taxes

Tax Policy News

November 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...

Reminders

Agricultural and Timber Registration Numbers – It's Time to Renew

Agricultural and timber registration numbers (ag/timber numbers) issued by the Comptroller must be renewed every four years, regardless of when the number was first issued. Current numbers expire Dec. 31, 2015.

To continue claiming the exemption on qualifying purchases on or after Jan. 1, 2016, agricultural and timber producers must renew their number online, by telephone or by mail.

Private Letter Rulings

Qualifying Data Centers

The Comptroller recently issued Private Letter Ruling Nos. 142740466 and 142740061 relating to qualifying data centers. The rulings address the expansion of an existing qualifying data center to a separate building and the effect, or lack thereof, on the required capital investment and qualified job requirement.

Expenses related to a separate building or buildings are not counted toward the required capital investment of the qualifying data center because the statute defines a qualifying data center as a single building. Permanent jobs are not required to be located at the qualifying data center. Therefore, as long as a qualifying permanent job is located within the same county and meets the other requirements, it is counted toward the qualifying data center requirements.

The Comptroller issued Private Letter Ruling No. 150970241 relating to qualified data centers that use third-party employees to meet the qualified job requirement. The ruling clarifies the factors constituting shared employment responsibilities.

Shared employment responsibilities require the qualifying data center and third-party employer to:

  • share the right of direction and control of third-party employees assigned to the qualifying data center;
  • share the right to hire, fire, discipline and reassign third-party employees assigned to the qualifying data center; and
  • share the right of direction and control over the adoption of employment and safety policies and the management of workers' compensation claims, claim filings, and related procedures for third-party employees assigned to the qualifying data center.

Notwithstanding the listed requirements, the qualifying data center retains sole responsibility for the direction and control of third-party employees as necessary to conduct the data center's business, discharge any applicable fiduciary duty or comply with any licensure, regulatory or statutory requirement.

Public Outreach

Tax Policy Division Meetings and Presentations

Various organizations often ask members of the Tax Policy Division to attend meetings or to give presentations to discuss taxability issues. Due to limited time and resources, we are unable to fill all requests.

At the recent 2015 Business Enterprises of Texas (BET) Conference in Austin, Texas, we discussed the taxability of sales made in cafeterias and convenience stores and through vending machines. The BET is a federally sponsored, state-administered program that provides food management opportunities for Texans who are sight-impaired.

Website Update

Agricultural and Timber (Ag/Timber) Registration Numbers Website

We are updating our ag/timber website to make it a one-stop resource for agricultural producers and timber operators. The first sections updated are How to Apply and How to Renew.

Practice and Procedures Rules Review

A Message from our Administrative Hearings Section and Office of Special Counsel for Tax Hearings

We are reviewing the Practice and Procedures Rules related to the administrative hearing process. At this time there are two ways you can provide input and be part of the review:

  1. Let us know what rules need attention and why. We welcome general or specific comments, including proposed language, on Rules 1.1-1.42. Let us also know if you think any rules need to be repealed or if new rules are needed.
  2. Actively participate in the drafting process by participating in review and drafting sessions that last approximately one hour at a time. We will be using "GoToMeeting" so that you do not have to travel to participate in these sessions.

In addition, before we propose the rules in the Texas Register, we will circulate all rule drafts to the Taxpayer Advisory Group and Business Advisory Group for comment. We will also remain open to holding roundtable discussions if necessary.

Please email Paula Lemcke (Paula.Lemcke@cpa.texas.gov) by Friday, Dec. 4 with any questions, comments or requests to participate in the drafting process, including your full contact information. We will review the feedback and contact those who want to participate in the drafting sessions, which will start in January.

Rules

Proposed Rules

The Comptroller proposed the following rules for public comment through the Texas Register, and we are considering comments received during the comment periods.

State and Local Sales and Use Taxes

Rule 3.355 – Insurance Services
Proposed – Oct. 15, 2015
Comment period ends – Nov. 29, 2015

Rule 3.320 – Texas Emissions Reduction Plan Surcharge: Off-Road, Heavy-Duty Diesel Equipment
Proposed – Oct. 23, 2015
Comment period ends – Dec. 6, 2015

Rule 3.322 – Exempt Organizations
Proposed – Oct. 23, 2015
Comment period ends – Dec. 6, 2015

Motor Fuel Tax

Rule 3.434 – Liquefied Gas Tax Decal
Proposed – Oct. 19, 2015
Comment period ends – Nov. 29, 2015

Rule 3.430 – Records Required, Information Required
Proposed – Nov. 9, 2015
Comment period ends – Dec. 20, 2015

Rule 3.436 – Liquefied Gas Dealer Licenses
Proposed – Nov. 9, 2015
Comment period ends – Dec. 20, 2015

Rule 3.447 – Reports, Due Dates, Bounding Requirements, and Qualifications for Annual Filers
Proposed – Nov. 9, 2015
Comment period ends – Dec. 20, 2015

Rule 3.448 – Transportation Services for Texas Public School Districts
Proposed – Nov. 9, 2015
Comment period ends – Dec. 20, 2015

Motor Vehicle Sales Tax

Rule 3.68 – United States and Foreign Military Personnel Stationed in Texas
Proposed – Oct. 23, 2015
Comment period ends – Dec. 6, 2015

Occupation Tax on Sulphur Producers

Rule 3.41 – Definition and Due Dates
Proposed – Nov. 9, 2015
Comment period ends – Dec. 20, 2015

Adopted Rules

State and Local Sales and Use Taxes

The following rule adoption was filed with the Secretary of State on Nov. 10, 2015. The rule will become effective on Nov. 30, 2015.

Rule 3.40 – Qualified Research

Effective Rules

State and Local Sales and Use Taxes

Rule 3.316, Occasional Sales; Transfers without Change in Ownership; Sales by Senior Citizens' Organizations; Sales by University and College Student Organizations; and Sales by Nonprofit Animal Shelters.
Effective – Oct. 22, 2015