Part 1. COMPTROLLER OF PUBLIC ACCOUNTS
Subchapter NN. FIREWORKS TAX
The Comptroller of Public Accounts proposes an amendment to §3.1281, concerning fireworks tax. The amendment implements House Bill 539, 80th Legislature, 2007, which changed Occupations Code, §2154.202, to include a period beginning May 1 and ending at midnight on May 5 as a period during which a retail fireworks permit holder is authorized to sell fireworks to the public if the fireworks are sold at a location that is not more than 100 miles from the Texas-Mexico border in a county in which the commissioners court has approved the sale of fireworks during that period. The definition of "sales tax" has been added to subsection (a) of the rule. The list of items that are excluded from the fireworks tax base has been moved from subsection (b) and combined with the exemption information under subsection (d). The caption for subsection (d) has been changed to reflect that reorganization. The payment provisions in subsection (e) have been reorganized under subsections (f) - (h). Due date information has been moved to subsection (f) and expanded to provide a due date of August 20 for remittance of fireworks tax collected during the new May 1 - May 5 sales period; the original effective date for the fireworks tax has been deleted from the subsection. Information regarding prepayment and timely filing discounts is found under new subsection (g); and late payment penalty and interest is covered under new subsection (h).
John Heleman, 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. Heleman also has determined that for each year of the first five years the rule is in effect, the amendment would benefit the public by clarifying the requirements for certain taxpayers subject to the fireworks tax. This rule is proposed 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 and §111.0022, which provide the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2, and taxes, fees, or other charges which the comptroller administers under other law.
The amendment implements Tax Code, Chapter 161, and Occupations Code, §2154.202(g)(3).
§3.1281.Fireworks Tax.
(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.
(1) Fireworks--Any composition or device that is designed to produce a visible or audible effect by combustion, explosion, deflagration, or detonation that is classified as Division 1.4G explosives by the United States Department of Transportation in 49 C.F.R. Part 173 as of September 1, 1999. Examples of fireworks include items that are commonly known as firecrackers, bottle rockets, Roman candles, and shooting stars.
(2) Retail sale--Any sale of fireworks directly to the public.
(3) Sales tax--The tax imposed by Tax Code, Chapter 151.
(b) Imposition. A 2.0% tax is imposed on the retail
sale of fireworks in Texas. The fireworks [This] tax
imposed under Tax Code, Chapter 161, is in addition to any
state and local sales taxes that are due on the retail sale of
fireworks. [Tax Code, §161.005, directs the
comptroller to allocate the revenue collected under this tax to the
rural volunteer fire department fund that is established under Government
Code, §614.075. The following items are excluded from the fireworks
tax, but may be subject to sales tax:]
[(1) a toy pistol, toy cane, toy gun,
or other device that uses a paper or plastic cap;]
[(2) a model rocket or model rocket
motor that is designed, sold, and used for the purpose of propelling
a recoverable aero model;]
[(3) a propelling or expelling charge
that consists of a mixture of sulfur, charcoal, and potassium nitrate;]
[(4) a novelty or trick noisemaker;]
[(5) a pyrotechnic signaling device
or distress signal that is designed for marine, aviation, or highway
use in an emergency situation;]
[(6) a fusee or railway torpedo for use by a railroad;]
[(7) a blank cartridge that is sold
for use in a radio, television, film, or theater production, for signal
or ceremonial purposes in athletic events, or for industrial purposes; or]
[(8) a pyrotechnic device that is sold
for use by a military organization.]
(c) Collection. Each seller must collect the fireworks tax from the purchaser on the total price of each retail sale of fireworks in Texas. The fireworks tax is collected in the same manner as sales tax. See §3.286 of this title (relating to Seller's and Purchaser's Responsibilities) for information on the collection and remittance of sales tax.
(d) Exclusions and exemptions [Exemptions].
(1) The following items are excluded from the fireworks tax base, but retail sales of these items may be subject to sales tax:
(A) a toy pistol, toy cane, toy gun, or other device that uses a paper or plastic cap;
(B) a model rocket or model rocket motor that is designed, sold, and used for the purpose of propelling a recoverable aero model;
(C) a propelling or expelling charge that consists of a mixture of sulfur, charcoal, and potassium nitrate;
(D) a novelty or trick noisemaker;
(E) a pyrotechnic signaling device or distress signal that is designed for marine, aviation, or highway use in an emergency situation;
(F) a fusee or railway torpedo for use by a railroad;
(G) a blank cartridge that is sold for use in a radio, television, film, or theater production, for signal or ceremonial purposes in athletic events, or for industrial purposes; or
(H) a pyrotechnic device that is sold for use by a military organization.
(2) [(1)] No fireworks tax is
due on a sale that is exempt from sales tax.
(3) [(2)] A seller who accepts
a valid and properly completed resale or exemption certificate for
sales tax is not required to collect the fireworks tax. All sales
that are unsupported by valid resale or exemption certificates or
by other exemption documentation acceptable under the law are considered
to be retail sales, and the seller will be liable for the fireworks
tax on those sales.
(e) Reports [and payments]. A seller
must report the fireworks tax to the comptroller on forms that the
comptroller prescribes. A seller who fails to receive the correct
form from the comptroller is not relieved of the responsibility for
filing a fireworks tax report and for payment of the tax by the due date.
[(1) A seller must report and remit
fireworks tax on or before August 20 on sales that occur during the
period that begins June 24 and ends midnight July 4. A seller must
report and remit fireworks tax on or before February 20 on sales that
occur during the period that begins December 20 and ends midnight January 1.]
[(2) A seller must report and pay the
fireworks tax to the comptroller on forms that the comptroller prescribes.
A seller who fails to receive the correct form from the comptroller
is not relieved of the responsibility for filing a fireworks tax report
and for payment of the tax by the due date.]
[(3) The penalties and interest that
are imposed for failure to timely file and pay the fireworks tax are
the same as those that are imposed for failure to timely file and
pay sales tax. Likewise, the 0.5% discount for timely filing and payment
applies to fireworks tax reports and payments. No prepayment discount
will be allowed for prepayment of the fireworks tax. See §3.286
of this title.]
(f) Due dates for reports and payments. A seller
must report and remit fireworks tax on or before the applicable due
date for the sales period. The due dates are: [Effective
date. The fireworks tax is effective October 1, 2001.]
(1) August 20 for tax collected on sales that occur during:
(A) the period that begins May 1 and ends at midnight on May 5 at a location that is not more than 100 miles from the Texas-Mexico border in a county in which the commissioners court has approved the sale of fireworks during that period; and
(B) the period that begins on June 24 and ends at midnight on July 4; and
(2) February 20 for tax collected on sales that occur during the period that begins December 20 and ends at midnight on January 1.
(g) Prepayment and timely filing discounts.
(1) The 1.75% sales tax prepayment discount does not apply to fireworks tax.
(2) A seller who timely files the fireworks report and pays the tax due on or before the applicable due date may retain 0.5% of the gross fireworks tax due.
(h) Late payment penalty and interest.
(1) If the tax is paid or postmarked one to 30 days after the due date, a penalty of 5.0% of the tax due is imposed.
(2) If the tax is paid or postmarked more than 30 days after the due date, a penalty of 10% of the tax due is imposed.
(3) If the tax is paid or postmarked more than 60 days after the due date, interest is also due on the late payment. Interest is applied at the applicable annual rate to the amount of the delinquent tax due, exclusive of any late penalty. The comptroller publishes the annual interest rate online at www.window.state.tx.us and by phone at 1-877-44RATE4.
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 April 29, 2008.
TRD-200802229
Martin Cherry
General Counsel
Comptroller of Public Accounts
Earliest possible date of adoption: June 15, 2008
For further information, please call: (512) 475-0387