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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

October 2018

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...

Wayfair

Tax Responsibilities and Resources for Texas Sellers After Wayfair

As a result of the U.S. Supreme Court’s decision on South Dakota v. Wayfair, Texas-based businesses and remote sellers selling items or services into other states may be required to collect, remit and report the taxes on their sales for that state. Generally, a “remote seller” is a seller that does not have a physical presence in a state, but who sells products or services for delivery into that state.

Beginning Oct. 1, 2018, some states require remote sellers to collect taxes if they have more than $100,000 in gross sales or 200 individual transactions into that state, but you must contact the state taxing agency or authority directly for exact tax responsibilities.

For more information about Texas businesses’ collection responsibilities for other states, see these websites:

Disclaimer: Each website listed is responsible for its own information, and the Texas Comptroller of Public Accounts is not responsible for maintaining the information provided on these websites.

Western States Association of Tax Administrators (WSATA)

2018 WSATA Conference Wrap-Up

Thanks for Making WSATA 2018 a Great Success!

The 2018 Annual Conference of the Western States Association of Tax Administrators (WSATA), Sept. 23-26, was a great success. As the host state, we want to thank all the sponsors, speakers and more than 200 participants for their time and support. We offered 18 presentations on relevant state and local tax topics, including sessions on preparing for a natural disaster, the economy in the 14 member states of WSATA, the implementation of the recent Wayfair decision and best practices in audit and enforcement. We had a great closing banquet at the Bullock Texas State History Museum, and everyone enjoyed the sights, music and food in Austin. Our special thanks to Michelle Reynolds and Chelsea Ray in our Tax Policy Division, whose great planning skills, professionalism and positive attitudes helped set a high bar for future WSATA conferences.

Reminders

Coin-Operated Amusement Machines Tax – 2019 Renewal Applications Due by Nov. 30, 2018

Coin-operated amusement machine owners and operators must file renewal applications and remit payment for their 2019 General Business License, Registration Certificate, Import License or Repair License by Nov. 30.

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

The Comptroller's office mailed renewal application packets in September. Coin-operated amusement machine owners and operators who have not received renewal packets by Oct. 31 should contact our office.

Franchise Tax – Filing Deadline is Nov. 15, 2018

The deadline for filing extended Franchise Tax reports is Nov. 15.

Use Webfile to file your tax report electronically. Webfile helps us process your information quickly, efficiently and accurately.

Tax Training Resources

Webinars, Podcasts, Videos and Seminars

The Comptroller’s office offers several training resources that provide in-depth information on tax topics that affect your business today. These include live and on-demand training sessions, as well as tax seminars.

Visit our Tax Training Resources webpage to:

  • find out more about our training resources;
  • listen to current podcasts;
  • register for upcoming webinars; and
  • view the Podcast and Webinar Archive sections for previous recordings.

Podcasts

Listen to our quarterly podcast highlighting exempt organizations, including religious, charitable and educational organizations. The segment highlights the application process and exempt purchases and sales for qualified organizations in Texas.

We are in the process of producing “Spotlight Podcasts” for release this month, covering the following topics:

  • PTAs and PTOs
  • Booster Clubs

Webinars

Our latest webinar covered sales by nonprofit organizations. The one-hour webinar highlighted the sales tax responsibilities of nonprofit organizations and helped them identify their taxable and nontaxable sales.

The recording of this webinar will soon be available on our Tax Training Resources webpage.

Videos

Our current video series covers contractors, repairpersons and Texas Sales Tax:

We also offers video tutorials on filing and paying sales tax though Webfile. To view these videos visit the Video Tutorials webpage.

Seminars

We offer sales and use tax seminars across the state throughout the year. New taxpayers are especially encouraged to attend these overviews of tax responsibilities for buyers, sellers and service providers. For locations, dates and times, visit the Taxpayer Seminars webpage.

Sales Tax

Contractors and Related Services

Part 3: Caught in the Middle Revisited

In this month’s issue, we are continuing with our contractor series and looking at agency agreements.

In our August Tax Policy News article, “The Sales Tax ABCs for Contractors and Taxable Service Providers,” we discussed the applicability and responsibility for sales and use taxes on taxable items bought, leased or rented to complete projects for exempt organizations. In summary, a contractor can buy incorporated materials, consumables and certain qualifying taxable services tax free for an exempt contract.

The contractor, however, must pay tax on equipment used in completing their work. They cannot give the seller a resale or exemption certificate for equipment they use in their work because they are the end user of the equipment.

