TITLE 34.PUBLIC FINANCE

Part 1. COMPTROLLER OF PUBLIC ACCOUNTS

Chapter 3. TAX ADMINISTRATION

Subchapter L. MOTOR FUEL TAX

34 TAC §3.171

The Comptroller of Public Accounts proposes an amendment to §3.171, concerning records required; information required. The 76th Legislature, 1999, in Senate Bill 1547, amended Tax Code, Chapter 153, regarding records required by sellers and users of motor fuel. The amendment provides for two new bonded diesel fuel user permits and requires common and contract carriers transporting gasoline or diesel fuel by truck in Texas to register with the comptroller and maintain records. The amendment also requires anyone wanting to use a signed statement to purchase tax-free diesel fuel to register with the comptroller. Subsections are being amended to provide a record keeping requirement for sellers or users claiming that gasoline and diesel fuel was stolen.

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 taxpayers with a more efficient means of obtaining tax information. This rule is adopted under the 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 78711-3528.

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, §§153.003, 153.018, 153.117. 153.219, 153.302, and 153.309.

§3.171.Records Required; Information Required.

(a)

Records required.

(1)

A distributor of gasoline or a supplier of diesel fuel, as those terms are defined in [ the ] Tax Code, §153.001, shall keep the shipping document that relates to each receipt for distribution of gasoline or diesel fuel, and shall also keep records that show [ showing ] the number of gallons of:

(A)

all gasoline or diesel fuel inventories on hand on the first day of each month;

(B)

all gasoline or diesel fuel[ , ] that the distributor or supplier refined, compounded, or blended;

(C)

all gasoline or diesel fuel that the distributor or supplier purchased or received, showing the name and location of the seller, the date of each purchase or receipt, and the amount of motor fuels tax paid or if no tax was paid, the basis for the nonpayment of the motor fuels tax;

(D)

all gasoline or diesel fuel that the distributor or supplier sold, distributed, or used, showing the name and location of the purchaser, the date of each sale, distribution, or use, and the amount of motor fuels tax assessed, or if no tax was assessed, the basis for not assessing the motor fuels tax; [ and ]

(E)

all diesel fuel that the distributor or supplier sold tax free, separately identifying sales of dyed and undyed fuel, showing the purchaser's aviation fuel dealer permit number, dyed diesel fuel bonded user permit number, agricultural bonded user permit number, or, when sold by signed statement, end user number or agricultural user exemption number;

(F)

all gasoline and diesel fuel that the distributor or supplier exported from Texas including the destination state or country for each load;

(G)

all gasoline and diesel fuel that the distributor or supplier imported into Texas including the origin state or country for each load; and

(H)

[ (E) ] all gasoline or diesel fuel that the distributor or supplier lost by fire , theft, or [ other ] accident ; [ . ]

(2)

A dealer, as that term is defined in the Tax Code, §153.001, shall keep the shipping document that relates to each receipt or distribution of gasoline or diesel fuel and shall also keep records that show [ showing ] the number of gallons of:

(A)

all gasoline or diesel fuel inventories on hand on the first day of each month;

(B)

all gasoline or diesel fuel that the dealer purchased or received, showing the name and location of the seller, the date of each purchase or receipt, the amount of motor fuels tax paid, or if no tax was paid, the basis for the nonpayment of the motor fuels tax;

(C)

all gasoline that the dealer sold, distributed, or used, showing the date of the sale, distribution, or use;

(D)

all diesel fuel that the dealer sold, distributed, or used showing the date of the sale, distribution, or use and individual invoices issued covering deliveries into fuel supply tanks of motor vehicles described under the definition of "interstate trucker" in the Tax Code, §153.001, in accordance with the Tax Code, §153.220; and

(E)

all gasoline or diesel fuel that the dealer lost by fire , theft, or [ other ] accident.

(3)

A permitted liquefied gas dealer must keep records showing the number of gallons of:

(A)

all liquefied gas that the dealer sold or delivered for taxable purposes; and

(B)

individual invoices that the dealer issued recording [ issued covering ] taxable sales and deliveries in accordance with the Tax Code, §153.309.

(4)

An aviation fuel dealer, as that term is defined in the Tax Code, §153.001, shall keep the shipping document relating to each receipt or distribution of gasoline or diesel fuel, and shall also keep records showing the number of gallons of:

(A)

all gasoline or diesel fuel inventories on hand on the first day of each month;

(B)

all gasoline or diesel fuel that the dealer purchased or received, showing the name and location of the seller, the date of each purchase or receipt, the amount of motor fuels tax paid, or if no tax was paid, the basis for the nonpayment of the motor fuels tax;

(C)

all gasoline or diesel fuel that the dealer sold, distributed, or used in aircraft or aircraft servicing equipment, showing the name of the purchaser or user, the date of each sale, distribution or use, and the registration or "N" number of the airplane or a description or number of the aircraft servicing equipment in which the gasoline or diesel fuel was used; and

(D)

all gasoline or diesel fuel that the dealer lost by fire , theft, or [ other ] accident.

(5)

An interstate trucker, as that term is defined in the Tax Code, §153.001, shall keep records of:

(A)

the total miles that the interstate trucker traveled in all states and countries by all vehicles traveling into or from Texas and the total quantity of gasoline, diesel fuel, or liquefied gas consumed in those vehicles; and

(B)

the total miles that the interstate trucker traveled in Texas and the total quantity of gasoline, diesel fuel, or liquefied gas delivered into the fuel supply tanks of motor vehicles and into storage facilities in Texas.

(6)

A jobber, as that term is defined in the Tax Code, §153.001, shall keep the shipping document relating to each receipt or distribution of gasoline or diesel fuel, and shall also keep records that show [ showing ] the number of gallons of:

(A)

all gasoline or diesel fuel inventories on hand on the first day of each month;

(B)

all gasoline or diesel fuel that the jobber purchased or received, showing the name and location of the seller, the date of each purchase or receipt, and the amount of motor fuels tax paid[ , or if no tax was paid, the basis for nonpayment of the motor fuels tax ];

(C)

all gasoline or diesel fuel that the jobber sold, distributed, or used, showing the name and location of the purchaser, the date of each sale, distribution, or use, and the amount of motor fuels tax assessed; and

(D)

all gasoline or diesel fuel that the jobber lost by fire , theft, or [ other ] accident.

(7)

A dyed diesel fuel bonded user, an agricultural bonded user, or [ bonded user or ] other user with nonhighway equipment who files a claim for refund shall keep the shipping document that relates to each receipt of gasoline or diesel fuel, and shall also keep records that show [ showing ] the number of gallons of dyed diesel fuel and the number of gallons of undyed diesel fuel that are in each of the following categories :

(A)

all diesel fuel inventories on hand on the first day of each month;

(B)

all diesel fuel that the user purchased or received, showing the name of the seller and the date of each purchase or receipt;

(C)

all diesel fuel that the user delivered [ deliveries ] into the fuel supply tanks of motor vehicles;

(D)

all diesel fuel that the user used for other purposes, showing the purpose for which used; and

(E)

all diesel fuel that the user lost by fire , theft, or [ other ] accident.

(8)

A common or contract carrier that transport motor fuel in Texas shall keep the shipping document that relates to each shipment of gasoline or diesel fuel, and shall also keep records that show:

(A)

the date of transportation;

(B)

the name of the seller or consignor;

(C)

the name of the purchaser or consignee;

(D)

the means of transportation;

(E)

the quantity and kind of motor fuel that the carrier transported;

(F)

the destination state or country of motor fuel that the carrier exported outside of Texas;

(G)

the origin state or country of motor fuel that the carrier imported into Texas;

(H)

the import verification number when that number is required by §3.187 of the title (relating to Documentation and Reporting of Imports and Exports, Import Verification Number, Export Sales by Distributors and Suppliers, and Diversion Number); and

(I)

the diversion number when that number is required by §3.187 of this title;

(9)

A person who claims a deduction or exclusion authorized by law must keep records that substantiate the claim. [ (8) Additional records must be kept to substantiate any claimed deductions or exclusions authorized by law. ] When records regarding the amount and applicability of any deductions or exclusions from the motor fuels tax are insufficient, the comptroller may estimate deductions or exclusions based on any records available or may disallow all deductions and exclusions. No exclusions for loss by fire, accident, or theft will be allowed unless accompanied by fire department, environmental regulatory agency, or police department reports that verify [ verifying ] the fire, accident, or theft.

(b)

Failure to keep adequate records.

(1)

If any person who is required [ to do so ] by this section [ fails ] to keep accurate records of receipts and purchases of gasoline or diesel fuel, fails to keep those records , the comptroller may estimate the tax liability based on any information available including, but not limited to, the records of the person's [ its ] suppliers or distributors.

