Part 1. COMPTROLLER OF PUBLIC ACCOUNTS

Chapter 3. TAX ADMINISTRATION

Subchapter O. STATE SALES AND USE TAX

34 TAC §3.320

The Comptroller of Public Accounts adopts on an emergency basis an amendment to §3.320, concerning the Texas emissions reduction plan surcharge; off-road, heavy-duty diesel equipment. This amendment is being adopted to implement Tax Code §151.0515 as amended by House Bill 1365 of the 78th Legislature. Effective July 1, 2003, the 1 percent surcharge will increase to 2 percent. The 2 percent surcharge will be imposed on off-road, heavy-duty diesel equipment, including mining equipment, rather than just construction equipment. The surcharge will be due on purchases, leases, and rentals of equipment subject to use tax including equipment brought into Texas for use and purchases by direct payment permit holders. The comptroller is filing an emergency amendment because the bill was signed by the governor on June 22, 2003, and specifies that the effective date of the changes to the fee is July 1, 2003. Because of this very short time frame, adoption of a rule on an emergency basis is necessary.

This amended rule is being simultaneously submitted to the Texas Register as a proposed rule.

This amendment is adopted on an emergency basis under Tax Code, §111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2.

The amendment implements Tax Code, §151.0515.

§3.320Texas Emissions Reduction Plan Surcharge; Off-Road, Heavy-Duty Diesel [ Construction ] Equipment.

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Off-road, heavy-duty diesel [ construction ] equipment--Diesel - powered equipment of 50 horsepower or greater, other than motor vehicles [ , that is used in the construction of improvements to realty such as roads, buildings, and other permanent structures, or in the repair, restoration, or remodeling of real property ]. Off-road, heavy-duty diesel [ construction ] equipment includes accessories and attachments sold with the equipment. Off-road, heavy-duty diesel [ construction ] equipment includes , but is not limited to, the following diesel-powered equipment :

(A) backhoes;

(B) bore equipment and drilling rigs;

(C) bulldozers;

(D) compactors (plate compactors, etc.);

(E) cranes;

(F) crushing and processing equipment (rock and gravel crushers, etc.[ , used by contractors to process the construction materials they incorporate into realty ]);

(G) dumpsters and tenders;

(H) excavators;

(I) forklifts (rough terrain forklifts, etc.);

(J) graders;

(K) light plants (generators) and signal boards;

(L) loaders;

(M) mining equipment;

(N) [ (M) ] mixers (cement mixers, mortar mixers, etc.);

(O) [ (N) ] off-highway vehicles and other moveable specialized equipment (equipment, such as a motorized crane, that does not meet the definition of a motor vehicle because it is designed to perform a specialized function rather than designed to transport property or persons other than the driver);

(P) [ (O) ] paving equipment (asphalt pavers, concrete pavers, etc.);

(Q) [ (P) ] rammers and tampers;

(R) [ (Q) ] rollers;

(S) [ (R) ] saws (concrete saws, industrial saws, etc.);

(T) [ (S) ] scrapers;

(U) [ (T) ] surfacing equipment;

(V) [ (U) ] tractors; and

(W) [ (V) ] trenchers.

(2) Surcharge--A [ 1.0% ] fee [ is ] imposed on the sale, lease, or rental in Texas of new or used off- road, heavy-duty diesel [ construction ] equipment and on the storage, use, or other consumption of such equipment subject to use tax as provided for in §3.346 of this title (relating to Use Tax) . This surcharge is in addition to state and local sales and use taxes that are due on the equipment and is for the benefit of the Texas Emissions Reduction Fund, which is administered by the Texas [ Natural Resources Conservation ] Commission on Environmental Quality .

(3) Sale price [ Total price ]--The total [ entire ] amount a purchaser pays a seller for the purchase, lease, or rental of off-road, heavy-duty diesel [ construction ] equipment as set out in Tax Code §151.007 . The sales [ total ] price includes charges for accessories, transportation, installation, services, and other expenses that are connected to the sale.

(b) Imposition of Surcharge.

(1) A 2.0% surcharge is due on the sales price of off-road, heavy-duty diesel equipment sold in Texas if the purchaser takes possession of or title to the equipment after June 30, 2003 and before October 1, 2008.

(2) A 2.0% surcharge is due on the sales price, excluding separately stated interest charges, of off-road, heavy-duty diesel equipment leased under a financing lease, as defined in §3.294 of this title (relating to Rental and Lease of Tangible Personal Property), if the lessee takes possession of the equipment after June 30, 2003 and before October 1, 2008.

(3) A 2.0% surcharge is due on the lease payments for off-road, heavy-duty diesel equipment that is leased under an operating lease, as defined in §3.294, if the lessee takes possession of the equipment after June 30, 2003 and before October 1, 2008.

(4) A 2.0% surcharge is due on the sales price of off-road, heavy-duty diesel equipment purchased for use in Texas if the purchaser brings the equipment into Texas after June 30, 2003 and before October 1, 2008. See §3.346 of this title (relating to Use Tax).

(5) A 1.0% surcharge is due on off-road, heavy-duty diesel construction equipment sold, leased, or rented after August 31, 2001 and before July 1, 2003, but no surcharge is due on equipment sold, leased, or rented during this time period if the equipment is subject to use tax or is used in non-construction activities.

(c) [ (b) ] Collection of surcharge. A seller must collect the surcharge from the purchaser on the sales [ total ] price of each sale, lease, or rental in Texas of off-road, heavy-duty diesel [ construction ] equipment that is not exempt from sales tax. The surcharge is collected at the same time and in the same manner as sales or use tax. See §3.286 of this title (relating to Seller's and Purchaser's Responsibilities) for information on the collection and remittance of sales or use tax. The surcharge is collected in addition to state and local sales or use taxes but is not collected on the amount of the sales or use tax.

(d) [ (c) ] Exemptions [ and exclusions ].

[ (1) ] No surcharge is collected [ due ] on the sale, lease, or rental of off-road, heavy- duty diesel [ construction ] equipment that is exempt from sales and use tax. A seller who accepts a valid and properly completed resale or exemption certificate, direct payment exemption certificate, or other acceptable proof of exemption from sales and use tax is not required to collect the surcharge. For example, a seller may accept an exemption certificate in lieu of collecting sales tax and the surcharge from a farmer who purchases a bulldozer to be used exclusively in the construction or maintenance of roads and water facilities on a farm that produces agricultural products that are sold in the regular course of business.

[ (2) No surcharge is due on the sale, lease, or rental of off-road, heavy-duty diesel equipment that is not used in construction. A seller may accept an exemption certificate in lieu of collecting the surcharge even if the sale, lease, or rental of the equipment is not exempt from sales tax. For example, a purchaser who buys equipment listed in subsection (a)(1) of this section for a purpose other than use in construction may issue an exemption certificate that states that the equipment will not be used to construct improvements to realty. The seller may accept the exemption certificate in lieu of collecting the surcharge, but is required to collect sales tax if there is no exemption from sales tax. Examples of non-construction activities include mining at quarries, and oil and gas exploration and production at oil and gas well sites.]

[ (3) No surcharge is due on the sale, lease, or rental of off-road, heavy-duty diesel construction equipment that is subject to use tax under Tax Code, Chapter 151, Subchapter D. A purchaser who brings off-road, heavy-duty diesel construction equipment into Texas for storage, use, or consumption in this state, or in other situations in which use tax rather than sales tax is due, is not required to pay or accrue the surcharge.]

(e) [ (d) ] Reports and payments.

(1) A seller or purchaser with a surcharge account, including direct payment holder, must report and pay the surcharge in the same manner as sales or use tax, but separate reports and payments for the surcharge are required.

(A) A seller's or purchaser's reporting period (i.e., monthly, quarterly, or yearly) and due date for the surcharge are [ is ] determined by the amount of surcharge that the seller collects or purchaser owes . See §3.286 of this title (relating to Seller's and Purchaser's Responsibilities).

(B) A purchaser who does not hold a surcharge account must report and pay the surcharge by the 20th day of the month following the month in which the purchaser acquired heavy-duty, diesel powered equipment on which the seller did not collect the surcharge.

(2) A seller or purchaser must report and pay the surcharge to the comptroller on forms prescribed by the comptroller for the surcharge. A seller or purchaser is not relieved of the responsibility for filing a surcharge report and paying the surcharge by the due date because the seller or purchaser fails to receive the correct form from the comptroller.

(3) The penalties and interest imposed for failure to timely file and pay the surcharge are the same as those imposed for failure to timely file and pay sales or use tax. Likewise, the 0.5% discount for timely filing and payment is applicable to surcharge reports and payments. No prepayment discount will be paid a seller or purchaser for prepayment of the surcharges.

[ (e) Effective date.]

[ (1) The surcharge is due on the total price of off-road, heavy-duty diesel construction equipment sold in Texas if the purchaser takes possession of or title to the construction equipment after August 31, 2001 and before October 1, 2008.]

[ (2) The surcharge is due on the total price, excluding separately stated interest charges, of off- road, heavy-duty diesel construction equipment leased under a financing lease, as defined in §3.294 of this title (relating to Rental and Lease of Tangible Personal Property), if the lessee takes possession of the construction equipment after August 31, 2001 and before October 1, 2008.]

[ (3) The surcharge is due on the lease payments for off-road, heavy-duty diesel construction equipment that is leased under an operating lease, as defined in §3.294, if the lessee takes possession of the construction equipment after August 31, 2001 and before October 1, 2008.]

This agency hereby certifies that the emergency adoption has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 30, 2003.

TRD-200304011

Martin Cherry

Chief Deputy, General Counsel

Comptroller of Public Accounts

Effective Date: July 1, 2003

Expiration Date: October 29, 2003

For further information, please call: (512) 475-0387

Chapter 41. HEALTH CARE AND INSURANCE PROGRAMS

Subchapter C. TEXAS SCHOOL EMPLOYEES GROUP HEALTH (TRS-ACTIVECARE)

34 TAC §41.42

The Teacher Retirement System of Texas (TRS) adopts on an emergency basis amendments to §41.42, concerning the payment of supplemental compensation to eligible active public school employees. The emergency amendments define full-time, part-time, and professional employees, and change the amount of the supplemental compensation. The amendments are adopted on an emergency basis pursuant to §2001.034 of the Government Code, which allows a state agency to adopt an emergency rule if a requirement of state or federal law requires adoption of the rule on less than 30 days notice. The amendments are being simultaneously proposed for permanent adoption in this issue of the Texas Register .

In accordance with Insurance Code article 3.50-8, the amendments set forth the definitions of full-time, part-time, and professional employees, and establish how that waiting period is calculated, and establish the new supplemental compensation amounts.

This emergency adoption is necessary because TRS is required to comply with timelines under House Bill 3459, 78th Legislature, Regular Session, and Insurance Code article 3.50-8, section 3, which requires eligible employees to elect among options offered by their cafeteria plans by August 1, 2003 for state fiscal year 2004, requires TRS to prescribe and distribute to eligible entities a model explanation of the employees' options, and requires the eligible entities to prepare and distribute a written explanation of the employees' options by July 1, 2003, for state fiscal year 2004. TRS finds that these requirements of state law require the adoption of the new sections on fewer than 30 days notice.

The amendments are adopted on an emergency basis under the Government Code, Chapter 825, §825.102, which authorizes the Board of Trustees of the Teacher Retirement System to adopt rules for, among other things, the transaction of business of the board. The amendments are also adopted under Insurance Code, article 3.50-8, section 4, which authorizes TRS to adopt rules to implement the article. The amendments are adopted under House Bill 3459, 78th Legislature, Regular Session, section 57, which requires TRS to define a professional employee by rule. As described above, the sections are also adopted under Government Code §2001.034.

There are no other codes affected.

§41.42.Payment of [ $1,000 ] Supplemental Compensation.

(a) For each designated report month, [ Effective September 2002, ] entities eligible to receive [ , ] and to hold in trust[ , ] supplemental compensation under Insurance Code Article [ article ] 3.50-8 or Insurance Code Chapter 1580 ("entity" or "entities") shall report to the Texas Education Agency (TEA), in the manner prescribed by TRS, the number of full-time and part-time employees, as defined herein, eligible to receive supplemental compensation and the total number of professional employees, as defined herein, as determined by the entity in accordance with requirements established by TRS. [ participating members of the Teacher Retirement System of Texas employed by the entity for the designated report month. ] TEA must receive each monthly report by 5:00 p.m. Central Time on the 10th calendar day of each month, or , if that date is not a business day, by 5:00 p.m. Central Time on the first business day after the 10th calendar day of the month. TEA or TRS may dispute , [ or ] seek verification of , or conduct an investigation regarding the reported number of participating members at any time after receiving the report.

(b) For purposes of this section, an individual is employed as a full-time employee if the individual meets the definition of "employee" under Article 3.50-8 or Chapter 1580, Insurance Code, the individual is not a professional employee, and the individual works for an entity or any combination of entities for 30 or more hours each week.

(c) For purposes of this section, an individual is employed as a part-time employee if the individual meets the definition of "employee" under Article 3.50-8 or Chapter 1580, Insurance Code, the individual is not a professional employee, and the individual works for an entity or any combination of entities for less than 30 hours each week.

(d) Except as provided by subsection (e) of this section, for purposes of this section, an individual is a professional employee if:

(1) regardless of the individual's annual compensation, 50% or more of the individual's time is reported under any combination of the following role identifications in the Public Education Information Management System (PEIMS), or under any subsequently created role identifications that describe roles that are substantially similar to the ones identified in this paragraph:

Figure: 34 TAC §41.42(d)(1)

(2) regardless of the individual's annual compensation, the individual is employed by a regional education service center and 50% or more of the individual's time is reported under any combination of the following role identifications in PEIMS, or under any subsequently created role identifications that describe roles that are substantially similar to the ones identified in this paragraph:

Figure: 34 TAC §41.42(d)(2)

(3) regardless of the individual's annual compensation, 50% or more of the individual's time is reported in a role that is substantially similar to a role set out in paragraphs (1) or (2) of this subsection, as determined by the reporting entity or combination of entities, but the time is reported under another PEIMS role identification; or

(4) the individual's annual compensation, as defined by §25.21 of this title (Relating to Compensation Subject to Deposit and Credit) for all work performed for an entity or any combination of entities is more than $50,000.

(e) An individual is not a professional employee, regardless of the individual's annual compensation from an entity or any combination of entities, if at least 50% of the individual's time is reported under the following PEIMS role identifications or any subsequently created role identifications that describe roles that are substantially similar to the ones identified in this subsection:

Figure: 34 TAC §41.42(e)

(f) [ (b) ] If TEA receives the report on or before the deadline and neither TRS nor TEA seeks verification of, investigates, or otherwise disputes[ , ] information in the report upon initial review, subject to later adjustment if TRS determines that there are errors in the report, TRS will remit to the entity :

(1) an amount equal to the number of full-time employees, [ participating members of the Teacher Retirement System of Texas ] reported by the entity for the reporting month divided by 12 and multiplied by $500; [ $1,000. ]

(2) an amount equal to the number of part-time employees reported by the entity for the reporting month divided by 12 and multiplied by $250.

(g) If a report is submitted after the deadline under this section, remittance to the reporting entity will be delayed by at least one month even if neither TEA nor TRS disputes or seeks verification of the numbers reported. In [ September 2002, or in ] the first month an individual becomes eligible for the supplement, all entities must begin to distribute the appropriate [ a ] monthly supplement [ $83.33 distribution ] to each eligible individual employed by the entity, regardless of whether reports are submitted in accordance with the deadlines and other requirements of this section. Entities must continue to make the appropriate [ $83.33 ] monthly distribution to eligible individuals for so long as such individuals are employed, as determined by the entity, for at least one day of the applicable month, provided that the individual did not receive a monthly distribution [ the $83.33 ] from another entity for employment that occurred earlier in the same month. Entities must [ may ] submit proposed adjustments to previously reported numbers through September 30 [ October 31 ] of the fiscal year following the reporting month. TRS or TEA may make adjustments to previously reported numbers[ , ] and may make a corresponding increase or decrease in funds that would otherwise be remitted to an entity, at any time after receipt of a report.

This agency hereby certifies that the emergency adoption has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 30, 2003.

TRD-200304013

Charles L. Dunlap

Executive Director

Teacher Retirement System of Texas

Effective Date: June 30, 2003

Expiration Date: October 28, 2003

For further information, please call: (512) 542-6115