Emergency Sections An agency may adopt a new or amended section or repeal an existing section on an emergency basis if it determines that such action is necessary for the public health, safety, or welfare of this state. The section may become effective immediately upon filing with the Texas Register, or on a stated date less than 20 days after filing, for no more than 120 days. The emergency action is renewable once for no more than 60 days. Symbology in amended emergency sections. New language added to an existing section is indicated by the use of bold text. [Brackets] indicate deletion of existing material within a section. TITLE 34. PUBLIC FINANCE Part I. Comptroller of Public Accounts Chapter 3. Tax Administration Subchapter O. State Sales and Use Tax 34 TAC sec.3.300 The Comptroller of Public Accounts adopts on an emergency basis an amendment to sec.3.300, concerning manufacturing; custom manufacturing; fabricating; processing. The emergency amendment reflects the changes to the Tax Code, Chapter 151, made by the 72nd Legislature, 1991, First Called Session. The phased-in exemption on manufacturing machinery and equipment was delayed. The amendment is adopted on an emergency basis under the Tax Code, sec.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 the Tax Code, Title 2. sec.3.300. Manufacturing; Custom Manufacturing; Fabricating; Processing. (a) (No change.) (b) Manufacturer's responsibilities. (1) Collection of tax. Persons engaged in the business of fabricating, manufacturing, processing, or custom manufacturing must collect sales tax on the total sales price of the manufactured item or take an exemption certificate in lieu of the tax. The sales price includes, but is not limited to, the cost of materials, labor or service costs, and all expenses connected with production. Persons fabricating, custom manufacturing, or processing tangible personal property which is furnished either directly or indirectly by the customer must collect tax on such fabricating, custom manufacturing, or processing charge. Manufacturers shall pay or accrue sales or use tax on all items used in the manufacturing process which do not qualify for exemption from tax. A manufacturer who purchases tangible personal property tax free by means of an exemption certificate or resale certificate and subsequently uses the item for a nonexempt purpose must remit the tax to the comptroller based on the purchase price of the item. Reference should be made to sec.3.285 of this title (relating to Resale Certificate;
    Sales for Resale[; Resale Certificate]), sec.3.287 of this title (relating to Exemption Certificates), and sec.3.346 of this title (relating to Use Tax). (2) Installed items. Generally, the charge for labor to install an item sold is taxable when the item sold is taxable. Persons who manufacture and install items which become improvements to residential realty or are incorporated into new real property structures are contractors and are subject to the provisions of sec.3.291 of this title (relating to Contractors). Example: cabinet makers or drapery makers who also affix the draperies or cabinets as a part of a new- construction contract. See also sec.3.347 of this title (relating to Improvements to Realty). Persons who manufacture and install items as a part of a repair contract are subject to the provisions of sec.3.292 of this title (relating to Repair, Remodeling, Maintenance, and Restoration of Tangible Personal Property
      [Repairmen]). Example: fabricating a propeller shaft for a customer as a part of an outboard motor repair. Persons who manufacture and install items which do not become improvements to realty or which are not part of a repair must collect sales tax on the total charge. Example: a retailer who makes and installs draperies for a home owner. (3)-(4) (No change.) (c)-(e) (No change.) (f) Useful life of more than six months. (1) State tax paid on machinery, equipment, replacement parts, and accessories with a useful life exceeding six months may be partially refunded by the comptroller if the items are purchased and the tax is paid after December 31, 1989. A reduced amount of tax may be paid at the time of purchase if the items are purchased on or
        after October 1, 1993
          [December 31, 1991]. The date that title or possession transfers from the retailer to the purchaser is the purchase date. Items purchased out of state will be considered purchased on the date they are brought into this state. (2) (No change.) (3) Qualifying items which are purchased in 1990 and from January 1, 1991, through September 30,
            1991,
              and on which tax is paid qualify for a refund of 25% of the state tax paid. (4) Manufacturing machinery and equipment purchased on or after October 1, 1991. through September 30, 1993, do not qualify for sales tax refunds or tax reductions
                [To qualify for a reduction in the amount of tax paid, the qualifying items must be purchased after December 31, 1991]. [(A) Twenty-five percent of the sales price of qualifying items purchased during 1992 is exempted from the state sales and use tax.] (A)
                  [(B)] Fifty percent of the sales price of qualifying items purchased on or after October 1, 1993, through December 31, 1993, [during 1993] is exempted from the state sales and use tax. (B)
                    [(C)] Seventy-five percent of the sales price of qualifying items purchased during 1994 is exempted from the state sales and use tax. (C)
                      [(D)] Qualifying items purchased on or after January 1, 1995, are exempt. (g) (No change.) (h) Method of paying a reduced amount of tax. (1) The purchaser shall provide the retailer an exemption certificate for the appropriate percentage of the sales tax for qualifying items purchased on or after October 1, 1993
                        [after December 31, 1991]. (A) A retailer who receives an exemption certificate for purchases in 1992 for 25% of the state sales tax shall collect state sales tax on 75% of the sales price.] [(A) A retailer who receives an exemption certificate for purchase in 1992 for 25% of the state sales tax shall collect state sales tax on 75% of the sale price.] (A)
                          [(B)] A retailer who receives an exemption certificate for purchases in 1993 for 50% of the sales tax shall collect state sales tax on 50% of the sales price. (B)
                            [(C)] A retailer who receives an exemption certificate for purchases in 1994 for 75% of the sales price shall collect state sales tax on 25% of the sales price. (2) A purchaser who remits use tax on qualifying items purchased on or
                              after October 1, 1993[
                                [December 31, 1991], shall deduct from the amount reported as the purchase price the appropriate percentage allowed as a reduction in the state tax. (i) (No change.) Issued in Austin, Texas, on October 14, 1991. TRD-9112698 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: October 14, 1991 Expiration date: February 11, 1992 For further information, please call: (512) 463-4028