Part 1.
COMPTROLLER OF PUBLIC ACCOUNTS
Chapter 3.
TAX ADMINISTRATION
Subchapter A. GENERAL RULES
34 TAC §3.5
The Comptroller of Public Accounts proposes an amendment
to §3.5, concerning waiver of penalty or interest. Subsection (b)(8)
is added to state that if Revenue Accounting Division denies waiver request
for penalty, the standard of review in a resulting contested proceeding will
be based on the factors considered by Revenue Accounting Division in its denial.
This change is necessary to eliminate the conflict that currently exists.
The proposed amendment to subsection (c) makes conforming change consistent
with new subsection (b)(8), and all other proposed amendments are made for
clarity and reflect existing agency policies.
James LeBas, Chief Revenue Estimator, has determined that for the first
five-year period the rule will be in effect, there will be no significant
revenue impact on the state or units of local government.
Mr. LeBas also has determined that for each year of the first five years
the rule is in effect, the public benefit anticipated as a result of enforcing
the rule will be in providing additional information regarding tax responsibilities.
This rule is adopted under Tax Code, Title 2, and does not require a statement
of fiscal implications for small businesses. There is no significant anticipated
economic cost to individuals who are required to comply with the proposed
rule.
Comments on the proposal may be submitted to Eleanor Kim, General Counsel
Division, P.O. Box 13528, Austin, Texas 78711.
This amendment is proposed 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, §111.103
§3.5.Waiver of Penalty or Interest.
(a)
Procedure for requesting waiver, audits.
(1)
Penalty or interest on an audit liability may be waived
if the taxpayer exercised reasonable diligence to comply with the tax laws
of this state. A request to waive penalty or interest will be presumed in
all cases governed by this subsection.
(2)
The comptroller has delegated to the audit manager the
initial authority to waive penalty and interest in appropriate cases. At the
exit conference, the taxpayer will be told whether any penalty or interest
will be waived. At this conference the taxpayer may request the audit manager
to reconsider his/her decision on penalty or interest waiver.
When reviewing
a waiver request, the audit manager will consider the factors enumerated in
subsection (c) of this section for penalty waiver and will consider the factors
enumerated in subsection (d) of this section for interest waiver.
(3)
The taxpayer will be advised of the audit manager's acceptance
or rejection of the request for waiver of penalty or interest in the audit
cover letter sent with the copy of the audit schedules.
(4)
If a taxpayer's request for waiver is denied at the audit
level, the taxpayer may raise the issue as a contested case matter during
either a refund or redetermination hearing.
(b)
Procedure for requesting waiver, non-audit.
(1)
The comptroller has delegated to the Revenue Accounting
Division the initial authority to waive penalty and interest when returns
and reports are filed past the due dates.
(2)
Penalty or interest on a non-audit liability may be waived
if the taxpayer exercised reasonable diligence to comply with the tax laws
of this state. A written request stating the reasons penalty and interest
should be waived must be sent to the comptroller's Revenue Accounting Division
accompanied by supporting documentation. The comptroller may require the production
of any additional documentation necessary to evaluate a request.
(3)
When reviewing a penalty waiver request under this
subsection, Revenue Accounting Division will consider the following factors
regarding a taxpayer's account and
[
(A)
whether the taxpayer is current in the filing of all returns;
(B)
whether the taxpayer is current in the payment of all taxes
and fees due the state;
(C)
whether penalty has been waived on other occasions;
(D)
why penalty was previously waived or denied;
(E)
whether the taxpayer has a good record of timely filing
and paying past returns; and
(F)
whether the taxpayer has taken the necessary steps to correct
the problem for future filings.
(4)
When reviewing an interest waiver request under this
subsection,
[
(5)
A taxpayer may request an administrative appeal with the
Revenue Accounting Division of a denial of a waiver request within ten calendar
days from the date of written notification of the denial. Such a request for
an administrative appeal must be in writing and
must state the reasons
the taxpayer disagrees with the denial of the waiver.
[
(6)
The taxpayer will be sent written notification from the
Revenue Accounting Division of the disposition of the appeal within 30 days
of either the comptroller's receipt of the request for an appeal or the comptroller's
receipt of all additional information requested from the taxpayer in relation
to the appeal.
(7)
If a taxpayer's request for waiver is denied by the Revenue
Accounting Division, the taxpayer may raise the issue as a contested case
matter during either a refund or redetermination hearing.
(8)
When reviewing Revenue Accounting
Division's denial of a penalty waiver request, the comptroller in a contested
case will consider the factors enumerated in paragraph (3) of this subsection.
(c)
Penalty. When reviewing
the audit manager's denial
of
a penalty waiver request [
(1)
the taxpayer's audit history;
(2)
the tax issues involved;
(3)
a change in comptroller policy during the audit period;
(4)
size and sophistication of the taxpayer;
(5)
whether tax was collected but not remitted;
(6)
whether returns were timely filed;
(7)
completeness of records;
(8)
delinquencies in other taxes; and
(9)
reliance on advice provided by the comptroller's office
which caused imposition of penalty and interest.
(d)
Interest. When reviewing an interest waiver request under
subsections (a) or (b) of this section or in a contested case, the following
factors regarding a taxpayer's account will be considered:
(1)
undue delay caused by comptroller personnel;
(2)
reliance on advice provided by the comptroller's office
which caused imposition of penalty and interest; and
(3)
natural disasters.
This agency hereby certifies that the proposal 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 March 1, 2004.
TRD-200401645
Martin Cherry
Chief Deputy General Counsel
Comptroller of Public Accounts
Earliest possible date of adoption: April 11, 2004
For further information, please call: (512) 475-0387
34 TAC §3.96
The Comptroller of Public Accounts proposes an amendment
to §3.96, concerning imposition and collection of a surcharge on certain
diesel-powered motor vehicles. The section is being amended to implement Tax
Code §152.0215 as amended by House Bill 1365 of the 78th Legislature,
2003, effective July 1, 2003. The surcharge now applies to the purchase or
use of all diesel-powered motor vehicles with a gross registered weight of
more than 14,000 pounds.
Subsection (a) is amended to include all model years and vehicles purchased
out of state. Subsection (b) is amended to specify surcharge rates by model
year. New subsection (f) addresses credit for tax paid to another state. Other
amendments are for clarity.
James LeBas, Chief Revenue Estimator, has determined that for the first
five-year period the rule will be in effect, there will be no significant
revenue impact on the state or units of local government.
Mr. LeBas also has determined that for each year of the first five years
the rule is in effect, the public benefit anticipated as a result of enforcing
the rule will be in providing additional information regarding tax responsibilities.
This rule is adopted under Tax Code, Title 2, and does not require a statement
of fiscal implications for small businesses. There is no significant anticipated
economic cost to individuals who are required to comply with the proposed
rule.
Comments on the proposal may be submitted to Bryant K. Lomax, Manager,
Tax Policy Division, P.O. Box 13528, Austin, Texas 78711.
This amendment is proposed 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, §152.0215
§3.96.Imposition and Collection of a Surcharge on Certain Diesel Powered Motor Vehicles.
(a)
Definitions. The following words and terms, when used in
this section, shall have the following meaning, unless the context clearly
indicates otherwise.
(1)
Motor vehicle subject to surcharge--A motor vehicle that
is[
[
[
[
(2)
Lease--an agreement, other than a rental, whereby an owner
of a motor vehicle gives exclusive use of the vehicle to another for consideration
for a period that is more than 180 days.
(3)
Rental--an agreement whereby:
(A)
the owner of a motor vehicle gives exclusive use of the
vehicle to another for consideration for a period that is 180 days or less;
(B)
the original manufacturer of a motor vehicle gives exclusive
use of the motor vehicle to another for consideration; or
(C)
the owner of a motor vehicle gives exclusive use of the
vehicle to another for re-rental purposes.
(4)
Surcharge--A fee
imposed
[
(b)
Payment, calculation, collection and remittance. Except
as provided in subsection (c) of this section, the surcharge is paid, calculated,
collected, and remitted in the same manner as the tax imposed on a Texas sale
as provided in Tax Code, Chapter 152, and §3.74 of this title (relating
to Seller Responsibility).
The fee is 1.0% of the total consideration
paid for a motor vehicle subject to surcharge that is a model year 1997 or
later, or 2.5% on a motor vehicle subject to surcharge that is a model year
1996 or earlier.
(c)
Motor vehicles purchased for rental or lease.
(1)
Rental. A person who purchases
or brings into
[
(2)
Lease. A person who purchases
or brings into Texas
a motor vehicle [
(d)
A motor vehicle described in
subsection (a)(1) of this section that is brought into Texas for use by a
new resident of this state is subject to the surcharge.
(e)
[
(f)
The surcharge may not be offset
by sales or use tax paid to other states on the purchase of a motor vehicle
subject to the surcharge.
(g)
[
This agency hereby certifies that the proposal 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 March 1, 2004.
TRD-200401646
Martin Cherry
Chief Deputy General Counsel
Comptroller of Public Accounts
Earliest possible date of adoption: April 11, 2004
For further information, please call: (512) 475-0387
34 TAC §3.161
The Comptroller of Public Accounts proposes an amendment
to §3.161, concerning definitions, exemptions, and exemption certificate.
This amendment incorporates legislative changes in House Bill 2424, 78th Legislature,
2003, which amended Tax Code, Chapter 156, to add the requirement that public
and private institutions of higher education be Texas public and private institutions
of higher education to be exempt from state hotel occupancy tax; to provide
good faith acceptance, with proper documentation, of hotel occupancy tax exemption
certificates by persons required to collect the tax; and to require the comptroller
to produce and maintain a list of organizations that have received a letter
of exemption under §156.102, and make the list available on the comptroller's
Internet Web site.
Subsection (a)(2) is amended to provide that public and private institutions
of higher education from other states and countries do not meet the requirements
for exemption. Subsection (c)(2) is added to prescribe the support documentation
required to accept an exemption certificate in good faith, including a printed
copy of the comptroller's Internet Web site listing the organization as exempt
for hotel tax when appropriate. The remainder of the section is renumbered
accordingly.
James LeBas, Chief Revenue Estimator, has determined that for the first
five-year period the rule will be in effect, there will be no significant
revenue impact on the state or units of local government.
Mr. LeBas also has determined that for each year of the first five years
the rule is in effect, the public benefit anticipated as a result of enforcing
the rule will be in providing additional information regarding tax responsibilities.
This rule is adopted under Tax Code, Title 2, and does not require a statement
of fiscal implications for small businesses. There is no significant anticipated
economic cost to individuals who are required to comply with the proposed
rule.
Comments on the proposal may be submitted to Bryant K. Lomax, Manager,
Tax Policy Division, P.O. Box 13528, Austin, Texas 78711.
This amendment is proposed under Tax Code, §111.102, 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, §156.102(b) and §156.104.
§3.161.Definitions, Exemptions, and Exemption Certificate.
(a)
Definitions. The following words and terms, when used in
this subchapter, shall have the following meanings, unless the context clearly
indicates otherwise.
(1)
Charitable or eleemosynary organization--A nonprofit organization
devoting all or substantially all of its activities to the alleviation of
poverty, disease, pain, and suffering by providing food, clothing, drugs,
treatment, shelter, or psychological counseling directly to indigent or similarly
deserving members of society with its funds derived primarily from sources
other than fees or charges for its services. If the organization engages in
any substantial activity other than the activities described in this section,
it will not be considered as having been organized for purely public charity,
and therefore, will not qualify for exemption under this provision. No part
of the net earnings of the organization may inure to the benefit of any private
party or individual other than as reasonable compensation for services rendered
to the organization. Some examples of organizations that do not meet the requirements
for exemption under this definition are fraternal organizations, lodges, fraternities,
sororities, service clubs, veterans groups, mutual benefit or social groups,
professional groups, trade or business groups, trade associations, medical
associations, chamber of commerce, and similar organizations. Even though
not organized for profit and performing services that are often charitable
in nature, these types of organizations do not meet the requirements for exemption
under this provision.
(2)
Educational organization--A nonprofit organization or governmental
entity whose activities are devoted solely to systematic instruction, particularly
in the commonly accepted arts, sciences, and vocations, and has a regularly
scheduled curriculum, using the commonly accepted methods of teaching, a faculty
of qualified instructors, and an enrolled student body or students in attendance
at a place where the educational activities are regularly conducted. An organization
that has activities consisting solely of presenting discussion groups, forums,
panels, lectures, or other similar programs, may qualify for exemption under
this provision, if the presentations provide instruction in the commonly accepted
arts, sciences, and vocations. The organization will not be considered for
exemption under this provision if the systematic instruction or educational
classes are incidental to some other facet of the organization's activities.
No part of the net earnings of the organization may inure to the benefit of
any private party or individual other than as reasonable compensation for
services rendered to the organization. Some examples of organizations that
do not meet the requirements for exemption under this definition are professional
associations, business leagues, information resource groups, research organizations,
support groups, home schools, and organizations that merely disseminate information
by distributing printed publications. Entities that are defined in the Education
Code, §61.003, as
Texas public or private
"institutions of
higher education" are recognized for exemption under this provision. Included
in the definition of "institutions of higher education"
is any public
technical institute, public junior college, public senior college or university,
medical or dental unit, public state college, or other agency of higher education
as identified in Education Code, §61.003. A Texas private "institution
of higher education" is a private or independent university or college that
is organized under the Texas Non-Profit Corporation Act; exempt from taxation
under Article VIII, Section 2, of the Texas Constitution and Section 501 (c)(3)
of the Internal Revenue Code of 1986 (26 U.S.C. Section 501); and accredited
by the Southern Association of Colleges and Schools
[
(3)
Hotel--Any building or buildings in which members of the
public obtain sleeping accommodations for a consideration. The term includes,
in addition to the buildings listed in Tax Code, §156.001, manufactured
homes, skid mounted bunk houses, residency inns, condominiums, cabins, and
cottages.
(4)
Permanent Resident--A person who has the right to use or
occupy a room or space in a hotel for at least 30 consecutive days without
interruption. A person may be an individual, organization, or entity.
(5)
Private Club--An organization that provides members entertainment,
recreation, sport, dining, or social facilities and assesses dues, initiation
fees, and other charges for special privileges or status not available to
the general public.
(6)
Religious organization--A nonprofit organization that is
an organized group of people regularly meeting for the primary purpose of
holding, conducting and sponsoring religious worship services, according to
the rights of their sect. The organization must be able to provide evidence
of an established congregation showing that there is an organized group of
people regularly attending these services. An organization that supports and
encourages religion as an incidental part of its overall purpose, or one whose
general purpose is furthering religious work or instilling its membership
with a religious understanding, will not qualify for exemption under this
provision. No part of the net earnings of the organization may inure to the
benefit of any private party or individual other than as reasonable compensation
for services rendered to the organization. Some examples of organizations
that do not meet the requirements for exemption under this definition are
conventions or associations of churches, evangelistic associations, churches
with membership consisting of family members only, missionary organizations
and groups who meet for the purpose of holding prayer meetings, bible study
or revivals.
(b)
Exemptions. This subsection deals with exemptions from
the state hotel occupancy tax. For information on city and county hotel taxes,
contact the affected city or county.
(1)
Religious, charitable, and educational organizations and
their employees, including college and university personnel, traveling on
official business of the organization are exempt from payment of hotel occupancy
tax.
(2)
State officials, judicial officers, heads of state agencies,
the Executive Director of the Legislative Council, the Secretary of the Senate,
state legislators, legislative employees, members of state boards and commissions,
and designated state employees of the State of Texas who present a Hotel Tax
Exemption Photo Identification Card when traveling on official state business
are exempt from the hotel occupancy tax. State agency, institution, board,
or commission employees who have not been issued a Hotel Tax Exemption Photo
Identification Card must pay the hotel occupancy tax. The hotel tax paid by
the state or reimbursed to a state employee may be refunded as provided in §3.163
of this title (relating to Refund of Hotel Occupancy Tax). For the purpose
of claiming an exemption, a Hotel Tax Exemption Photo Identification Card
includes:
(A)
any photo identification card issued by a state agency
that states "EXEMPT FROM HOTEL OCCUPANCY TAX, under Tax Code, §156.103(d)",
or similar wording; or
(B)
a Hotel Tax Exemption Card that states "when presented
with a photo identification card issued by a Texas agency, the holder of this
card is exempt from state, municipal, and county hotel occupancy tax, Tax
Code, §156.103(d)", or similar wording.
(3)
The United States government and its employees traveling
on official business representing the United States government are exempt
from the hotel occupancy tax.
(4)
Diplomatic personnel of a foreign government who present
an appropriate Tax Exemption Card issued by the United States Department of
State are exempt from the tax.
(5)
If an exemption applies, then the organization or individual
claiming exemption must present an exemption certificate to the hotel.
(6)
Permanent residents are exempt from payment of hotel occupancy
tax.
(A)
A permanent resident is exempt beginning on:
(i)
the first day for which the resident has entered into a
written agreement with the hotel or has given a written notice to the hotel
of the resident's intent to use or occupy a room or space in the hotel for
the next 30 or more consecutive days and the resident actually stays for at
least the next 30 consecutive days; or
(ii)
the first day after the 30th consecutive day of the stay,
if the resident neither gave written notice of intent to stay, nor entered
into any written agreement with the hotel. For example, if a person does not
notify the hotel that he intends to stay for at least 30 days, but stays 35
days, then the person is exempt from hotel tax from the 31st day through the
35th day, but tax is due on the first 30 consecutive days of the occupancy.
(B)
The permanent resident exemption ends when an interruption
in the right to use or occupy the room or space occurs.
(C)
Permanent residents are not required to physically occupy
a room or space.
(D)
Permanent residents may have the right to use or occupy
different rooms in the same hotel without loss of the permanent resident exemption.
(E)
The permanent resident exemption applies to the lowest
number of rooms in a written notice, agreement, or contract for a range of
rooms plus the number of rooms that qualify for the permanent resident exemption
under subsection (b)(6)(A)(ii) of this section.
Figure: 34 TAC §3.161 (b)(6)(E) (No change)
(c)
Exemption certificate.
(1)
Any organization or individual claiming exemption from
the payment of hotel occupancy tax must furnish the hotel with a signed exemption
certificate.
(2)
The rental of a room or space in a hotel
is exempt from tax if the person required to collect the tax receives, in
good faith from a guest, a properly completed exemption certificate stating
that the guest qualifies for exemption under Tax Code §156.102 or §156.103
or other law. The exemption certificate must be supported by the following
documentation:
(A)
for persons traveling on official business of the federal
government, a valid government identification card;
(B)
for state officials exempted by Tax Code §156.103(d),
a Hotel Tax Photo Identification Card, as described in subsection (b)(2)(A)
or (B) of this rule;
(C)
for diplomatic personnel of a foreign government, the appropriate
Tax Exemption Card issued by the United States Department of State;
(D)
for persons traveling on official business of a charitable,
educational, or religious organization, as defined in subsection (a)(1), (2)
or (6) of this rule:
(i)
a letter of hotel tax exemption issued by the Comptroller
of Public Accounts; or
(ii)
verification that the organization is on the comptroller's
list of entities that have been provided a letter of exemption; such as, a
printed copy of the Comptroller's Internet Web site listing the organization
as exempt for hotel tax.
(E)
For persons traveling on official business of an organization
exempt by law other than Tax Code Chapter 156:
(i)
a letter of hotel tax exemption issued by the Comptroller
of Public Accounts; or
(ii)
verification that the organization is on the comptroller's
list of entities that have been provided a letter of exemption.
(F)
The manner of payment by an employee of an exempt organization
does not affect the exemption. To claim an exemption a nonemployee traveling
on behalf of an exempt organization must pay the hotel directly with the organization's
funds, by organization check, organization credit card, or direct billing
to the organization by the hotel.
(3)
[
(4)
[
(5)
[
(d)
Exclusions.
(1)
Dormitories and other housing facilities owned or leased
and operated by institutions of higher education as defined in subsection
(a)(2) and used to provide sleeping accommodations for persons engaged in
educational programs or activities at the institutions are excluded from the
definition of a hotel in Tax Code, §156.001, and their rentals are not
subject to tax. Hotels owned or leased and operated by institutions of higher
education, however, are not excluded and their rentals are subject to tax.
(2)
Private clubs as defined in subsection (a)(5) do not collect
tax on rentals of rooms to members. Tax is due, however, on the rental of
rooms to nonmembers.
This agency hereby certifies that the proposal 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 March 1, 2004.
TRD-200401642
Martin Cherry
Chief Deputy General Counsel
Comptroller of Public Accounts
Earliest possible date of adoption: April 11, 2004
For further information, please call: (512) 475-0387
The Revenue Accounting Division
] will inform the taxpayer of the division's decision
to accept
or reject
[
regarding
] the penalty waiver request [
after
considering
]:
The
] Revenue Accounting Division
will consider
the factors enumerated in subsection (d) of this section and
will inform
the taxpayer of the division's decision
to accept or reject
[
regarding
] the interest waiver request [
after considering the factors
listed in subsection (d) of this section.
]
contain
all new
]
New
or additional documentation upon which the taxpayer
relies
for support should be submitted with the written request for an
administrative appeal
.
under subsection (a) of this section
or in a contested case
],
the comptroller in a contested case will
consider
the following factors regarding a taxpayer's account [
will be considered
]:
Subchapter F. MOTOR VEHICLE SALES TAX
:
]
(A)
]
diesel powered
and
[
;
]
(B)
]
registered with a gross vehicle weight in
excess of 14,000 pounds
.
[
; and
]
(C)
a 1996 model year or earlier.]
of 2.5% of the
total consideration paid
] on a [
Texas
] retail sale
or use in this state
of a motor vehicle described in paragraph (1) of
this subsection. The surcharge is imposed by Tax Code, §152.0215, for
the benefit of the Texas Emission Reduction Plan Fund as provided in Health
and Safety Code, §386.251.
in
] Texas a motor vehicle for rental must pay the surcharge at the time
of registration and titling. Payment of the surcharge cannot be deferred even
if the purchaser is allowed to defer the motor vehicle sales and use tax.
The surcharge is not due on the rental receipts paid to the motor vehicle
owner.
in Texas
] for lease must pay the surcharge
based on the total consideration paid by the owner
at the time of registration
and titling. The surcharge is not due on the lease receipts paid to the motor
vehicle owner.
(d)
] Exemptions. The exemptions
provided in Tax Code, Subchapter E, Chapter 152, apply to the surcharge.
(e)
] Expiration. The surcharge expires
September 30, 2008.
The surcharge is not due on vehicles sold or used
in
Texas [
retail sales
] after that date [
are not subject
to the surcharge
].
Subchapter K. HOTEL OCCUPANCY TAX
are state and
private universities and colleges
].
Beginning October 1, 2003,
public and private "institutions of higher education" from other states or
countries do not meet the requirements for exemption under this provision.
(2)
] A hotel claiming exemption
of its receipts from hotel occupancy tax must provide proof that the receipts
were exempt, either through exemption certificates or other competent evidence.
(3)
]
Certain entities that are
exempt from hotel tax may be issued identification numbers for administrative
purpose only. The Comptroller may issue a tax number to an entity that is
not exempt from Hotel Tax, and a tax number does not guarantee that an organization
is exempt from Hotel Tax. An organization is not required to provide an identification
number on the Hotel Tax Exemption Certificate
[
Exemption numbers
or tax numbers do not exist for purposes of the hotel occupancy tax
].
(4)
] The exemption certificate must
be substantially in the form herein adopted by reference. Copies of the certificate
are available for inspection at the office of the Texas Register or may be
obtained from the Comptroller of Public Accounts, P.O. Box 13528, Austin,
Texas 78711. Copies may also be requested by calling our toll-free number
1-800-252-1385. In Austin, call 463-4600. (From a Telecommunication Device
for the Deaf (TDD) only, call 1-800-248- 4099 toll free. In Austin the local
TDD number is 463-4621.) Taxpayers may download copies at www.window.state.tx.us.
Subchapter O. STATE SALES AND USE TAX