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Glenn Hegar
Texas Comptroller of Public Accounts
Glenn Hegar
Texas Comptroller of Public Accounts
Glenn Hegar
Texas Comptroller of Public Accounts

taxes

Tax Policy News

December 2016/January 2017

The Comptroller's office publishes this online newsletter to keep you informed about Texas taxes. Tax Policy News provides general information and is not a substitute for legal or other professional advice.

In This Issue...

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Hotel Occupancy Tax

Renting Out a Room, House, Condo or Apartment?

More people today are renting out rooms or their entire house, condo or apartment, especially when a special event comes to town. Hotel occupancy taxes are due on these rentals.

State hotel occupancy tax is due when you rent sleeping accommodations for $15 or more per day. The state hotel occupancy tax rate is 6 percent and is remitted to the Comptroller's office. Hotel occupancy taxes are not due if the sleeping accommodations are for 30 or more consecutive days.

Anyone planning to rent sleeping accommodations must complete and submit Form AP-102, Texas Questionnaire for Hotel Occupancy Tax (PDF) to create a hotel tax account.

Local hotel occupancy taxes may also be due on sleeping accommodations costing $2 or more per day. Local hotel occupancy tax rates are determined by, and remitted to, each local government. Information about local hotel occupancy tax responsibilities is available from the city and county governments where the property is located.

Sales and Use Tax

Holiday Shopping – Returns and Exchanges

Returns

The refund or store credit for an item returned to the seller includes all the sales tax originally paid.

Exchanges

Additional sales tax is not due on an item exchanged for another item at the same price.

If the returned and new items are different prices, additional sales tax or a refund is due on the price difference.

Keeping Warm this Winter – What's Taxable

Natural Gas and Electricity

The sale of natural gas and electricity to heat or power homes is not subject to state sales tax. Some local cities and special purpose districts associated with those cities can, however, choose to impose local sales tax on those sales.

The sale of natural gas and electricity is taxable when sold for commercial use, unless an exemption applies.

Propane, Butane and Kerosene

Sales of propane, butane and kerosene are exempt from tax by law. For example, sales of propane for a barbecue pit, kerosene for a lantern or butane for a portable heater are not taxable sales. An exemption certificate is not required.

Firewood

The sale of firewood is taxable, including any additional fees for delivering, packing and stacking.

Sales tax is also due when hiring someone to cut down or cut up a tree for firewood.

Portable Generators

Tax is due on the sale or rental of a portable generator, including any additional charges such as a delivery fee.

New Year's Resolutions and Self-Improvement – What's Taxable

Gym Memberships

Initiation and membership fees to gyms, athletic clubs, health clubs and physical fitness centers are taxable.

Sales tax is not due on a membership bought with a doctor's prescription. The prescription must be dated on or before the sale date and specify the type of health treatment required. A new prescription is required for each membership renewal.

Nutritional and Dietary Supplements

Sales tax is not due on the sale of nutritional supplements, vitamins or minerals.

Dietary supplements sales are not taxable if the supplements:

  • contain one or more vitamins, minerals, herbs, botanicals, amino acids or substances that supplement daily dietary intake;
  • are not represented as "food or the sole item of a meal or diet" (such as a meal replacement); and
  • are labeled as "dietary supplements."

A product that does not meet these criteria is also considered a nontaxable dietary supplement if the product is labeled, or required to be labeled, with a Supplement Facts panel by the Food and Drug Administration.

2016 Federal Income Tax Returns – Sales Tax Deductions

If you itemize deductions on your 2016 income tax return, you have the option of claiming a deduction for state and local sales taxes paid during 2016. See the IRS Sales Tax Deduction Calculator for more information on claiming the deduction.

Tobacco Taxes and Fees

Electronic Reporting Now Available

As of December, cigarette and tobacco distributors, wholesalers and manufacturers can file the following reports online using eSystems:

  • Retail Sales Report (Retailer Inventory Tracking System)
  • Non-Settling Manufacturers (NSM)/Subsequent Participating Manufacturers (SPM) Report (Distributor Inventory Tracking System)
  • Manufacturer Report

Our office recently mailed letters to permit holders explaining filing instructions for using eSystems. If you need help, call our Tobacco Section at 800-862-2260 or directly at 512-463-3731.

Policy Memo

Franchise Tax

Inclusion of Empty Miles in Apportionment of Transportation Receipts

A taxable entity can either include or exclude empty miles in the apportionment formula for transportation receipts as long as the empty miles are also included or excluded in both the calculation of Texas transportation miles and total miles everywhere. Apportionment involves calculating the relative Texas percentage of a taxable entity's total receipts and symmetry must be maintained between the numerator and the denominator.

See State Tax Automated Research (STAR) System document 201609008L for more information.

Website Updates

Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is a federal program for working people with low to moderate income who meet certain requirements and who file a tax return, even if they do not owe tax or are not required to file a tax return. The credit reduces the amount of tax owed and may provide a refund.

The Comptroller's office has updated Earned Income Tax Credit (EITC) information on our website.

Interest Rates for 2017

The Comptroller's office has updated the interest rates for delinquent taxes and refund claims for 2017. The interest rate for delinquent taxes is 4.75 percent. The interest rate for refunds is 1.004 percent.

See Interest Owed and Earned for more information about how the interest rate is applied, as well as the interest rates for this year and previous years.

Texas Sales and Use Tax Permit – Requesting a Duplicate

Taxpayers can now log in to Webfile and request a duplicate copy of their sales and use tax permit. Requests can only be made for active permitted locations and can only be requested once every 30 days.

Rules

Proposed

The Comptroller's office proposed the following rules for public comment through the Texas Register:

Cigarette, E-Cigarette, and Tobacco Products Regulation

Rule 3.1205 – Delivery Sales of Cigarettes (Health and Safety Code, Chapter 161, Subchapter R)
Publication date – Jan 20, 2017
Comment period end date – Feb. 19, 2017

Rule 3.1206 – Delivery Sales of E-Cigarettes (Health and Safety Code, Chapter 161, Subchapter R)
Publication date – Dec. 30, 2016
Comment period end date – Jan. 29, 2017

General Rules

Rule 3.11 – Petition for Adoption of Rules
Publication date – Dec. 16, 2016
Comment period end date – Jan. 15, 2017

Motor Vehicle Sales Tax

Rule 3.83 – Sales and Use of Motor Vehicles Purchased or Leased by Public Agencies; and Sales and Use of Motor Vehicles Purchased by Commercial Transportation Companies
Publication date – Dec. 23, 2016
Comment period end date – Jan. 22, 2017

State and Local Sales and Use Taxes

Rule 3.293 – Food, Food Products; Meals; Food Service
Publication date – Dec. 16, 2016
Comment period end date – Jan. 15, 2017

Rule 3.295 – Natural Gas and Electricity
Publication date – Dec. 16, 2016
Comment period end date – Jan. 15, 2017

Adopted

The Comptroller's office filed the following rules for adoption with the Secretary of State:

Franchise Tax

Rule 3.574 – Margin: New Veteran-Owned Businesses
Publication date – Dec. 12, 2016
Effective date – Dec. 20, 2016

Rule 3.583 – Margin: Exemptions
Publication date – Jan. 20, 2017
Effective date – Jan 29, 2017

Rule 3.584 – Margin: Reports and Payments
Publication date – Dec. 2, 2016
Effective date – Dec. 8, 2016

Sexually Oriented Business Fee

Rule 3.722 – Sexually Oriented Business Fee
Publication date – Jan. 20, 2017
Effective date – Jan. 29, 2017

State Sales and Use Tax

Rule 3.350 – Master Recordings and Broadcasts
Publication date – Jan. 27, 2017
Effective date – Feb. 1, 2017

Tobacco Settlement Permanent Trust Account

Rule 18.1 – Purpose and Definitions
Publication date – Dec. 16, 2016
Effective date – Dec. 21, 2016

Rule 18.2 – Trust Account Distributions
Publication date – Dec. 16, 2016
Effective date – Dec. 21, 2016

Adopted Repeals

Controlled Substances Tax

The Comptroller's office filed the following rule repeal adoptions with the Secretary of State:

Rule 3.682 – Tax Payment Certificates
Publication date – Dec. 16, 2016
Effective date – Dec. 20, 2016

Rule 3.683 – Jeopardy Determinations
Publication date – Dec. 16, 2016
Effective date – Dec. 20, 2016

HB855 Browser Statement

In 2015, the Texas Legislature passed House Bill 855, which requires state agencies to publish a list of the three most commonly used Web browsers on their websites. The Texas Comptroller’s most commonly used Web browsers are Google Chrome, Microsoft Internet Explorer and Apple Safari.

We support: