This issue of Tax Policy News summarizes Texas tax law changes resulting from bills passed by the 85th Legislature (Regular Session) and lists the statutes affected by the changes. It also explains our agency’s participation in the Multistate Tax Commission (MTC) Online Marketplace Seller Voluntary Disclosure Initiative.
Previous issues are available through the Tax Policy News Index.
As Texas Comptroller, I am focused on the core constitutional duties of the office. One of the most important of those duties – if not always the most popular – is my role as Texas’ tax collector. Day in and day out I work with hundreds of dedicated Comptroller employees across multiple divisions within the agency to ensure we administer taxes fairly, treat taxpayers with respect and accurately collect the proper tax due to the state – and not a penny more!
To achieve these goals, it’s crucial for us to educate taxpayers and regularly update them on changes to tax law. This is particularly important after a busy legislative session. The Legislature recently made important modifications to clarify and update Texas’ tax code. In this issue we’ll be discussing in detail the various adjustments lawmakers put into place. Many changes provided much needed tax relief, some granted additional time for taxpayers to make key decisions, and others created administrative efficiencies for the agency and clarification of the application process for our customers.
I will continue to emphasize the importance of excellent customer service and will work to simplify and streamline the process of paying taxes, which includes providing our customers with useful guidance and pertinent information, so I hope you find this legislative roundup helpful. As Texas’ chief financial officer, I will continue to monitor our economy and do my part to ensure the Lone Star State continues to thrive.
SB 1 requires the Comptroller of Public Accounts to establish a tax amnesty program to encourage voluntary reporting by:
The amnesty program provides a waiver of penalty or interest (or both), but does not apply to an established tax liability or to taxpayers currently under audit. The amnesty program will be for a limited duration and will include tax due on purchases. We will provide additional information once dates and program details are established.
SB 1095 extends the time from 30 days to 60 days for a taxpayer to:
The extension applies to determination notices and refund denials issued on or after Sept. 1, 2017.
The bill also ties the date that a decision in a redetermination or refund hearing becomes final and the time a claimant has to request a rehearing to that of a contested case under Chapter 2001, Government Code.
Amends Tax Code Sections 111.009 and 111.105
SB 1390:
Amends Tax Code Sections 154.210, 154.502, 154.503, 154.515, and 155.111
Adds Tax Code Section 154.026
Amends Health and Safety Code Sections 161.604 and 161.605
HB 1003 adds expenses incurred by certain public institutions of higher education and university systems to eligible costs and expenses for the certified rehabilitation of certified historic structures, if the other provisions of Internal Revenue Code Section 47(c)(2) are met.
The provision applies to authorized investments of public funds made on or after June 14, 2017.
This provision is effective until Jan. 1, 2022.
Amends Tax Code Section 171.901
HB 2126 provides that the sale of prepaid phone calling cards is not the provision of telecommunications services for purposes of qualifying for the reduced tax rate for entities primarily engaged in retail or wholesale trade.
Amends Tax Code Section 171.002
HB 3992 allows a franchise tax exemption for certain cooperatives whose single member is a farmers’ cooperative described in Section 521(b)(1) of the IRS Code and has at least 500 farmer-fruit grower members.
Amends Tax Code Section 171.071
HB 4002 removes the term “installation” from the definition of production used in determining the cost of goods sold deduction.
Amends Tax Code Section 171.1012
SB 550 allows entities subject to certain insurance premium taxes, which are sold or assigned a credit for the certified rehabilitation of certified historic structures, to claim all or part of the credit against their premium tax liability.
The provisions related to the credit apply to these insurers to the same extent they apply to entities subject to franchise tax.
Amends Tax Code Section 171.908
HB 1896:
Combines the amendments to Tax Code Section 351.101 made by Chapters 666 (HB 3772) and 979 (HB 3615) of the 84th Legislature (2015) and renumbers accordingly
Amends Local Government Code Section 334.001
Amends Tax Code Sections 351.001, 351.007, 351.101 and 351.0031
House Bill 2445 adds the following cities to the list of cities that can pledge bonds for a hotel project or a hotel and convention center project:
Abilene Cedar Hill Denton |
Katy Kemah League City |
Lewisville Lubbock Midland |
Port Aransas Prosper Roanoke |
Rowlett Sugar Land |
These municipalities can receive a rebate of certain taxes that are paid or collected by a hotel project and businesses ancillary to the hotel project that are located within 1,000 feet of a convention center facility owned by the municipality or the hotel.
Eligible municipalities:
The city of Laredo can receive tax rebates for a hotel and convention center project that is:
The following locations can use their hotel tax revenue for sports facilities and fields, with some restrictions:
Cooke County can:
The bill also allows a county with no municipalities that owns an airport to use its hotel tax revenue for repairs and improvements to the airport for ten years, with restrictions.
Amends Local Government Code Sections 334.001, 334.1015 and 334.2515
Amends Tax Code Sections 351.005, 351.101, 351.1012, 351.102, 351.10711, 351.1076, 351.1078, 352.002, 352.103, and 352.113
SB 345 authorizes a city with a population of 173,000 or more, located within two or more counties, to pledge its municipal hotel tax revenue to pay bonds for a hotel project that is:
Before this amendment, cities had to either own the hotel project or own the land on which the hotel project is located.
Amends Tax Code Section 351.102
SB 1086 prohibits a state agency from publishing the receipts of an individual hotel on a public internet website.
Persons can still request hotel data by submitting an open records request to the Comptroller’s office.
