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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

April 2022

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...

Announcement

Coming Soon: Revamped Tax Policy News

We’re excited to announce the launch of a new Tax Policy News this summer! Please note that we will be taking a short hiatus while we work on a revamp of our newsletter to better suit your needs. In the meantime, visit Comptroller.Texas.Gov for the latest news and announcements for taxpayers.

Reminders

Annual Franchise Tax Reports Due May 16

Annual franchise tax reports are due May 16. Beat the rush to file your franchise tax report or request an extension of time to file – Webfile is available now!

Webfile makes it easy to submit tax reports, make payments, request extensions, file final reports or request tax clearance letters. Your Webfile account allows you to view a summary of your transactions. You can find your franchise tax Webfile number (which starts with "XT") on the franchise tax upcoming due date reminder letter we mailed in January.

You can also call 800-442-3453 at any time to get your XT number via our automated system. When you call, be sure to have your 11-digit taxpayer number and identifying information, such as total revenue from a previous report or the amount of the last tax payment you made (cannot be zero).

View the following video tutorials for help with franchise tax:

Annual Independently Procured Insurance Premium Tax Reports Due May 16

The 2021 independently procured insurance tax report (PDF) and supplement (PDF) are due on or before May 16, 2022.

To qualify as independently procured insurance, you must obtain the insurance policy directly from a non-admitted insurer, and you must not use the services of an agent or broker in the procurement of coverage. If an agent is involved in the placement of the insurance, the policy may be surplus lines insurance with taxes due to the home state of the insured. If Texas is the home state of the insured and the agent does not hold a surplus lines license in Texas, the transaction may be considered unauthorized insurance.

As of January 2021, taxpayers no longer receive a paper tax report. Instead, the Comptroller’s office sends an email reminder about the filing deadline. Email reminders were sent in April.

For any questions regarding insurance tax reports, please contact us at insurance.tax@cpa.texas.gov.

ENERGY STAR® and Water-Efficient Products Sales Tax Holiday

Texas taxpayers can save money on tax-free purchases of certain ENERGY STAR® energy-efficient products and certain water-efficient and water-conserving products during the annual Texas ENERGY STAR® Sales Tax Holiday and Water-Efficient Products Sales Tax Holiday. The 2022 holidays begin Saturday, May 28, and go through Memorial Day (Monday, May 30, ending at midnight). There is no limit on the number of qualifying items you can buy, and you do not need to give the seller an exemption certificate to buy items tax free.

ENERGY STAR® Sales Tax Holiday

You can buy, rent or lease only the following ENERGY STAR®-labeled items tax free:

  • Air conditioners (with a sales price of $6,000 or less).
  • Refrigerators (with a sales price of $2,000 or less).
  • Ceiling fans.
  • Incandescent and fluorescent light bulbs.
  • Clothes washers.
  • Dishwashers.
  • Dehumidifiers.

Non-Qualifying Products

Examples of items that do not qualify and are taxable, even if ENERGY STAR®-labeled, include:

  • Water heaters.
  • Clothes dryers.
  • Freezers.
  • Stoves.
  • Attic fans.
  • Heat pumps.
  • Wine refrigerators.
  • Kegerators.
  • Beverage chillers.

Contractors and Taxable Service Providers

If you perform new construction or residential repair and remodeling contract work, you are a contractor. If you repair or remodel nonresidential real property, you are a taxable service provider.

Purchases

Contractors and taxable service providers can buy qualifying ENERGY STAR® energy-efficient products tax free to keep in inventory. An exemption or resale certificate is not required.

Sales

During the holiday, contractors and taxable service providers can sell ENERGY STAR® energy-efficient products tax free if they are incorporated into real property under a separated contract.

Examples of products that might be considered incorporated into real property are central air conditioning units, ceiling fans and built-in appliances such as dishwashers. This exemption applies to both residential and non-residential customers.

Water-Efficient Products Sales Tax Holiday

During the holiday period, you can buy any product tax free that displays a WaterSense® label or logo. These items can be bought for either personal or business purposes. You can also buy certain water-conserving products tax free during the holiday period. Unlike WaterSense®-labeled items, these items are only exempt when you buy them for use at your residential property.

Water-Conserving Products

You can buy items tax free during the holiday that are used or planted for:

  • Conserving or retaining groundwater;
  • Recharging water tables; or
  • Decreasing ambient air temperature, and so limiting water evaporation.

Examples of items that qualify for the exemption include:

  • A soaker or drip-irrigation hose.
  • A moisture control for a sprinkler or irrigation system.
  • Mulch.
  • A rain barrel or an alternative rain and moisture collection system.
  • A permeable ground cover surface that allows water to reach underground basins, aquifers or water collection points.
  • Plants, trees and grasses.
  • Water-saving surfactants.
  • Soil and compost.

