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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

January 2020

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...

Reminders

Insurance Tax Reports Due March 1, 2020

The 2019 annual insurance premium and maintenance tax reports and payments for licensed insurance companies and miscellaneous organizations (such as HMOs or Health Maintenance Organizations) are due on or before March 2, 2020.

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, are also due on or before March 2, 2020.

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 2020.

Motor Vehicle Crime Prevention Authority Fee

Property and casualty insurance companies authorized by the Texas Department of Insurance to write automobile insurance as described in Insurance Code, Art. 5.01(e) must report and pay this fee on or before March 2, 2020, for automobile policies effective from July 1, 2019, through Dec. 31, 2019. Companies licensed to write automobile coverage must file the form, even if no fee is due. The rate of the fee increased from $2 to $4 per motor vehicle year effective Sept. 1, 2019. Refer to Form 25-107A, Insurance Motor Vehicle Crime Prevention Authority Semi-Annual Fee Report - July thru December (PDF) and our Insurance Taxes Frequently Asked Questions webpage for additional information.

Statements of Available Premium Tax Credits

In January 2020, for tax year 2019, 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.

Tax Training Resources

Podcast Episodes, Webinars, Videos and Seminars

Webinars

A recording of a recent webinar, “Fairs, Festivals, Markets and Shows” is now available on our Tax Training Resources webpage. The one-hour webinar highlights tax responsibilities when organizing or selling at fairs, festivals, markets and shows.

Our last webinar, "Online Sales and Remote Sellers," was held on Dec. 10, 2019. This webinar highlighted updates from the 86th Texas Legislature. A recording of this webinar will soon be available on our Tax Training Resources webpage.

Videos

We also offer video tutorials on filing and paying sales tax through Webfile. View them on our 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, see the Taxpayer Seminars webpage.

Visit our Tax Training Resources webpage to

  • find out more about our training resources
  • register for upcoming webinars
  • view the Podcast and Webinar Archive sections for previous recordings

Cigarette Tax, Cigar and Tobacco Tax

Minimum Age for Sale of Tobacco Products – Federal Update

On Dec. 20, 2019, President Trump signed legislation amending the Federal Food, Drug, and Cosmetic Act to increase the federal minimum age from 18 to 21 for the sale of tobacco products, including cigarettes, cigars and e-cigarettes, with no exceptions. This legislation became effective immediately.

The Texas Legislature increased the legal age from 18 to 21 for the sale, distribution, possession, purchase, consumption or receipt of cigarettes, e-cigarettes or tobacco products. This legislation was effective Sept. 1, 2019. See Senate Bill 21.

Although Texas law provides exceptions to the 21-year age requirement for individuals who are 18 and in the United States or state military forces and individuals who were born on or before Aug. 31, 2001, these exceptions are not found in the federal statute. Based on the new federal legislation, selling to any person under 21 is a violation of federal law. Please monitor the FDA website for more information.

The Comptroller of Public Accounts will continue to enforce state law, including requiring the posting of warning notice signs with the statutory language and completion of employee notification forms.

The Comptroller will provide new or supplemental signage to retailers to address the federal age requirements. Please visit our Tobacco Taxes and Fees page for updated information.

Mixed Beverage Tax

Mixed Beverage Exemptions

Are you an exempt organization thinking about buying or selling alcohol? This article is a brief overview of your tax responsibilities and exemptions.

Selling Alcoholic Beverages

If you plan to sell alcoholic beverages (such as beer, wine, ale or distilled spirts) in Texas, you must have a permit with the Texas Alcoholic Beverage Commission (TABC). The type of permit you have from TABC determines what type of alcohol you may sell and what taxes you must collect.

If you are permitted to sell alcoholic beverages, you will be set up to pay the mixed beverage gross receipts tax on all your sales and to collect and remit mixed beverage sales tax from your Texas customers. There is no exemption for the mixed beverage gross receipts tax. There are exemptions, however, for the mixed beverage sales tax.

