taxes

Tax Policy News

October 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

Franchise Tax Filing Deadline

The deadline for filing extended Franchise Tax reports is Nov. 16. Nov. 15, the statutory due date, is a Sunday so the next business day becomes the due date.

We hope you will use Webfile to file your tax report electronically. Webfile helps us process your information quickly, efficiently and accurately.

Tax Help

General Information Letters and Private Letter Rulings

Most written responses the Comptroller issues to taxpayers' questions are considered general information letters (GILs). GILs are advisory in nature and typically refer to an existing law, rule or publication in answering the question. We do not require the question to be presented in a particular form. We issue GILs when existing guidance is available to confirm taxability or non-taxability of an item or transaction, or when the question does not meet the requirements for a private letter ruling (PLR) request.

On the other hand, a person seeking a private letter ruling (PLR) must submit a properly completed private letter ruling request. A PLR is the Comptroller's written determination on the application of relevant tax laws, rules and policies to a specific set of facts, issued in response to a request for a PLR. More information, including sample PLRs and answers to frequently asked questions, is available.

Coin-Operated Amusement Machines Tax

2016 Renewal Applications Due by Nov. 30, 2015

Coin-operated amusement machine owners and operators must file their renewal applications for a 2016 General Business License, Registration Certificate, Import License or Repair License by Nov. 30. The Comptroller mailed renewal application packets in September. Applications postmarked after Nov. 30 are subject to penalty.

A $60 occupation tax on each coin-operated amusement machine exhibited or displayed in Texas is also due by Nov. 30. An occupation tax permit decal must be affixed to each machine in use.

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

Franchise Tax

Qualifying for the 0.5 Percent Tax Rate – Wholesaler/Retailer vs. Producer

A taxable entity that contracts with an unaffiliated manufacturer for the production of goods that meet the taxable entity's specifications can be considered either a retailer/wholesaler or a producer of the goods it acquires from the contract manufacturer.

If the taxable entity produces tangible personal property that is incorporated into, installed in or becomes a component part of the final product that the taxable entity sells, the entity will be considered the producer of that product for purposes of determining whether less than 50 percent of the taxable entity's retail or wholesale revenue comes from the sales of products produced by the taxable entity. See STAR document 201508350L for more information.

Sales Tax

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.

The Comptroller began sending letters in late September to persons with ag/timber numbers explaining numbers can be renewed by telephone, online or mail.

Public Notice

Breastfeeding Rights

As required by the 84th Legislature's House Bill 1, we are reminding readers that all mothers have the right to breastfeed their babies without interference or restriction of that right.

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.

Recent events attended or held include the following:

  • Board of Directors meeting of the Texas Agricultural Cooperative Council to answer questions about the process for renewing agricultural and timber registration numbers
  • Earthmoving Contractors Association of Texas, Inc. in Temple about the taxability of dyed diesel fuel
  • Federation of Texas A&M University Mothers' Clubs Fall Meetings and Workshops in College Station to discuss sales and use tax rules as they relate to fundraising activities
  • Spiritual Life Sales Tax Seminar in Austin about sales tax issues for its members
  • Two roundtable meetings to discuss the process for renewing agricultural and timber registration numbers, one meeting for retailers and one meeting for farmers and ranchers

In the Works

Legislative Implementation

We are updating our rules, publications and website to reflect changes to Texas tax laws passed during the 84th Legislative Session. We'll let you know via this newsletter when new or revised items are available.

Publications

Fireworks Tax

The Comptroller updated the Fireworks Tax publication to add a note that the 2 percent fireworks tax collected under Chapter 161 was repealed effective Sept. 1, 2015.

The repealed 2 percent tax, which provided funding to the Volunteer Fire Department Insurance Fund, will be replaced by an allocation equal to 2 percent (or the amount estimated to represent 2 percent) of each taxable retail sale of fireworks sold in Texas.

Fireworks sellers must still collect sales and use tax on their fireworks sales.

Website Update

International Fuel Tax Agreement (IFTA)

IFTA Webfile Now Available

IFTA joins the list of taxes that can be filed electronically using Webfile. We included information with the 2015 third quarter returns to let taxpayers know they can now use Webfile for IFTA.

Motor Fuels, Natural Gas and Crude Oil

Update Your EDI Software

New versions of Electronic Data Interchange (EDI) software are now available for Motor Fuels Tax and for Natural Gas and Crude Oil Tax. You must download the new version to be able to file your returns. Returns created with previous versions of the software will no longer be accepted. We hope you continue to save time and money by using EDI to file your tax information.

Sales and Use Tax

Easy Viewing for Sales Tax Searches

We recently upgraded the Sales Taxpayer Search and the Sales Tax Rate Search so you'll have an optimal viewing experience whether you're using a desktop computer, a tablet or a mobile phone. Our IT staff used the responsive Web design approach that provides easy reading and navigating with a minimum of resizing, panning and scrolling.

Rules

Proposed Rules

Proposed rules are available from the Texas Secretary of State.

Motor Vehicle Sales Tax

The Comptroller proposed amendments to the following rule for public comment through the Texas Register on July 27, 2015. The comment period ended Sept. 6, 2015, and we are considering comments received.

Rule 3.88 – Moveable Specialized Equipment and Off-Road Vehicles

State and Local Sales and Use Taxes

The Comptroller proposed the following rule for public comment through the Texas Register on Sept. 21, 2015. The comment period ends Nov. 2, 2015.

Rule 3.340 – Qualified Research

Effective Rules

New Subchapter – Special Fee on Certain Cigarettes and Cigarette Tobacco Products

Rule 3.751, Special Fee on Certain Cigarettes and Cigarette Tobacco Products: Definitions, Imposition of Fee, and Reports, effective Oct. 18, 2015.

Franchise Tax

Rule 3.598, Margin: Tax Credit for Certified Rehabilitation of Certified Historical Structures, effective Aug. 6, 2015.

Motor Vehicle Sales Tax

Rule 3.96, Imposition and Collection of a Surcharge on Certain Diesel Powered Motor Vehicles, effective Aug. 10, 2015.

State and Local Sales and Use Taxes

Rule 3.299, Newspapers, Magazines, Publishers, and Exempt Writings, effective Oct. 12, 2015.