Tax Policy News

February/March 2016

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...


Franchsie Tax

Annual franchise tax reports are due May 16

May 16 is the due date for franchise tax annual reports this year. Since May 15 falls on a Sunday, the next business day is the due date.

The Comptroller' s office is in the process of mailing due date reminder letters. The letter includes your franchise tax Webfile number that you will need to file your report using Webfile. Remember, beginning in 2016, all No Tax Due Reports must be filed electronically. Webfile satisfies the electronic reporting requirement, and it' s free.

If you need more time to file your report, you can also use Webfile to request an extension.

You can get a copy of your reminder letter by calling us at 1-800-252-1381.

If all you need is your Webfile number, you can get that by calling 1-800-442-3453 and using our automated system. To use the automated system, you will need your taxpayer number, and you must provide confidential identifying information, such as total revenue from a previous report or the amount of the last tax payment you made greater than zero.

In addition to Webfile, another electronic reporting option is to use a third-party software provider to file your franchise tax report. The Comptroller' s office maintains a list of approved software providers.

Franchise Tax Filing – What' s New for 2016

Rates for 2016 - The following rates apply to reports originally due on or after Jan. 1, 2016:

  • 0.75 percent rate for most entities; or
  • 0.375 percent rate for entities primarily engaged in retail or wholesale trade
  • EZ Computation Report
    • 0.331 percent rate
    • Revenue threshold is now $20 million.

Electronic Filing Required – No Tax Due Reports originally due on or after Jan. 1, 2016, must be filed electronically.

No Tax Due Threshold – The no tax due threshold is now $1,110,000 for reports originally due on or after Jan. 1, 2016, and before Jan. 1, 2018, after making the adjustment required by Tax Code Section 171.006(b).

Compensation Deduction Limit – The limit on wages and cash compensation included in the compensation deduction is now $360,000 per person for reports originally due on or after Jan. 1, 2016, and before Jan. 1, 2018, after making the adjustment required by Tax Code Section 171.006(b).

Reporting Requirements for Limited Partnerships and Professional Associations – Limited partnerships and professional associations are now required to file Public Information Reports with the Comptroller' s office instead of Ownership Information Reports. This change applies to reports originally due on or after Jan. 1, 2016.

Hotel Occupancy Tax

Renting Houses and Rooms to the Public

Springtime entertainment events bring many visitors to Texas cities and towns. Remember that persons who rent their houses or rooms to these visitors must register to collect and pay Hotel Occupancy Tax. These persons must collect this tax from their customers, in the same way a hotel collects the tax from its patrons.

Insurance Tax

Annual Independently Procured Insurance Premium Reports Due May 16

The Comptroller' s office will mail the 2015 independently procured insurance report forms the first week of April. The annual independently procured insurance premium tax report and supplement are due, and the taxes payable, on or before May 16. Since May 15 is a Sunday, the due date falls on the next business day, May 16.

To qualify as independently procured insurance, the insured must obtain a policy of insurance directly from a non-admitted insurer and must not use the services of an agent or broker in the procurement of coverage. If an agent is involved in the placement of the insurance, the policy will be surplus lines insurance with taxes due the home state of the insured, or the transaction will be considered unauthorized insurance.

Volunteer Fire Department Assistance Fund Assessment Billing

The Comptroller' s office will mail the billings for the Volunteer Fire Department Assistance Fund Assessment by the end of May, and the assessment is due Aug. 1, 2016.

This assessment applies to property and casualty insurers writing homeowners insurance, fire insurance, farm and ranch owners insurance, private passenger auto physical damage insurance, commercial auto physical damage insurance and commercial multi-peril insurance.

Sales Tax

Agricultural and Timber Registration Numbers

The Comptroller' s office recently sent letters to people with agricultural and timber registration numbers (ag/timber numbers) who had not yet renewed reminding them their numbers expired on Dec. 31, 2015.

