taxes

Tax Policy News

February 2015

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...

Reminder

Insurance Tax Reports Due in March

The 2014 annual insurance premium tax, maintenance, assessment and retaliatory tax, automobile burglary and theft prevention authority assessment reports, as well as the first semi-annual premium tax payment for 2015, are due and payable either on or before March 1, or on the due date of the National Association of Insurance Commissioner's Annual Statement.

Since March 1 is a Sunday, the due date falls on the next business day of March 2.

Webfile is mandatory for certain taxpayers, but is available to everyone. We hope you will use Webfile to report and pay your taxes electronically. Webfile helps us process your information quickly, efficiently and accurately. If you don't use Webfile, please use the preprinted forms we mailed in January.

Hotel Occupancy Tax

Homeowners Renting a Room to the Public

The many upcoming springtime festivals, fairs, rodeos, races and other entertainment events have some Texans renting their houses to visitors in town for the events. Remember though, persons who rent their rooms or houses must register to collect and remit Hotel Occupancy Tax from their customers, in the same way a hotel or motel collects the tax from its patrons.

Sales Tax

Tax Deductions on 2014 Federal Income Tax Returns

Texans who itemize deductions on their federal income tax return can deduct state and local sales or use taxes paid on purchases made during the 2014 calendar year, including big-ticket items such as cars, recreational vehicles and boats.

To claim the federal deduction, eligible taxpayers can either:

Taxpayers who built a new home or improved their home in 2014 can deduct sales taxes paid on the materials incorporated into the real property improvement. Labor is not taxable for new construction or residential repair and remodeling.

To be eligible for the deduction, the homeowner must have:

  • purchased the materials directly from, and paid tax to, the building materials supplier; or
  • worked with a contractor under a separated contract.

Lump-sum contracts are not eligible for the deduction because a contractor performing a contract for a lump-sum price pays the sales tax on materials and does not collect tax from the customer. Since the customer did not pay tax to the contractor, the customer cannot deduct the tax on the federal income tax return.

Website Updates

Changes to the Comptroller's Website Address and Employee Email Addresses

In keeping with the Texas Department of Information Resources' request for state agencies to adopt the texas.gov Web and email addresses, our office has taken steps for a seamless rollover to these new ones:

  • Website address: The agency's website address is now Comptroller.Texas.Gov.
  • Employee email addresses: An email previously addressed to Jane.Doe@cpa.state.tx.us should now be addressed to Jane.Doe@cpa.texas.gov.

Our previous Window on State Government website and email address format will still work for at least a year and will simply redirect to the new texas.gov addresses. We do recommend, however, that you update your bookmarks or links to our website.

How-To Videos Answer Taxpayers' Frequently Asked Questions

In response to questions taxpayers ask most often, our office recently released a series of how-to videos on filing and paying sales tax electronically. The series guides taxpayers through Webfile, our secure online system.

We will release additional videos on other topics in the coming months.

Superseding Administrative Hearings Decisions on our State Tax Automated Research (STAR) System

We have recently revised how we classify the status of administrative hearings decisions on our STAR system.

Until now, administrative hearings decisions have been completely superseded or partially superseded for one of the following reasons:

  • when the tax issue in the administrative decision was overturned by a final court decision;
  • when an administrative decision was specifically identified and superseded by an administrative law judge or the Comptroller (through a final "order") in a current proceeding; or
  • when it was determined that an error originally occurred in applying the tax law to the specific facts presented in the administrative hearing.

Generally, an administrative hearing decision was completely superseded (as denoted in the "summary" appearing at the beginning of the decision) when all the issues in the decision had been overturned.

Or, if there were other tax issues presented in the decision that continued to accurately represent the tax law or policy, the decision was partially superseded. This was also reflected in the "summary" appearing at the top of the decision.

In addition to the situations discussed above, administrative hearing decisions were also superseded when:

  • a prospective change was dictated by a court decision or another administrative hearing decision;
  • a modification of existing tax policy was made; or
  • a change in law was prompted by legislative action or by administrative actions updating a tax rule.

Now, instead of superseding these latter decisions, they will remain classified as a current hearing, but an "ALERT" will be posted on the first page to notify the reader of any prospective changes in current law or policy. That way, a reader can rely upon those hearings for report periods prior to the date of the "ALERT."

For example, during the 83rd Legislature Regular Session in 2013, the Mixed Beverage Gross Receipts Tax was lowered, along with the imposition of a new Mixed Beverage Sales Tax. Rather than superseding all Mixed Beverage Tax hearings that addressed issues at the higher tax rate (and that otherwise were currently accurate), we have labeled the hearings decisions with an "ALERT" to notify readers of the prospective rate change along with the effective date.

Letters and other documents appearing on STAR will be partially or completely superseded for all of the reasons listed above. Additionally, letters will be superseded when long-standing policies discussed in the document are incorporated into new tax rules as they are adopted.

Rules

Proposed Rules

Information about proposed rules is available from the Texas Secretary of State.

Franchsie Tax

Proposed amendments to Rule 3.599, Margin: Research and Development Activities Credit were published for public comment through the Texas Register on Jan. 30, 2015. The comment period ends March 1.

Adopted Rules

Information about proposed rules is available from the Texas Secretary of State.

Insurance Tax

The following rule was filed for adoption with the Secretary of State on Jan. 29, 2015. The effective date is Feb. 18, twenty days after filing.

Rule 3.827 - Captive Insurance Companies