Adds Tax Code Section 156.155
SB 1221 requires cities that impose a hotel tax and if applicable, a sports or community venue hotel tax, to report to the Comptroller’s office its:
The report is due Feb. 20 each year and includes the amount and percentage allocated to the following authorized expenditures:
Cities must submit the information on a report provided by the Comptroller’s office or by giving the Comptroller’s office a link or description where to find the information on its website.
Adds Tax Code Section 351.009
HB 1944 authorizes captive insurance companies to organize as captive exchanges subject to insurance premium taxes in the same manner as other captive insurance companies.
Amends Insurance Code Sections 964.001, 964.051-964.053, 964.055-964.063, 964.065 and 964.070
Adds Insurance Code Section 964.073 and Subchapter C, Captive Exchanges
SB 2087 creates a health insurance risk pool to provide low-cost insurance to the public, if federal funds become available.
If the risk pool does operate, it will be exempt from all Texas state taxes.
Adds Insurance Code Chapter 1510 Temporary Health Insurance Risk Pool
HB 2492 allows insurance companies to apply for designation as a domestic surplus lines insurer. The policies issued by these companies are subject to surplus lines premium tax.
The domestic surplus lines insurer is subject to maintenance tax.
Amends Insurance Code Sections 981.002, 981.004, 981.006 and 981.210
Adds Insurance Code Subchapter B-1, Domestic Surplus Lines Insurer
HB 3496:
Farm mutual companies are exempt, unless they are a “fronting insurer.”
An insurer is a “fronting insurer” if it:
Amends Insurance Code Sections 221.001, 252.005, 911.065 and 2210.006
SB 550 allows entities subject to certain insurance premium taxes, which are sold or assigned a credit for the certified rehabilitation of certified historic structures, to claim all or part of the credit against their premium tax liability.
The provisions related to the credit apply to these insurers to the same extent they apply to entities subject to franchise tax.
Amends Tax Code Section 171.908
SB 559 clarifies that the Miscellaneous Gross Receipts Tax is imposed on utility companies based on the location of their customers, rather than the location of the utility company.
Amends Tax Code Sections 182.021 and 182.022
SB 1120 adds Compressed Natural Gas and Liquefied Natural Gas to the motor fuels that are exempt from local or county excise or occupation taxes.
Amends Tax Code Section 162.014
Tax-free fuel sold to an unlicensed purchaser:
Fuel purchased tax free for export and subsequently sold in Texas prior to export:
Petroleum Product Delivery Fee:
Amends Tax Code Sections 162.012, 162, 101, 162.104, 162.115, 162.201, 162.204 162.216 and 162.401
Adds Sections 162.1155 and 162.2165
Repeals Subsections 162.104(c) and (e) and 162.204(c) and (e)
Amends Water Code Section 26.3574
HB 897:
Amends Tax Code Section 152.001
HB 2067:
The registration of an RFC remains in effect until canceled.
Amends Tax Code Section 152.0475
SB 2076:
Amends Tax Code Section 152.062
Amends Transportation Code Sections 501.002 and 541.201
HB 2277:
Amends Tax Code Section 201.057
HB 3232 provides an automatic waiver of late payment penalties on tax paid with amended reports if:
Amends Tax Code Sections 201.351 and 202.301
NOTE: Updated on Sept. 15, 2017, for clarification of bill.
HB 3101:
A wholesaler’s permit holder can sell liquor to a qualifying passenger bus company tax free as a sale for resale and is not required to obtain a resale certificate.
Amends Alcoholic Beverage Code Sections 11.38 and 101.46
Creates Alcoholic Beverage Code Chapter 48A
HB 4038 expands the definition of “qualifying job” for purposes of certification as a qualifying data center to include a new employment position staffed by a third-party employer if there is a written contract between the third-party employer and a qualifying owner, qualifying operator or qualifying occupant stating the employment position is permanently assigned to an associated qualifying data center.
The amended definition applies to a data center certified as a qualifying data center regardless of whether the certification occurred before June 1, 2017, the effective date of this bill.
Amends Tax Code Section 151.359
HB 4042:
Amends Alcoholic Beverage Code Chapter 53
Amends Tax Code Section 151.461
HB 4054:
Amends Tax Code Section 151.314
SB 745:
To qualify for the exemption, the host employer:
Transfers Tax Code Section 151.057 to Tax Code Section 151.3503 and amends that new section
SB 1083 excludes from taxable insurance services:
Amends Tax Code Section 151.0039
We are participating in the Multistate Tax Commission (MTC) Online Marketplace Seller Voluntary Disclosure Initiative, which is designed to bring into compliance out-of-state taxpayers who sell products in Texas and other states through online marketplaces.
This program is open Aug. 17 – Oct. 17, 2017. Taxpayers must make their requests for agreements through the MTC, and those who qualify must be registered and start collecting tax as of Dec. 1, 2017. The program covers Texas sales and use and franchise taxes.
Agreements are available to taxpayers who represent they do not have any nexus-creating contracts in Texas except for having inventory in an online marketplace provider’s fulfillment centers or having other nexus-creating activities through a marketplace provider on behalf of a marketplace seller, such as handling customer service calls. Taxpayers with nexus for any other reason are not eligible for agreements.
In addition, taxpayers who have already been contacted by our agency about their tax responsibilities, including contact about a routine audit, will not qualify. The agreements also do not waive any taxes collected but not remitted.
More information about applying for the program is available at Multistate Tax Commission (MTC) Online Marketplace Seller Voluntary Disclosure Initiative. You can also contact Rusty Johnson, Manager of our Business Activity Research Team, at rusty.johnson@cpa.texas.gov or 512-463-2501.
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