The letters also explained they can still renew their number between now and March 31, 2016. After March 31, ag/timber number holders will have to submit a new application for a number.

Cable Television, Internet Access or Telecommunications Service Providers

Providers of cable television, Internet access or telecommunications services are eligible for a refund on sales tax paid on the total sales price for qualifying purchases of tangible personal property used to provide their service. "Total sales price" includes delivery and installation costs assessed at the time of purchase.

March 31, 2016, is the deadline to submit a refund request for sales tax paid in 2015 on qualifying purchases.

Emergency Preparation Supplies Sales Tax Holiday

You can purchase certain emergency preparation supplies tax free during the new emergency preparation supplies sales tax holiday. There is no limit on the number of qualifying items you can purchase, and no exemption certificate is required.

The 2016 emergency preparation sales tax holiday begins at 12:01 a.m. on Saturday, April 23, and ends at midnight on Monday, April 25.

Qualified Research – Annual Information Report due March 31

For persons claiming the sales tax exemption for qualified research, the Annual Information Report (AIR) is due March 31. The AIR allows registrants to renew their Texas qualified research registration number and to provide information the Comptroller must report to the Texas Legislature. Those claiming the sales tax exemption must report the amount of qualified research performed in Texas; the number of employees engaged in research and development in Texas; and data regarding sales tax revenue.

Persons renewing their registration number should log in to the Comptroller' s eSystems and will need the 11-digit taxpayer number(s) and Webfile number(s) printed on correspondence from the Comptroller' s office.

Website Update

New Veteran-Owned Businesses and Texas Franchise Tax

As we noted in the Legislative Update in September, new veteran-owned businesses are not subject to franchise tax for an initial five-year period.

We have a new Web page explaining who qualifies and the steps to follow for Comptroller verification that the business qualifies as a new veteran-owned business.

Public Outreach

Tax Policy Division Presentations

Various organizations often ask members of the Tax Policy Division to attend meetings or to give presentations to discuss taxability issues. We are committed to helping taxpayers and their representatives understand their tax responsibilities and strive to fill requests as staffing permits.

A Tax Policy representative discussed motor vehicle sales tax and administrative issues at the meeting of the Coastal Bend Region of the Tax Assessor-Collectors Association of Texas in Corpus Christi. Fifteen counties participated, along with members of the Texas Department of Motor Vehicles Corpus Christi office.

Other News

A Message from the Texas Department of Assistive and Rehabilitative Services – Service Animals and Their Access to Public Places

As a public service to Texas businesses, the Comptroller is helping spread the word about trained service animals used by people with disabilities and their right to access public places.

Texas law and the federal Americans with Disabilities Act (ADA) guarantee the right of a person who is blind or has other disabilities, including post-traumatic stress disorder (PTSD), to be accompanied by a trained service animal in all public places. These places of public accommodation are businesses that are generally open to the public and that fall into one of 12 categories listed in the ADA, such as restaurants, movie theaters, schools, day care facilities, recreation facilities and doctors' offices.

For a complete description, see Information about Service Animals and Their Access to Public Places on the Department of Assistive and Rehabilitative Services website.


Proposed Rules

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

Mixed Beverage Sales Tax

Rule 3.1002 – Mixed Beverage Sales Tax
Publication date – March 11, 2016.
Comment period ends – April 10, 2016.

State and Local Sales and Use Taxes

Rule 3.353 – Sales Tax Holiday-Certain Emergency Preparation Supplies
Publication date – February 26, 2016.
Comment period ends – March 27, 2016.

Adopted Rules

Fireworks Tax

Rule 3.1281 – Fireworks Tax
Publication date – April 1, 2016.
Effective date – April 6, 2016.

General Rules

Rule 3.9 – Electronic Filing of Returns and Reports; Electronic Transfer of Certain Payments by Certain Taxpayers
Publication date – April 1, 2016.
Effective date – April 5, 2016.