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 response to the U.S. Supreme Court’s decision on South Dakota v. Wayfair, Texas-based businesses selling items or services into other states may be required to collect taxes for those states. Additionally, remote sellers who were previously not required to collect and remit sales and use tax may have to begin collecting Texas tax on their sales into Texas in late 2019. 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.
The Comptroller’s office is currently updating sales and franchise tax rules to provide details about remote seller tax responsibilities. We are not applying the Wayfair decision to additional taxes at this time, and any new tax responsibilities will be prospective.
You can learn more about tax requirements on our new webpage, Texas Tax Responsibilities and Resources for Sellers After Wayfair.
If you are a Texas-based business selling into other states you may now be required to collect taxes for those states. 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. 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.
As part of our Wayfair implementation, amendments to Rule 3.286, concerning seller’s and purchaser’s responsibilities, will be effective Jan. 1, 2019. The amendments establish a safe harbor for remote sellers whose Texas revenues are below $500,000 from sales of tangible personal property and services in the preceding 12 calendar months. Remote sellers with Texas revenue below the safe harbor amount will not have to register and collect tax. Remote sellers whose Texas revenue exceeds the safe harbor amount shall register and begin collecting tax.
To allow time for remote sellers to prepare for these changes, the amendments postpone the permitting and tax collection requirements for remote sellers until Oct. 1, 2019. The initial 12 calendar months for calculating a remote seller’s Texas revenues will be July 1, 2018, through June 30, 2019.
The Comptroller’s office has completed an overall update to the Comptroller’s Rules of Practice and Procedure, new 34 Texas Administrative Code Section 1.1-1.35, effective Jan. 1, 2019.
Payment Option Deadlines:
For more information on filing and payment requirements, visit our File and Pay webpage.
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 page to:
Our podcast covers popular tax topics and other helpful information. Listen to our current series highlighting exempt organizations, including religious, charitable and educational organizations. Learn about the application process and exempt purchases and sales for qualified organizations in Texas.
Listen to our podcast episode about the sales tax return form and what to include when reporting your total sales, taxable sales and taxable purchases.
Our latest webinar, “Franchise Tax and Closing Your Business in Texas,” covered the franchise tax responsibilities of entities registered with the Texas Secretary of State and provided the steps for closing a business and ending reporting responsibilities. A recording of the webinar will soon be available through our Tax Training Resources page.
Our next Webinar will cover what taxpayers need to know when starting a new business. The webinar highlights the tax responsibilities of doing business in Texas and provides steps for the registration process along with how to collect and report tax. Registration will open sometime in February. Check our Tax Training Resources webpage for updated information.
Our current video series covers contractors, repairpersons and Texas Sales Tax:
We also offers video tutorials on filing and paying sales tax through Webfile. To view these videos visit the Video Tutorials webpage.
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.
Property and casualty insurance companies authorized by the Texas Department of Insurance to write automobile insurance under Insurance Code, Art. 5.01(e) must report and pay this assessment on or before March 1, 2019, for policies effective from July 1, 2018, through Dec. 31, 2018. Companies licensed to write automobile coverage must file the tax form, even if no assessment is due. Refer to Form 25-107 (PDF) and the Insurance FAQs for additional information.
The annual insurance premium and maintenance tax reports and payments for licensed insurance companies and miscellaneous organizations are due on or before March 1, 2019.
Also due March 1, 2019, are the annual insurance premium tax reports and payments for Texas licensed surplus lines agents and agencies, and for entities required to report unauthorized insurance premium taxes.
Taxpayers required to report electronically and those who voluntarily reported their taxes electronically for two consecutive years do not receive a paper tax report. Instead, the insurance company receives an email reminder about the filing deadline.
Taxpayers who are not required to file electronically will receive paper tax reports before the end of January 2019.
In January 2019, for tax year 2018, all licensed insurance companies will receive a statement showing the available guaranty association assessment credits, including any remaining Texas Windstorm Insurance Association (TWIA) and Certified Capital Company (CAPCO) credits.
Veterinarians may offer a variety of services from animal treatments to boarding. In addition to services, they may also sell a variety of items to patients in their clinics, as well as to customers who walk in for purchases. This article explains the taxability of their services, as well as the taxability of the items they purchase and sell when performing their services.
A veterinarian’s professional medical services are not taxable.
Examples of nontaxable veterinarian services include:
Nonmedical grooming services are taxable, even when done by a veterinarian or veterinary staff.
Examples of taxable nonmedical grooming services are baths that include routine expressing of anal glands, nail trimming and similar pet maintenance services.
Even though veterinarians’ medical services are not taxable, they must pay tax on most of the equipment, materials and supplies used to provide their nontaxable services. For example, tax is due on office equipment, as well as X-ray machines, scalpels and similar medical tools.
A “drug” or “medicine” is defined as a product (other than an appliance, device or food for human consumption) that is:
A “drug” or “medicine” also includes a product that is required to be labeled with a “Drug Facts” panel in accordance with regulations of the U.S. Food and Drug Administration.
An item that meets the definition of a drug or medicine, including a drug or medicine sold “over the counter,” is exempt from sales tax when it is prescribed or dispensed by a veterinarian. The seller should keep a copy of the prescription in their files as proof the sale qualified for exemption. An exemption certificate is not required.
“Prescribed” means the veterinarian either gives a written prescription to buy the items elsewhere, or sells the item under a written or oral prescription.
“Dispensed” means the item is given or applied to the animal by the veterinarian during the course of treatment or provided to the animal’s owner to give or apply to the animal during the course of treating the medical condition presented by the animal.
The items listed below are examples of items that meet the definition of a drug or medicine and are exempt when prescribed or dispensed by a veterinarian:
*Food for animals that is prescribed by a veterinarian does not have to be food that can only be purchased and dispensed by a veterinarian.
Note: For information on feed for animals used for agricultural purposes, see Agricultural and Timber Exemptions and Texas Taxes.
Example: An ear rinse for dogs that is not required to be labeled with a "Drug Facts" panel may still be considered a drug or medicine because it is applied to the body of the animal and is intended or marketed for the diagnosis, cure, mitigation, treatment or prevention of disease, illness, injury or pain. Therefore, when a veterinarian prescribes or dispenses the ear rinse, the sale of the ear rinse is exempt.
When a customer buys the ear rinse without a prescription from a veterinarian for use on a pet, the purchase is taxable. See Tax Exemptions for Agriculture (PDF) for more information about the sales tax exemptions for items used exclusively on a farm or ranch to care for farm or work animals.
Wound care dressings and supplies are not taxable. A “wound care dressing” is an item that absorbs wound drainage, protects healing tissue, maintains a moist or dry wound environment (as appropriate) or prevents bacterial contamination.
Examples of exempt wound care dressings and supplies are:
Hypodermic needles and syringes are not taxable. A “hypodermic needle” is a hollow needle adapted for use with hypodermic syringes.
A “hypodermic syringe” is a small syringe with a hollow needle adapted for use in removing or injecting material beneath the skin. A needle or syringe that is not considered hypodermic is taxable.
Dental devices are exempt from sales tax. A “dental device” is an artificial replacement of one or more teeth or a dental appliance worn on the teeth to correct irregularities of growth or position.
A dental device does not include toothbrushes, mouth mirrors, picks, scrapers, drills or other devices used to prevent cavities or plaque build-up or removal.
Veterinarians who sell taxable items or provide taxable services are required to obtain a Texas Sales and Use Tax Permit.
When veterinarians want to buy taxable items tax free to resell, they must give a resale certificate (PDF) to the supplier of the taxable item.
Examples of items that are taxable when sold by a veterinarian are:
Sales of pets are taxable, unless the pet is adopted from a nonprofit animal shelter. Pets are animals such as dogs, cats, guinea pigs, mice, rabbits, fish (that do not ordinarily constitute food for human consumption) and reptiles.
Sales of horses, mules and work animals, as well as livestock that ordinarily constitutes food for human consumption, are not taxable.
Equipment exclusively used on a farm or ranch to produce agricultural products for sale is exempt. This includes the production of horses held for sale.
This exemption also includes veterinary tools used exclusively on a farm or ranch for the care or treatment of farm and ranch animals, such as cattle, goats, swine, horses and herd dogs. Veterinarians who make farm and ranch calls can give an exemption certificate (PDF) to their suppliers when claiming the exemption for equipment used exclusively for such care or treatment on a farm or ranch.
Items used to provide treatment for pets or wildlife that are not agricultural products are taxable, even if the animals are on a farm or ranch.
Veterinarians buying taxable items for use in their offices or other locations outside of a farm or ranch, such as a show arena or boarding facility, must pay tax on those items, even if those items are sometimes used on a farm or ranch to care for qualifying agricultural animals.
For example, a veterinarian can give an exemption certificate to their supplier for diagnostic testing kits that will be exclusively used on a farm or ranch. If the veterinarian also uses them on non-agricultural animals or away from the farm or ranch, then tax is due.
Wood shavings are used at many fairs and festivals for animal comfort and bedding. As a convenience, these types of events sometimes sell wood shavings to the participants.
There is an agricultural exemption for wood shavings used exclusively on a farm or ranch. This exemption does not extend to wood shavings, or other agricultural products, sold to participants for use at fairs, festivals and events.
The Earned Income Tax Credit (EITC) is a federal program for working people with low to moderate income, 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 could provide a refund.
Information about the credit for 2018 is now available in both English and Spanish on our Earned Income Tax Credit (EITC) webpage. We also provide printable EITC posters for employers to share with their employees.
Delinquent taxes accrue interest beginning on the 61st day after the due date until paid. For 2019, the interest rate on taxes owed is 6.5 percent. Refund claims filed with the Comptroller's office accrue credit interest at either Treasury Pool rate or Prime +1, whichever is less. The interest begins to accrue 60 days after the date of the payment or the due date of the tax report, whichever is later.
For more information about how the interest rate is applied (as well as the interest rates for this year and previous years), see Interest on Credits and Refunds and on Tax Due.
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