The equipment is not re-rented to the exempt organization, and the exempt organization’s exempt status does not flow through to the contractor. The contractor can, however, ask for an equipment and tax reimbursement from the exempt entity. The exempt entity is simply paying an expense (including the tax paid by the contractor) for a cost incurred in completing the contract. The exempt entity is not paying sales tax to the contractor on a purchase for the entity’s use that the entity could claim as an exempt purchase.

Agency Agreements

An exempt organization can enter into an agency agreement with a contractor. This agreement authorizes the contractor to buy items and services tax free on the exempt organization’s behalf.

Three elements are necessary to demonstrate that an agency relationship exists:

  • one person (the agent) is acting for another (the principal);
  • both parties consent to the arrangement; and
  • the agent is under the principal’s control.

Although an agency agreement might be implied from the parties’ conduct, and it might be determined that one exists based on that conduct alone, Comptroller authorities require a written agreement to confirm such a relationship. That is, a written agreement is the only way to verify an agency agreement.

Note: agency agreements apply only to materials incorporated into the job.

Documentation Requirements

When buying items or services on the exempt organization’s behalf, the contractor must disclose that they are acting as the exempt organization’s agent. The contractor can give a properly completed exemption certificate (PDF) to the seller for taxable items.

When acting as an agent, the contractor cannot mark up the item’s purchase price. Charges to the exempt organization must show the actual amount paid to suppliers. Any charges identified as a collection of tax, however, must be remitted to the Comptroller’s office.

The contractor must maintain accounting records and invoices proving that the charges to their clients are identical to what was paid.

Refunds

If the contractor pays sales tax in error, they are due a refund and can:

  • take a credit in the amount of the refund on a future sales tax return;
  • amend the return to take a credit in the amount of the refund for the period in which the sales tax was paid; or
  • request a refund from the Comptroller’s office.

For more information, see Sales Tax Refunds.

More Information

Public Notices

Breastfeeding Rights

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

Publications

Disasters and Texas Taxes

We revised Publication 94-182, Disasters and Texas Taxes as a source of basic information for what people need before, during and after a disaster to take care of themselves and their property. The publication also has a link to the Governor’s recent disaster declaration for counties affected by flooding.

Fireworks and Texas Taxes

We recently updated our fireworks publication to emphasize fireworks sellers’ sales tax responsibilities as well as when and where they can legally sell fireworks.

Read all about it in Publication 94-162, Fireworks and Texas Taxes. The publication is also available in Spanish.

Nonprofit and Exempt Organizations – Purchases and Sales

Our Exempt Organizations – Sales and Purchases publication is now called Publication 96-122, Nonprofit and Exempt Organizations – Purchases and Sales, to reflect its broader scope. The publication has also been updated and reorganized and includes a helpful chart detailing what purchases by qualifying nonprofit and exempt organizations are exempt from sales, hotel and motor vehicle taxes.

Rules

Proposed

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

State and Local Sales and Use Taxes

Rule 3.286 – Seller’s and Purchaser’s Responsibilities
Publication date – Oct. 19, 2018
Comment period end date – Nov. 18, 2018

Rule 3.293 – Food; Food Products; Meals; Food Service
Publication date – Oct. 12, 2018
Comment period end date – Nov. 11, 2018

Adopted

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

Automotive Oil Sales Fee

Rule 3.701 – Automotive Oil Sales Fee Reporting Requirements
Publication date – Nov 2, 2018
Effective date – Nov 7, 2018

STAR Watch

Monthly Updates

To see the latest items added to our State Tax Automated Research (STAR) system, use the "New Documents" link on the STAR home page in the right-hand column. This will access the Monthly Updates Search Form

The Monthly Updates Search Form defaults to the current month and “All Taxes.” Use the pull-down menu to choose a different month or a particular tax. Selecting “All Taxes” brings up the documents organized by tax type.

More Information

Help is just a click away! Use our website to take care of business.

Taxes

The Taxes webpage has links to:

  • all Texas taxes and fees
  • resources for taxpayers
  • filing and paying taxes
  • tax laws and rules
Taxpayer Seminars and Videos

We host free taxpayer seminars across the state about the tax responsibilities of buyers, sellers and service providers.

Our Video Library has online tutorials on tax-related topics as well as information about our office.

Practitioners’ Corner

The Practitioners’ Corner is a one-stop resource for information about filing and paying taxes, links to tax research sources and searchable databases.

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: