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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

September 2020

The Comptroller's office publishes this 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...

Disaster Relief

Taxpayer Assistance for Those Affected by Tropical Storm Beta

In response to Governor Abbott’s disaster declaration regarding Tropical Storm Beta, taxpayers in the following counties affected by widespread flooding, storm surge and damaging winds are eligible for an automatic penalty waiver for state taxes due Sept. 21, if the taxes are paid within 30 days of the original due date; and an automatic 30-day extension of time to file and pay any state taxes that will be due on Sept. 25 and Sept. 30: Aransas, Bee, Bexar, Brazoria, Calhoun, Chambers, Fort Bend, Galveston, Hardin, Harris, Jackson, Jasper, Jefferson, Jim Wells, Kenedy, Kleberg, Liberty, Live Oak, Matagorda, Nueces, Orange, Refugio, Sabine, San Augustine, San Patricio, Shelby, Travis, Victoria and Wharton.

Taxpayers are not required to request a penalty waiver or an extension of time to file and pay taxes that have been automatically waived or extended.

COVID-19 News

Comptroller COVID-19 Response

The Comptroller’s office understands the tremendous strain the pandemic and its related closures have placed on businesses throughout our state. We’re grateful that virtually all of our taxpayers are doing their best to remain in compliance with Texas tax requirements, and we want to ease this burden whenever possible.

To aid Texas franchise taxpayers, we automatically extended the due date to file and pay 2020 Texas franchise tax reports to July 15, 2020.

We will continue to extend the payment deadline for the motor vehicle tax due on purchases until the Governor’s state disaster declaration expires. Any tax penalty will be automatically waived if the tax payment is received within 60 days of the expiration of the state disaster declaration.

For businesses struggling to pay the full amount of sales taxes they collect from customers, a short-term payment agreement may be available.

We continue to stand with and assist our Texas businesses during these difficult times.

For more information on these accommodations in addition to other COVID-19 related information, please see

Tax Training Resources

Webinars

Our latest webinar, "Sales Tax Exemptions for Healthcare Items," was held in June and highlighted the sales tax exemptions available for a variety of healthcare items such as medicines, medical equipment and devices. A recording of this webinar is now available.

We also offer video tutorials on filing and paying sales tax through Webfile. View them on our Video Tutorials 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

Sales Tax Rate Locator

Enhanced Version for Multiple Address Search

The Comptroller’s office recently launched an enhanced Sales Tax Rate Locator on our website. The rate locator still allows users to search for a single address to determine their sales tax responsibility. With the enhanced version, users may now choose to submit a file with multiple addresses using our Secure Information and File Transfer (SIFT) system. The submitted file will be processed overnight and the user will be advised by email when the updated file is available for them to download. First-time users will be asked to create an account, and returning users will be asked to sign in.

Select "Help" in the top right corner on the Sales Tax Rate Locator page for helpful tips and contact information.

Motor Vehicle Tax

All-Electric and Hydrogen-Powered Motor Vehicles: "Watts" the Difference in Taxability?

All-electric and hydrogen-powered motor vehicles are increasingly popular these days, owing to their efficient kilowatt-hours per mile (kWh/mi) or megawatt-hours per mile (MWh/mi) performance. If you are considering purchasing one of these types of vehicles, you need to be aware that they are taxed differently for motor vehicle sales and use tax purposes. As our title (with its bad pun) suggests, this article explains the difference in taxability between these vehicles.

What are all-electric motor vehicles?

All-electric motor vehicles (EVs), sometimes called battery electric vehicles (BEVs) or battery-only electric vehicles (BOEVs), use chemical energy stored in rechargeable battery packs to power their electric motors and motor controllers. An EV gets power from battery packs and does not have a combustion engine, fuel cell or fuel tank.

What are hydrogen-powered motor vehicles?

Hydrogen-powered motor vehicles use hydrogen as their fuel source. A hydrogen-powered vehicle converts the chemical energy of hydrogen either by burning hydrogen in an internal combustion engine or by using hydrogen fuel cells to run electric motors.

One important note is that though it runs on gaseous fuel, a hydrogen-powered motor vehicle is an electric vehicle. Hydrogen fuel cells power their vehicles with electricity.

Are these vehicles exempt from motor vehicle sales tax?

All-electric motor vehicles are not exempt from motor vehicle sales tax.

Hydrogen-powered motor vehicles, however, are exempt from motor vehicle sales tax if they meet the standards established by the California Air Resources Board for ultra-low emission vehicles, and are

  • capable of being powered by hydrogen and have a fuel economy of at least 45 miles per gallon; or
  • fully hydrogen-powered.

Purchasers must prove that a hydrogen-powered motor vehicle meets the exemption requirements by providing documentation, such as manufacturer specifications, to their local county tax assessor-collector’s (CTACs) office at the time of titling and registration.

When preparing the Form 130-U, Application for Texas Title and/or Registration, the dealer or purchaser of a hydrogen-powered motor vehicle must note the exemption for the CTAC office by entering "hydrogen-powered motor vehicle exempt under Section 152.090" (or similar wording) on the "Exemption claimed under the Motor Vehicle Sales and Use Tax Law because:" line in the Sales and Use Tax Computation section, item 38, of the form.

For more information about the exemption, see Texas Tax Code Section 152.090, Certain Hydrogen-Powered Motor Vehicles.

Sales and Use Tax

Dry Cleaning, Garment Repair and Alteration Services

Dry cleaners may provide services beyond just cleaning garments. For instance, dry cleaners may repair damaged clothing or perform alterations to tailor clothing for a more comfortable fit.

The laundry, cleaning and garment services that dry cleaning businesses provide are taxable. Examples of dry cleaning services include the following:

  • cleaning garments
  • removing stains
  • stitching tears
  • patching holes
  • replacing zippers
  • shaping waists
  • hemming pants

Dry cleaners must have Texas Sales and Use Tax Permits and collect sales tax on the total amount charged for these services.

Tools, Supplies and Equipment

Tax is due on cleaning supplies, tools and equipment used by dry cleaners to perform their services.

When dry cleaners purchase items such as soap, dry cleaning chemicals, steamers or garment-hanging racks, they owe sales and use tax on these items.

Tax is not due on wrapping, packing, and packaging supplies purchased by dry cleaners and used to wrap, pack, or package items that they have dry cleaned and pressed or laundered in the regular course of their business. These include items such as hangers, safety pins, pins, inventory tags, staples, boxes, paper wrappers and plastic bags. When buying these items, dry cleaners may give exemption certificates (PDF) to their suppliers instead of paying tax.

Taxable Items Sold to Customers

If dry cleaners sell items to customers, they must collect sales and use tax on those items.

These items include, but are not limited to

  • lint brushes
  • laundry bags
  • sewing kits
  • collar stays
  • stain protection products

When buying items to resell to customers, dry cleaners may give resale certificates(PDF) to their suppliers instead of paying tax.

Disaster Area Exemption

There is an exemption for separately stated labor charges to restore tangible personal property damaged by a declared disaster. Customers can claim exemptions on costs to launder or dry clean damaged clothing or other items.

Customers must give dry cleaners exemption certificates clearly stating the reason for claiming the exemption is for damage caused by a declared disaster.

More Information

Rules

Proposed

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

Natural Gas

Rule 3.27 – Exemption of Certain Interest Owners from Gas Occupation Taxes
Publication date – Sept. 11, 2020
Comment period end date – Oct. 11, 2020

Adopted

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

General Rules

Rule 3.9 – Electronic Filing of Returns and Reports; Electronic Transfer of Certain Payments by Certain Taxpayers
Publication date – Oct. 9, 2020
Effective date – Oct. 13, 2020

State and Local Sales and Use Taxes

Rule 3.285 – Resale Certificate; Sales for Resale
Publication date – Oct. 9, 2020
Effective date – Oct. 13, 2020

Rule 3.292 – Repair, Remodeling, Maintenance, and Restoration of Tangible Personal Property
Publication date – Oct. 9, 2020
Effective date – Oct. 13, 2020

Rule 3.305 – Criminal Offenses and Penalties
Publication date – Oct. 9, 2020
Effective date – Oct. 13, 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.

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