You will also need to apply for a Texas sales and use tax permit to report and pay tax on complimentary drinks.

Buying Alcoholic Beverages

There are exemptions for the mixed beverage sales tax because it is administered, collected and enforced the same way as sales and use tax.

Government Entities

A government entity that is exempt under Texas Tax Code Section 151.309 is exempt from paying tax on the purchase of mixed beverages. These entities include

  • the U.S. federal government and its agencies and departments
  • Texas state and local government agencies, cities, counties, public schools, school districts, state universities or college and state institutions of higher education

The exemption does not apply to personal purchases made by employees of the governmental entities, even if the employees are traveling on official business and they are reimbursed.

Nonprofit Organizations

A nonprofit organization that is exempt under Texas Tax Code Section 151.310 or 151.321 is not exempt from paying mixed beverage sales tax because mixed beverages are not normally related to the purpose of a nonprofit organization. These organizations include

  • nonprofit charitable, educational and religious organizations
  • 501 (c)(3), (4), (8) or (19) organizations
  • nonprofit youth athletic organizations
  • volunteer fire and medical service departments
  • chambers of commerce and convention and tourism promotional agencies
  • qualified university and student organizations

Sales of alcoholic beverages made by these organizations are exempt, however, if sold during a qualifying tax-free fundraising sale or auction under Texas Tax Code Section 151.310 (c) and 151.321.

Reporting Mixed Beverage Taxes

Mixed beverage reports are filed monthly and are due on or before the 20th day of the month following each reporting period. Even if there were no mixed beverage sales during the reporting period, the entity must still file a report.

If the due date falls on a Saturday, Sunday or legal holiday, the next business day is the due date.

Record Keeping

As a seller of alcoholic beverages, you must keep extensive records of your purchases and sales. Records include receipts and invoices for each individual sale and complimentary drink. You must also retain information on the following:

  • alcohol that was stolen
  • alcohol that was spilled or broken
  • alcohol used in cooking
  • alcohol lost in disaster
  • alcohol lost from cleaning or repair of equipment
  • changes in drink prices, glass sizes, recipes, pour amounts, parties and promotions
  • cover charges

You must keep records for four years, and longer under circumstances where tax, penalty or interest could be assessed, collected or refunded or when an administrative hearing or judicial procedure is pending.

More Information

Sales and Use Tax

Mark Your Calendar for the 2020 Sales Tax Holidays

Timing and planning are critical for retailers. With that in mind, it is time to mark your 2020 calendar for Texas’ four annual sales tax holidays. A sales tax holiday lets you sell specific taxable items tax free for a limited period. Here are the sales tax holidays and their dates.

Emergency Preparation Supplies
Saturday, April 25, through Monday, April 27, 2020.

Energy Star Products
Saturday, May 23, through Monday, May 25, 2020 (Memorial Day).

Water-Efficient Products
Saturday, May 23, through Monday, May 25, 2020 (Memorial Day).

Clothing, Footwear, Backpacks and School Supplies
Friday, Aug. 7, through Sunday, Aug. 9, 2020.

Although each holiday exempts different items from sales tax, there are common aspects you should know and steps to take.

Texas Retailers Should Comply With the Law

The laws passed by the Texas Legislature for each of these holidays use the words “is exempted.” Retailers should comply with these laws and honor the exemptions whether the Texas sale is made in person, online or by mail, email or telephone.

Know the Details of Each Holiday

Know the items that are exempt during each holiday. Understand how changing the sales price of an item can make the item either eligible or ineligible for the exemption. For example, rebates, discounts, coupons, delivery charges and other elements of the transaction can change the taxability of an item if a maximum sales price is set in the law. Learn how to handle exchanges and returns after the sale. We provide Administrative Rules and Publications that explain the details of each holiday.

Plan Ahead

Program your sales tax software to adjust for these temporary sales tax exemptions. Alert and train in-store and online staff, so they will be prepared to assist associates and customers during each sales tax holiday. Make available our Rules, Publications and other relevant Comptroller resources for staff and customers to reference.

Keep Accurate Records

When you report your sales for the reporting period, do not include your tax-free sales with your “Taxable Sales.” Only report tax-free sales under “Total Texas Sales” on your sales tax return.

In most cases, you do not need to get a resale or exemption certificate (PDF) from your customer, but there are exceptions. For example, you must get an exemption certificate from a customer that uses a business account to buy school supplies during the Clothing, Footwear, Backpacks and School Supplies sales tax holiday.

Report or Refund Tax Collected in Error

Retailers must report and remit any sales tax collected, even if the tax is collected in error.

If you collect sales tax in error on an exempt item and your customer asks for a refund, you have two options. You can refund the tax to your customer and then request a refund from our office or take a credit on your next sales tax return, or give your customer Form 00-985, Assignment of Right to Refund (PDF) for them to request the refund directly from the Comptroller. Visit our Sales Tax Refunds webpage for details.

Stay Updated

One of the ways the Comptroller’s office communicates with taxpayers is through our electronic GovDelivery service. This service will alert taxpayers of all upcoming holidays. Sign up for GovDelivery to stay informed. Be sure to visit our website for updates, as well.

More Information

Rules

Proposed

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

Cigar and Tobacco Tax

Rule 3.121– Definitions, Imposition of Tax, Permits, and Reports
Publication date – Jan. 24, 2020
Comment period end date – Feb. 23, 2020

Cigarette Tax

Rule 3.102– Applications, Definitions, Permits, and Reports
Publication date – Jan. 24, 2020
Comment period end date – Feb. 23, 2020

Cigarette, E-Cigarette, and Tobacco Products Regulation

Rule 3.1206– Delivery Sales of E-Cigarettes (Health and Safety Code, Chapter 161, Subchapter R)
Publication date – Dec 27, 2019
Comment period end date – Jan 26, 2020

Mixed Beverage Taxes

Rule 3.1002– Mixed Beverage Sales Tax
Publication date – Jan. 24, 2020
Comment period end date – Feb. 23, 2020

Motor Fuel Tax

Rule 3.441– Documentation of Imports and Exports, Import Verification Numbers, Export Sales, and Diversion Numbers
Publication date – Jan. 24, 2020
Comment period end date – Feb. 23, 2020

Sales Tax

Rule 3.334– Local Sales and Use Tax
Publication date – Jan. 03, 2020
Comment period end date – Extended to Feb. 17, 2020

Special Fee on Certain Cigarettes and Cigarette Tobacco Products

Rule 3.751– Special Fee on Certain Cigarettes and Cigarette Tobacco Products; Definitions, Imposition of Fee, and Reports
Publication date – Dec. 20, 2019
Comment period end date – Jan. 19, 2020

Adopted

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

Cigarette and Tobacco Products Regulation

Rule 3.1201– Fee for Outdoor Advertising of Cigarettes or Tobacco Products
Publication date – Jan. 24, 2020
Effective date – Jan. 29, 2020

Motor Fuel Tax

Rule 3.432– Refunds on Gasoline, Diesel Fuel, Compressed Natural Gas, and Liquefied Natural Gas Tax
Publication date – Feb. 07, 2020
Effective date – Feb. 11, 2020

Natural Gas

Rule 3.23– Credits for Qualifying Low Producing Wells
Publication date – Feb. 07, 2020
Effective date – Feb. 11, 2020

Special Fee on Certain Cigarettes and Cigarette Tobacco Products

Rule 3.751– Special Fee on Certain Cigarettes and Cigarette Tobacco Products; Definitions, Imposition of Fee, and Reports
Publication date – Feb. 07, 2020
Effective date – Feb. 11, 2020

State Tax Automated Research System

STAR Watch

To see the latest items added to our State Tax Automated Research (STAR) system, use the New Documents link on the STAR home page.

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: