Part 1.
COMPTROLLER OF PUBLIC ACCOUNTS
Chapter 3.
TAX ADMINISTRATION
Subchapter F. MOTOR VEHICLE SALES TAX
34 TAC §3.96
The Comptroller of Public Accounts adopts an amendment to §3.96,
concerning imposition and collection of a surcharge on certain diesel-powered
motor vehicles, without changes to the proposed text as published in the March
12, 2004, issue of the
Texas Register
(29
TexReg 2603).
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.
No comments were received regarding adoption of the amendment.
This amendment is adopted 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
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on May 12, 2004.
TRD-200403224
Martin Cherry
Chief Deputy General Counsel
Comptroller of Public Accounts
Effective date: June 1, 2004
Proposal publication date: March 12, 2004
For further information, please call: (512) 475-0387
34 TAC §3.151
The Comptroller of Public Accounts adopts an amendment to §3.151,
concerning imposition, collection, and bond or other security of the fee,
without changes to the proposed text as published in the March 19, 2004, issue
of the
Texas Register
(29 TexReg 2852).
The 77th Legislature, 2001, amended Water Code, Chapter 26, to reduce the
petroleum products delivery fee, and set forth incremental reductions of the
fees imposed on the withdrawal of petroleum products imported into Texas or
withdrawn from bulk facilities and delivered into cargo tanks or barges by
20% for fiscal years 2004 and 2005, 50% 2006, and 60% for 2007.
Subsection (c) is being amended to implement the reduced fee rate schedule
for the fiscal years 2004 and 2005, effective September 1, 2003; for fiscal
year 2006, effective September 1, 2005; and for the fiscal year 2007, effective
September 1, 2006.
No comments were received regarding adoption of the amendment.
This amendment is adopted under Tax Code, §111.002 and §111.0022,
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 Water Code, §26.3574.
§3.151.Imposition, Collection, and Bonds or Other Security of the Fee.
(a)
The Texas Petroleum Products Delivery Fee is imposed, collected,
and paid to the state by operators of bulk facilities. The fee is assessed
when petroleum products are withdrawn from the bulk facility and delivered
into a cargo tank or barge or imported into this state in a cargo tank or
barge for delivery to another location for distribution or sale. The fee is
not assessed when the fuel is destined for delivery to another bulk facility,
an electrical generating plant, a common carrier railroad for its exclusive
use, or is to be exported from the state.
(b)
For the purposes of this section, withdrawals from a bulk
facility into a cargo tank or barge are not subject to the fee when the entire
withdrawal is delivered into the fuel supply tanks of vessels or boats.
(c)
The fee is collected by the operator of a bulk facility
from the person ordering the withdrawal. The fee is computed as follows:
(1)
For each delivery into a cargo tank or barge having a capacity
of less than 2,500 gallons:
(A)
$10 for each delivery made after August 31, 2003, and before
September 1, 2005;
(B)
$5 for each delivery made after August 31, 2005, and before
September 1, 2006;
(C)
$2 for each delivery made after August 31, 2006, and before
September 1, 2007;
(D)
the fee is repealed effective September 1, 2007.
(2)
For each delivery into a cargo tank or barge having a capacity
of 2,500 gallons or more but less than 5,000 gallons:
(A)
$20 for each delivery made after August 31, 2003, and before
September 1, 2005;
(B)
$10 for each delivery made after August 31, 2005, and before
September 1, 2006;
(C)
$4 for each delivery made after August 31, 2006, and before
September 1, 2007;
(D)
the fee is repealed effective September 1, 2007.
(3)
For each delivery into a cargo tank or barge having a capacity
of 5,000 gallons or more but less than 8,000 gallons:
(A)
$30 for each delivery made after August 31, 2003, and before
September 1, 2005;
(B)
$15 for each delivery made after August 31, 2005, and before
September 1, 2006;
(C)
$6 for each delivery made after August 31, 2006, and before
September 1, 2007;
(D)
the fee is repealed effective September 1, 2007.
(4)
For each delivery into a cargo tank or barge having a capacity
of 8,000 gallons or more but less than 10,000 gallons:
(A)
$40 for each delivery made after August 31, 2003, and before
September 1, 2005;
(B)
$20 for each delivery made after August 31, 2005, and before
September 1, 2006;
(C)
$8 for each delivery made after August 31, 2006, and before
September 1, 2007;
(D)
the fee is repealed effective September 1, 2007.
(5)
For each increment of 5,000 gallons or any part thereof
delivered into a cargo tank or barge having a capacity of 10,000 gallons or
more:
(A)
$20 for each delivery made after August 31, 2003, and before
September 1, 2005;
(B)
$10 for each delivery made after August 31, 2005, and before
September 1, 2006;
(C)
$4 for each delivery made after August 31, 2006, and before
September 1, 2007;
(D)
the fee is repealed effective September 1, 2007.
(d)
In determining the amount of fee due for motor gasoline,
other alcohol blended fuels, and aviation gasoline, each net temperature corrected
withdrawal of 7,000 gallons or more but less than 10,000 gallons shall be
presumed to have been a delivery into a cargo tank having a capacity of 8,000
gallons or more but less than 10,000 gallons and the fee shall be collected
as provided by subsection (c)(4) of this section.
(e)
In determining the amount of fee due on all withdrawals
not covered by subsection (d) of this section, it shall be presumed that the
capacity of the cargo tank or barge is equal to the total net temperature
corrected quantity of product withdrawn.
(f)
For the purposes of this section, a bulk facility is a
refinery terminal or any other terminal or facility which receives petroleum
products by pipeline, rail, or barge, and delivers the products into a cargo
tank or barge.
(g)
For the purposes of this section, the operator of a bulk
facility is the person who first invoices petroleum products withdrawn from
the facility. An exchange statement is not considered an invoice.
(h)
For the purposes of this section, an electrical generating
facility is a plant operated for the primary purpose of generating electricity
for sale to consumers.
(i)
Persons exempt from the petroleum products delivery fee,
including persons operating barges who make withdrawals from a permitted bulk
facility for delivery into the fuel supply tanks of vessels or boats, shall
request in writing a letter of exemption from the comptroller. The letter
of exemption issued by the comptroller, or a copy, must be furnished to the
seller each time purchases exempt from the petroleum products delivery fee
are made.
(j)
If the person making the sale to the exempt purchaser does
not hold a petroleum products delivery fee permit, the purchaser must also
furnish to the seller a statement listing the date of purchase, number of
gallons purchased per delivery, and destination of the product. For the seller
to receive credit for exempt sales, this documentation must be presented to
the permitted bulk facility from which the product was purchased.
(k)
The amount of the petroleum products delivery fee must
be listed as a separate item on the invoice or cargo manifest issued by the
person holding a permit to collect the fee upon the withdrawal of product
from a bulk facility.
(l)
Only persons who hold a petroleum products delivery fee
permit may charge and collect the fee on the basis of the bracket system established
in this section. No other persons selling fuel may list the fee as a separate
item on invoices or manifest except:
(1)
when required to do so by another governmental agency;
or
(2)
when an amount is clearly identified as reimbursement.
An amount collected as reimbursement may not exceed the amount of fee actually
paid by the person issuing the manifest or invoice.
(m)
The comptroller may require a bulk facility operator to
post a bond or other security to protect the revenues of the state.
(n)
When determining the security required of a bulk facility
operator, the comptroller will take into consideration the amount of fee that
has or is expected to become due from the person, any past history of the
person as a distributor or supplier of fuel, and the necessity to protect
the state against the failure to pay the fee as it becomes due.
(o)
The comptroller may require a bond equal to two times the
highest amount of fees that will accrue during a reporting period. The minimum
bond is $30,000. The maximum bond is $600,000 unless the comptroller believes
there is undue risk of loss of fee revenues, in which event he may require
one or more bond or securities in a total amount exceeding $600,000.
(p)
If the comptroller determines that a bulk facility operator
has for four consecutive years continuously complied with the conditions of
the bond or other security on file, the operator is entitled on request to
have the comptroller return, refund, or release the bond or security. However,
if the comptroller determines that the revenues of the state would be jeopardized
by the return, refund, or release of the bond or security, the comptroller
may elect not to return, refund, or release the bond or security. The comptroller
may reimpose a requirement of a bond or other security if necessary to protect
the revenues of the state.
(q)
A bond must be a continuing instrument, must constitute
a new and separate obligation in the penal sum named in the bond for each
calendar year or portion of a year while the bond is in force, and must remain
in effect until the surety on the bond is released and discharged.
(r)
In lieu of filing a surety bond, an applicant for a permit
may substitute the following security:
(1)
cash in the form of United States currency in an amount
equal to the required bond, to be deposited in the suspense account of the
state treasury;
(2)
an assignment to the comptroller of a certificate of deposit
in any bank or savings and loan association in Texas that is a member of the
FDIC in an amount equal to the bond amount required; or
(3)
an irrevocable letter of credit to the comptroller from
any bank or savings and loan association in Texas that is a member of the
FDIC in an amount of credit at least equal to the bond amount required.
(s)
If the amount of an existing bond becomes insufficient
or a security becomes unsatisfactory or unacceptable, the comptroller may
require the filing of a new or of an additional bond or security.
(t)
No surety bond or other form of security may be released
until it is determined by examination or audit that no fee, penalty, or interest
liability exists. The cash or securities shall be released within 60 days
after the comptroller determines that no liability exists.
(u)
The comptroller may use the cash or certificate of deposit
security to satisfy a final determination of delinquent liability or a judgment
secured in any action by this state to recover fees, cost, penalties, and
interest found to be due this state by a person in whose behalf the cash or
certificate security was deposited.
(v)
A surety on a bond furnished by a permittee shall be released
and discharged from liability to the state accruing on the bond after the
expiration of 30 days after the date on which the surety files with the comptroller
a written request to be released and discharged. The request does not relieve,
release, or discharge the surety from a liability already accrued, or that
accrues before the expiration of the 30-day period. Promptly after receipt
of the request, the comptroller shall notify the permittee who furnished the
bond, and unless the permittee, before the expiration date of the existing
security, files with the comptroller a satisfactory new bond or other security,
the comptroller shall cancel the permit.
(w)
The comptroller shall notify immediately the issuer of
a letter of credit of a final determination of the bulk facility operator's
delinquent liability or a judgment secured in any action by this state to
recover fees, cost, penalties, and interest found to be due this state by
a bulk facility operator in whose behalf the letter of credit was issued.
A letter of credit accepted as security shall contain a statement that the
issuer agrees to respond to the comptroller's notice of liability with amounts
sufficient to satisfy the comptroller's delinquency claim against the bulk
facility operator.
(x)
An examination or audit may be requested to obtain release
of the security when the permit holder relinquishes the permit or desires
to substitute one form of security for an existing one.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on May 14, 2004.
TRD-200403258
Martin Cherry
Chief Deputy General Counsel
Comptroller of Public Accounts
Effective date: June 3, 2004
Proposal publication date: March 19, 2004
For further information, please call: (512) 475-0387
34 TAC §3.161
The Comptroller of Public Accounts adopts an amendment to §3.161,
concerning definitions, exemptions, and exemption certificate, with changes
to the proposed text as published in the March 12, 2004, issue of the
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 subsection is renumbered
accordingly.
No comments were received regarding adoption of the amendment.
This amendment is adopted 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, §2,
of the Texas Constitution and §501(c)(3) of the Internal Revenue Code
of 1986 (26 U.S.C. §501); and accredited by the Southern Association
of Colleges and Schools. 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.
(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 subparagraph (A)(ii) of this paragraph.
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 section;
(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 section:
(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)
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.
(4)
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.
(5)
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.
(d)
Exclusions.
(1)
Dormitories and other housing facilities owned or leased
and operated by institutions of higher education as defined in subsection
(a)(2) of this section 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) of this section
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 adoption has been
reviewed by legal counsel and found to be a valid exercise of the agency's
legal authority.
Filed with the Office of
the Secretary of State on May 12, 2004.
TRD-200403222
Martin Cherry
Chief Deputy General Counsel
Comptroller of Public Accounts
Effective date: June 1, 2004
Proposal publication date: March 12, 2004
For further information, please call: (512) 475-0387
34 TAC §3.325
The Comptroller of Public Accounts adopts an amendment to §3.325,
concerning refunds, interest, and payments under protest, without changes
to the proposed text as published in the March 12, 2004, issue of the
The adopted amendment implements legislative changes and codification of
existing policies made by House Bill 2425, 78th Legislature, 2003, that describe
when and how persons may obtain a refund of tax paid in error. Provisions
relating to limitations in subsection (a) are reorganized in new subsection
(c) and the remaining subsections have been relettered accordingly.
No comments were received regarding adoption of the amendment.
This amendment is adopted 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 §§111.064, 111.104, 111.107,
111.108, and 111.207.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on May 14, 2004.
TRD-200403259
Martin Cherry
Chief Deputy General Counsel
Comptroller of Public Accounts
Effective date: June 3, 2004
Proposal publication date: March 12, 2004
For further information, please call: (512) 475-0387
34 TAC §3.331
The Comptroller of Public Accounts adopts an amendment to §3.331,
concerning transfers of common interests in tangible personal property; intercorporate
services, with changes to the proposed text as published in the March 12,
2004, issue of the
Texas Register
(29 TexReg
2608). The section is adopted with changes to correct a typographical error
in subsection (c)(3)(E).
The adopted amendment consolidates subsections (a) and (b) and reletters
other subsections accordingly. Subsection (b) restates the exemption for joint
research and development venture as provided by Tax Code §151.348. Subsection
(c) updates and clarifies the current policy of intercorporate exemption as
provided by Tax Code §151.346. Other amendments are made for clarity.
No comments were received regarding adoption of the amendment.
This amendment is adopted 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, §151.346.
§3.331.Transfers of Common Interests in Tangible Personal Property; Intercorporate Services.
(a)
Transfer of common interests.
(1)
Sales or use tax is not due when an interest in tangible
personal property is sold to a purchaser who, either before or after the sale,
owns a joint or undivided interest in the tangible personal property with
the seller.
(2)
In order for the sale to be exempt, the following requirements
must be met.
(A)
The seller must have paid sales or use tax on the tangible
personal property when it was purchased.
(B)
The sale must be made pursuant to the terms of a good faith
contractual relationship between the seller and the purchaser. Good faith
contractual relationship means a legal relationship established between two
or more persons created for considerations other than the avoidance of the
limited sales and use tax.
(C)
It is necessary that the purchaser, either before or after
the sale, own a joint or undivided interest in the property with the seller.
The joint ownership transfer exemption does not apply to sales between related
corporations or other entities if the only joint ownership is the ultimate
ownership of the corporation stock.
(b)
Research and development ventures. Sales and use tax is
not due on tangible personal property sold by a joint research and development
venture as defined by 15 United States Code §4301 to a participating
entity if the tangible personal property is created, developed, or substantially
modified by or for the joint research and development venture.
(c)
Intercorporate services.
(1)
Sales or use tax is not due on charges for taxable services
if the seller and purchaser are affiliated entities that are members of an
affiliated group under 26 U.S.C. §1504, and if both entities report their
income to the Internal Revenue Service on a single consolidated income tax
return with at least one corporation that is a member of the affiliated group
for the tax year in which the taxable service is provided. If either the seller
or the purchaser elects to file a separate federal income tax return even
though it is eligible to file a consolidated federal income tax return with
other members of the affiliated group, the exemption provided by this subsection
does not apply.
(2)
Sales or use tax is not due on charges for taxable services
if both the seller and purchaser are entities classified as members of an
affiliated group under 26 U.S.C. §1504, but either the seller or purchaser
or both cannot file a consolidated federal income tax return because of the
exclusions provided by 26 U.S.C. §1504(b).
(3)
The exemption provided by this subsection does not apply
to sales of tangible personal property between affiliated corporations or
sales of services that were taxable before September 2, 1987. The following
services were taxable before September 2, 1987:
(A)
amusement services;
(B)
cable television services;
(C)
personal services;
(D)
motor vehicle parking and storage;
(E)
the repair, remodeling, maintenance, or restoration of
tangible personal property except maintenance of computer software and those
services excluded from tax by Tax Code, §151.0101(a)(5); and
(F)
telecommunications services.
(4)
A seller of a taxable service must pay sales or use tax
on its purchase of tangible personal property that the seller transfers as
an integral part of the taxable service if the sale of the taxable service
is exempt from sales tax under this subsection. The seller may not claim a
sale for resale exemption.
(5)
A seller of a taxable service must pay sales or use tax
on its purchase of a taxable service that the seller transfers as an integral
part of the taxable service sold if the sale of the taxable service is exempt
from sales tax under this subsection. The seller may not claim a sale for
resale exemption.
(6)
When a contract contains charges for taxable items and
charges for services that qualify for exemption under this subsection, the
total charge will be taxable unless the charge for taxable items is separately
stated to the customer.
This agency hereby certifies that the adoption has been
reviewed by legal counsel and found to be a valid exercise of the agency's
legal authority.
Filed with the Office of
the Secretary of State on May 12, 2004.
TRD-200403223
Martin Cherry
Chief Deputy General Counsel
Comptroller of Public Accounts
Effective date: June 1, 2004
Proposal publication date: March 12, 2004
For further information, please call: (512) 475-0387
Subchapter J. PETROLEUM PRODUCTS DELIVERY FEE
Subchapter K. HOTEL OCCUPANCY TAX
Subchapter O. STATE SALES AND USE TAX
Chapter 16.
ELECTRONIC TRANSFER OF PAYMENTS TO THE TEXAS STATE TREASURY DEPARTMENT