Examples of items that do not qualify for the exemption include:

  • Construction/building materials.
  • Awnings and other items used to create shade.
  • Air conditioners.
  • Ceiling fans.
  • Sprinklers.

Contractors, Landscapers and Taxable Service Providers

WaterSense® Products Purchases

Contractors, landscapers and other service providers can buy WaterSense® products tax free to keep in inventory. An exemption or resale certificate is not required.

WaterSense® Products Sales

Contractors, landscapers and other service providers can sell WaterSense® products tax free under a separated contract during the holiday period. This exemption applies to residential and business customers.

Water-Conserving Products Purchases

Since the exemption does not apply to water-conserving products used for business, contractors and service providers cannot buy water-conserving products tax free to keep in inventory using the sales tax holiday exemption even if the item will be used in new or existing residential property.

Service providers repairing and remodeling commercial property, and all separated contractors, can purchase items tax free with a resale certificate just as they would outside of the holiday period.

Water-Conserving Products Sales

Separated contractors can sell water-conserving products tax free only to individual customers for their residences during the holiday period. Sales to businesses are taxable.

Online Purchases and Telephone Orders

During the holiday you can buy qualifying ENERGY STAR® energy-efficient products and certain water-efficient and water-conserving products in-store, online, by telephone, mail, custom order, or any other means. The sale of the item must take place during the specific holiday period (beginning Saturday, May 28, and ending at midnight on Monday, May 30).

The purchase date is easy to determine when the purchase is made in-store but becomes more complicated with remote purchases. The purchaser must have given the consideration for the item during the period even if the item may not be delivered until after the period is over.

For example, if a purchaser enters their credit card information in an online shopping website on Monday, May 30, at 5:00 p.m. to purchase a qualifying rain barrel, but the rain barrel will not be shipped until Friday, June 3, and will not arrive until Tuesday, June 7, the purchase will still qualify for the exemption. However, if the charge to credit card is declined by the payment processor at 11 p.m. on Monday, May 30, and the purchaser does not resubmit payment until Tuesday, May 31, the purchase is taxable.

Additional Charges Affect Purchase Price

Some items listed are only exempt during these holidays depending on their price. Delivery, shipping, handling and transportation charges by the seller are part of the item’s sales price. Consider these charges when determining whether an item can be purchased tax free during the holiday.

For example, you purchase an ENERGY STAR® refrigerator for $1,995 with a $50 delivery charge for a total sales price of $2,045. Because the refrigerator’s total sales price is more than the $2,000 price cap for refrigerators, tax is due on the entire $2,045 sales price.

Sales Tax Holiday Refund Requests

During these annual sales tax holidays, purchasers can buy certain items tax free. However, if you pay sales tax on these items during the sales tax holiday, you can ask the seller for a refund of the tax paid. The seller can either grant the refund or provide their customer with Form 00-985, Assignment of Right to Refund (PDF), which allows the purchaser to file the refund claim directly with the Comptroller’s office.

Should you have additional questions about refund requests, please contact our Refunds Department at 800-531-5441, ext. 34545, or visit our Sales Tax Refunds web page for further details on filing a refund claim.

More Information

For more information about the upcoming sales tax holidays, contact us at Tax Help, or call 800-252-5555.

Volunteer Fire Department Assistance Fund Assessment Billing

The Comptroller’s office will mail invoices to insurers by the end of May for the Volunteer Fire Department Assistance Fund Assessment, and payment is due Aug. 1, 2022.

This assessment applies to property and casualty insurers writing homeowners insurance, fire insurance, farm and ranch owners insurance, private passenger auto physical damage insurance, commercial auto physical damage insurance and the non-liability portion of commercial multi-peril insurance.

Rules

Effective Rules

The following rules became effective April 2022:

Franchise Tax

Rule 3.589 – Margin: Compensation
Effective date – April 19, 2022

Sales Tax

Rule 3.276 – Surveying Services
Effective date – April 11, 2022

Rule 3.282 – Auditing Taxpayer Records
Effective date – April 26, 2022

Rule 3.285 – Resale Certificate; Sales for Resale
Effective date – April 26, 2022

Rule 3.287 – Exemption Certificates
Effective date – April 26, 2022

State Tax Automated Research System

STAR Watch

To see the latest items added to our State Tax Automated Research (STAR) system, click New Documents in the blue menu bar 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.
Account Update Tools

Our Account Update Tools make it easy for you to:

Resources for Texas Taxpayers

The Comptroller’s office offers video tutorials on filing and paying sales tax through Webfile. View them on our Video Tutorials webpage.

Our office also offers virtual Sales and Use Tax Seminars conducted via Webex Events. New taxpayers are especially encouraged to attend these overviews of tax responsibilities for buyers, sellers, and service providers. For more information, visit 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.
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.

Agency Calendars