society of Certified Public Accountants and the Tax Executives Institute.

Representatives from our agency's Account Maintenance, Audit, Enforcement, General Counsel, Revenue Estimating and Tax Interpretations and Publications Divisions presented updates on a variety of topics, including implementation plans for bills passed in the recent legislative session, the recent re-organization of the Tax Administration Divisions and updates on electronic reporting and payment processes.

Panhandle Chapter of the Texas Society of Certified Public Accountants

On Oct. 24, 2013, Melissa Brogan will present information about several sales tax topics, including taxable services, the agricultural exemption and data centers to the Panhandle Chapter of the Texas Society of Certified Public Accountants.

Website Updates

New Web Pages

The new Compressed Natural Gas/Liquefied Natural Gas (CNG/LNG) Web page includes rate information and links to the forms needed to file the report.

The new State Sales Tax Exemption for Qualified Data Centers Web page provides an overview of the new state sales tax exemption for qualified data centers, along with links to relevant statutes, rules, FAQs and forms.

Revised Publications

Insurance Tax

We have updated the following insurance publications to clarify legislative changes:

  • Automobile Burglary and Theft Prevention Authority Assessment (Pub. 96-667)
  • Tax on Independently Procured Insurance (Pub. 98-376)
  • Volunteer Fire Department Assistance Fund Assessment (Pub. 94-169)

In the Works

Forms

Insurance Tax Forms and Instructions under Revision

We are currently conducting our annual review and update of insurance tax report forms and instructions. The revision will incorporate legislative changes and any updates on taxability issues.

Motor Vehicle Sales and Use Tax Form for Gift Transfers

We are updating the Affidavit of Motor Vehicle Gift Transfer form (14-317) to reflect the recent legislative change allowing certain revocable trusts to qualify for the $10.00 gift tax when the trust is the donor or recipient of the motor vehicle.

New and Amended Rules in Progress

We are currently updating numerous existing rules and drafting three new sales and use tax rules. Rule drafts are published in the Secretary of State's Texas Register as proposals and public comment is welcome. We will also identify proposed rules and dates in this newsletter.

We are drafting three new sales and use tax rules:

  • Rule 3.334 concerning local sales and use tax
  • Rule 3.340 concerning qualified research
  • Rule 3.345 concerning the annual refund program for providers of cable television, Internet access and telecommunications services

The following existing rules are currently being updated:

  • Rule 3.284 – Drugs, Medicines, Medical Equipment, and Devices
  • Rule 3.295 – Natural Gas and Electricity
  • Rule 3.299 – Newspapers, Magazines, Publishers, Exempt Writings
  • Rule 3.313 – Cable Television Service
  • Rule 3.357 – onresidential Real Property Repair, Remodeling, and Restoration; Real Property Maintenance
  • Rule 3.430 – Records Required, Information Required
  • Rule 3.431 – Refund of Gasoline and Diesel Fuel Tax to Transit Company
  • Rule 3.432 – Refunds on Gasoline and Diesel Fuel Tax
  • Rule 3.433 – Incidental Highway Travel
  • Rule 3.434 – Liquefied Gas Tax Decal
  • Rule 3.436 – iquefied Gas Dealer Licenses
  • Rule 3.442 – Bad Debts or Accelerated Credit for Non-payment of Taxes
  • Rule 3.447 – Reports, Due Dates, Bonding Requirements, and Qualifications for Annual Filers
  • Rule 3.448 – Transportation Services for Texas Public School Districts

Rules - Proposed, Effective and Repealed

Proposed Rules

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

Fireworks Tax

Amendments to Rule 3.1281, Fireworks Tax, were proposed for public comment through the Texas Register on Sept. 27, 2013. The comment period ends Oct. 27.

Effective Rules

Insurance Tax

Rule 3.811, Election by Reciprocal or Interinsurance Exchange Pursuant to Insurance Code, Chapter 224, became effective July 1, 2013.

Rule 3.828, Workers' Compensation Insurance Gross Premiums for the Purpose of Maintenance Taxes, became effective Sept. 4, 2013.

Rule 3.834, Volunteer Fire Department Assistance Fund Assessment, became effective July 1, 2013.

Rule 3.835, Reporting of Unauthorized Insurance Premium Tax by Nonadmitted Captive Insurers, became effective Oct. 16, 2013.

Motor Fuels Tax

The following rules became effective Oct. 1, 2013:

Rule 3.437 – Trip Permit in Lieu of Interstate Trucker License

Rule 3.440 – On-Highway Travel of Farm Machinery

State Sales and Use Tax

The following rule became effective Sept. 23, 2013:

Rule 3.305 – Criminal Offenses and Penalties

Repealed Rules

Crude Oil Production Tax

The following rules were repealed effective Oct. 1, 2013:

Rule 3.36 – Estimated Tax Payment

Rule 3.38 – Exemption for Hydrocarbons Produced from a Texas Experimental Research and Recovery Activity Well