Tax Policy News

Current cigarette and tobacco products non-retailer permits expire Feb. 28, 2025.

The Comptroller's office mailed renewal packets with preprinted applications to all cigarette, cigar and/or tobacco products manufacturers, importers, distributors, bonded agents, export warehouses, import warehouses and wholesalers to renew their cigarette and tobacco products non-retailer permits for March 1, 2025, through Feb. 28, 2026.

If you did not receive your packet, call us at 800-862-2260 to request one.

Non-retailers should review the preprinted information, make any corrections, sign the renewal form and return all pages of the packet (and any other documentation) with the applicable permit fee to our office by the date printed on the renewal form. You can also renew online by submitting your renewal and payment electronically through our Webfile system.

A $50 late filing fee will be assessed on non-retailer renewals postmarked after Feb. 28, 2025.

The 2024 annual insurance premium and maintenance tax reports and payments for licensed insurance companies and miscellaneous organizations (such as HMOs) are due on or before March 1, 2025.

Annual insurance premium tax reports and payments for Texas licensed surplus lines agents and agencies, and entities required to report unauthorized insurance premium taxes, are also due on or before March 1, 2025.

As of January 2021, taxpayers no longer receive a paper tax report. Instead, the taxpayer receives an email reminder about the filing deadline. Email reminders were sent in January 2025.

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

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 the Motor Vehicle Crime Prevention Authority Fee on or before March 1, 2025, for automobile policies effective from July 1, 2024, through Dec. 31, 2024. Companies licensed to write automobile coverage must file the form even if no fee is due. Refer to Form 25-107, Insurance Motor Vehicle Crime Prevention Authority Semiannual Fee Report - July through December (PDF) .

During Texas’ annual sales tax holidays, certain taxable items are exempt from tax for a limited time. We know timing and planning are critical for retailers, so we encourage you to mark your 2025 calendar for this year’s four sales tax holidays:

Emergency Preparation Supplies

Saturday, April 26, through Monday, April 28, 2025.

Energy Star and Water-Efficient Products

Saturday, May 24, through Monday, May 26, 2025 (Memorial Day).

Clothing, Footwear, Backpacks and School Supplies

Friday, Aug. 8, through Sunday, Aug. 10, 2025.

Know the Exemptions and Holidays

While each exemption and holiday exempts different items from sales tax, there are common aspects and steps to take to be prepared.

Know the Details of Each Holiday

Retailers and customers should know the items that are exempt. They should also 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 other details of the holidays, like how to handle exchanges and returns after a tax-free sale is made, by reviewing our Administrative Rules and Publications for each holiday.

Plan Ahead

Retailers should program sales tax software to adjust for these exemptions and temporary sales tax holidays. It would be helpful to alert and train in-store and online staff so they will be prepared to assist customers during each sales tax holiday. One option is to make our Rules, Publications and other relevant Comptroller resources available to staff and customers for reference.

Keep Accurate Records

When it is time to report sales for the reporting period, do not include tax-free sales with “Taxable Sales” on your sales tax return. Include tax-free sales only in “Total Texas Sales” on the return.

In most cases, a customer does not need to provide a resale or exemption certificate (PDF) for the tax-free purchase, but there are exceptions. For example, retailers 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 they collected the tax in error.

If sales tax is collected and remitted in error on an exempt item and a customer asks for a refund, retailers have two options: 1) refund the tax to the customer and then either request a refund from our office or take a credit on the next sales tax return; or 2) give the customer Form 00-985, Assignment of Right to Refund (PDF) for them to request the refund directly from the Comptroller’s office. Visit our Sales Tax Refunds webpage for details.

Stay Updated

Sign up for our electronic GovDelivery service to be informed with alerts about all upcoming sales tax holidays as well as other helpful updates from the Comptroller’s office. Be sure to also visit our website for up-to-date Comptroller information.

More Information

• Sales Tax Rule 3.353 – Sales Tax Holiday – Certain Emergency Preparation Supplies
• Sales Tax Rule 3.369 – Sales Tax Holiday – Certain Energy Star Products, Certain Water-Conserving Products, and WaterSense Products
• Sales Tax Rule 3.365 – Sales Tax Holiday – Clothing, Shoes and School Supplies

The Comptroller's Office did not propose any rules for public comment through the Texas Register from Nov. 1, 2024, to Jan. 31,2025.

Practice and Procedures

Rule 1.6 – Service of Documents on Parties

Rule 1.10 – Requesting a Hearing

Rule 1.35 – Motion for Rehearing

Publication date – Oct. 25, 2024
Effective date – Oct. 31, 2024

Summary: The Comptroller’s office adopted amendments to Rule 1.6, concerning service of documents on parties. The amendments were adopted without changes to the proposed text. The amendments update the mailing address of the Administrative Hearings Section, which has moved to Suite 14.301 of the George H.W. Bush Building at 1801 Congress Ave., Austin, Texas 78701.

The Comptroller’s office adopted amendments to Rule 1.10, concerning requesting a hearing. The amendments were adopted without changes to the proposed text. The amendments update the mailing addresses for the Audit Division and the Administrative Hearings Section, both of which moved to the George H.W. Bush Building at 1801 Congress Ave., Austin, Texas 78701.

The Comptroller’s office adopted amendments to Rule 1.35, concerning motion for rehearing. The amendments were adopted without changes to the proposed text. The amendments implement Senate Bill 903, 87th Legislature, 2021, which enacted Tax Code Section 111.106, Tax Refund: Notice of Intent to Bypass Hearing. Effective Sept. 1, 2021, a taxpayer who files a notice of intent to bypass the refund hearing, and who either participates in a conference with a designated Comptroller employee or is excused from participation in such a conference by the Comptroller, may file suit in district court. Language providing that a motion for rehearing is a prerequisite for a tax refund lawsuit is deleted. The amendments also implement House Bill 2080, 87th Legislature, 2021, which enacted Tax Code Chapter 112, Subchapter E, Suit After Redetermination. Language was added requiring a motion for rehearing of a redetermination to identify the disputed amounts associated with the grounds of error raised.

To see the latest items added to the STAR System, use the New Documents link on the STAR home page in the blue menu bar.

We have recently updated the categories of searchable documents on STAR. Below is the list of the new categories along with their corresponding suffixes:

• AG Opinion (A)
• Court Case (C)
• Emergency Rule (E)
• Hearing/Comptroller’s Decision (H)
• Letters (L)
• Memos (M)
• Publications (P)
• Rule (R)
• Statute (S)
• TPN Articles (N)
• Taxability Response (T)
• Web Content (W)

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.

STAR Doc. No. 202501001M

Tax Policy Division issued a memo to Audit Division providing guidance on the order for applying franchise tax credits and credit carryforwards when a taxable entity has more than one credit or credit carryforward available.

STAR Doc. No. 202408013L

A taxpayer requested a private letter ruling regarding the taxability of pre-authorization services provided to a health insurance company.

The taxpayer receives authorization requests from health care providers such as hospitals and clinics whose patients have health care plans administered by the insurer. The taxpayer’s staff enter the information provided in a request into its proprietary software system which determines if a procedure is covered by the insurer. The software is used only by taxpayer and is not sold or licensed to health care providers, patients, or the insurance company.

The Comptroller’s office determined the taxpayer’s service is not subject to Texas sales and use tax.

STAR Doc. No. 202410006L

Tax Policy responded to a private letter ruling request regarding whether a financial services company that sells warranties for heavy equipment sells those warranties through a marketplace for purposes of Texas sales and use tax.

The taxpayer is a financial products division of a manufacturer that builds construction and mining equipment that is sold to customers by dealers. The taxpayer sells warranties that cover the failure of certain equipment components. The sale of the warranties is taxable as the repair of tangible personal property.

The warranties are a contract between the taxpayer and the customer, but charges for the purchase of the warranties are invoiced to customers by the dealers.

The Comptroller’s office found that a dealer’s location where the taxpayer sells taxable warranties meets the definition of a marketplace. Therefore, dealers that process warranty payments from customers are marketplace providers for warranties sold at their locations and are responsible for collecting Texas sales and use tax on those sales.

STAR Doc. No. 202410007L

Tax Policy issued a private letter ruling related to whether a software and event planning company is a marketplace for sales of food and catering through its platform or mobile application. The taxpayer also requested a ruling regarding the taxability of the charges for each of its services as well as additional catering, scheduling, payment processing, and site management fees charged to restaurants that sell food through the platform or application.

For each of the services, the Comptroller’s office determined the taxpayer operates a marketplace through which restaurants sell their food. The taxpayer also processes payments for the sales of the food through that marketplace. The taxpayer is therefore a marketplace provider and is required to collect and remit Texas sales and use tax on the sales of food.

The taxpayer’s services fees and additional catering, scheduling, payment processing fees were charged for the storage, compilation, and manipulation of data for the restaurants including storing menus, tracking orders, and compiling sales data. The Comptroller’s office therefore determined these fees were taxable data processing services. The taxpayer’s site management fee is a charge for providing items such as plates, utensils, and napkins and was determined to be a taxable sale of tangible personal property.

STAR Doc. No. 202410023L

A taxpayer requested a private letter ruling regarding the taxability of garage rentals when provided with a nontaxable amusement service.

The taxpayer is a high-performance driver education company that hosts driving events at racetracks and rents the entire racing facility, including garages located within the facility. The taxpayer charges its customers a registration fee to participate in these driving events and a separate fee for helmet rentals. The taxpayer also charges a separate garage rental fee, which is optional.

The Comptroller’s office concluded that the taxpayer is not renting real property to registrants and is required to collect sales and use tax on a lump sum charge for garage rentals. The lump sum rental or lease of a parking facility for an event, where there will be a combination of parking and non-taxable use of the facility, is taxable as the provision of motor vehicle parking.

Separately stated charges for the use of an area in the facility that is not devoted to motor vehicle parking are not taxable. Further, parking and storing a vehicle that does not meet the definition of a motor vehicle is not taxable. The separately stated charges for the motor vehicle parking and the nontaxable use must represent a reasonable allocation based on the area used for motor vehicle parking and the nontaxable use. The taxpayer must collect tax on these types of rentals unless it receives and retains documentation such as an exemption certificate or contract, clearly describing the nontaxable activity.

STAR Doc. No.202411010L

A taxpayer requested a private letter ruling asking if purchases of cloud computing services qualify for the sale for resale exemption.

The taxpayer provides transportation logistics solutions services via web-based software modules stored in the cloud. The modules perform several transportation and logistics related functions including individual shipping, shipment tracking, freight payments and fleet accounting, and full supply chain management. Taxpayer charges its customers a monthly fee for access to its logistics services and collects and remits Texas sales tax on this charge as data processing services.

Taxpayer purchases cloud services for the hosting and storage of its software and customer databases. The cloud services provider invoices the taxpayer monthly and lists line-item charges for each of the cloud services, including access to virtual servers, database software, data storage, analytics, security, and software development tools.

The Comptroller’s office concluded that the purchase of the cloud services did not qualify for the sale for resale exemption.

STAR Doc. No. 202411011L

Tax Policy issued a private letter ruling related to the taxability of a taxpayer’s fee to host computer hardware at its location.

The taxpayer charges its customer an all-inclusive fee based on power usage to host cryptocurrency mining hardware machines in the taxpayer’s facility. The taxpayer’s customers own the machines and have full control over the machines remotely. The taxpayer does not have access to the data or internal processing of the machines.

The taxpayer provides a secure location with electricity, internet connectivity, and machine monitoring where a customer places its hardware so that it can conduct business. The Comptroller’s office found that the service falls outside the definitions of data processing, security services, and the other services subject to Texas sales and use tax. The fee for hardware hosting was therefore nontaxable. The fee to repair customer’s machines is taxable repair and restoration of tangible personal property.

The Taxes webpage has links to:

• All Texas taxes and fees.
• Resources for taxpayers.
• Filing and paying taxes.
• Tax laws and rules.

Our Account Update Tools make it easy for you to:

• Change your address.
• Add a location.
• Close a location.
• Change return/email notifications.

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.

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

• Tax Due Dates
• Holiday Schedule