(2)

If any person who is required [ to do so ] by this section [ fails ] to keep accurate records of sales, distributions, or uses of gasoline or diesel fuel, fails to keep those records , the comptroller may estimate the tax liability of that person, if any, based on any information available including, but not limited to, the records of the person's [ its ] purchasers or distributees.

(3)

The comptroller may suspend any permit or license the comptroller has issued [ by the comptroller ] to a person if the person fails [ for failing ] to keep the records required by this section.

(4)

Records may be written, kept on microfilm, or stored on data processing equipment.

(c)

Information required.

(1)

The comptroller may require any person who must [ required to ] hold a permit or registration under [ the ] Tax Code, Chapter 153, to furnish information that the comptroller needs to:

(A)

identify any person who applies [ applying ] for a motor fuels permit , uses a signed statement to purchase tax-free diesel fuel, or transports motor fuel in Texas by truck as a common or contract carrier, or any person who is required to file a return;

(B)

determine the amount of bond, if any, required to commence or continue business;

(C)

determine possible successor liability; and

(D)

determine the amount of tax the person is required to remit, if any.

(2)

The information required may include, but is not limited to, the following:

(A)

name of the actual owner of the business;

(B)

name of each partner in a partnership;

(C)

names of officers and directors of corporations and other organizations;

(D)

all trade names under which the owner operates;

(E)

mailing address and actual locations of all business outlets;

(F)

license numbers, title numbers, and other identification of business vehicles;

(G)

identification numbers assigned by other governmental agencies, including social security numbers, federal employers identification numbers, and drivers license numbers;

(H)

names of diesel fuel suppliers or gasoline distributors with whom the supplier, distributor, or dealer will transact business;

(I)

names and last known addresses of former owners of the business.

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 July 31, 2000.

TRD-200005274

Martin Cherry

Deputy General Counsel for Tax Policy and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: September 10, 2000

For further information, please call: (512) 463-4062


34 TAC §3.173

The Comptroller of Public Accounts proposes an amendment to §3.173, concerning refunds on gasoline and diesel fuel. The 76th Legislature, 1999, in Senate Bill 1547, amended Tax Code, Chapter 153, providing two new diesel fuel bonded user permits and setting out additional record keeping requirements for users of dyed and undyed diesel fuel.

An amendment is being made to the subsection regarding the delivery of tax-free diesel fuel into off- highway equipment and into farm machinery traveling on-highway.

A new paragraph is being added regarding retail sales of tax-free undyed kerosene from blocked pumps.

Nonsubstantive grammatical corrections are also made to various subsections.

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 taxpayers with a more efficient means of obtaining tax information. This rule is adopted under the 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, §§153.104, 153.119, 153.121. 153.203, 153.205, 153.222, and 153.224.

§3.173.Refunds on Gasoline and Diesel Fuel Tax.

(a)

Exclusive use. Exclusive use by a public school district or commercial transportation company means use of fuel only in motor vehicles or other equipment that :

(1)

[ operated by ] the public school district operates ; or

(2)

[ owned and/or operated by ] a person under [ performing a ] contract with [ between ] the public school district own and/or operates [ and the owner and/or operator ] to provide transportation services for the public school district and uses [ when used ] in performance of the contract.

(b)

Refunds. A person may file a claim for refund of [ the ] taxes paid on gasoline or diesel fuel used off the highway[ , ] for certain resale, for export from Texas, for loss caused by fire, theft , or [ other ] accident, and for the provision of [ to provide ] transportation services to public school districts.

(c)

Time limitation. A claim for refund must be filed before the expiration of the following time limitations , as provided by Tax Code, §153.121 and §153.224:

(1)

one year from the first day of the calendar month that follows [ following ]:

(A)

purchase;

(B)

tax exempt sale;

(C)

use, if withdrawn from one's own storage for one's own use;

(D)

export from Texas; or

(E)

loss by fire, theft, or [ other ] accident; or

(2)

four years from the first day of the calendar month that follows [ following ] the overpayment of tax for motor fuel acquired prior to October 1, 1997, when the overpayment is the result of:

(A)

the same taxpayer who makes [ making ] multiple payments of the tax directly to the comptroller on the same motor fuel , or pays [ paying ] tax on motor fuel that did not exist (e.g., a taxpayer reports and pays [ reported and paid ] the tax on 10,000 gallons of fuel in a particular reporting period. The taxpayer later files [ filed ] an amended report for the same period , or a report for another period , and reports and pays [ reported and paid ] tax again on the same fuel. Essentially, the taxpayer paid the tax on 20,000 gallons when [ where ] only 10,000 gallons existed.); or

(B)

a typographical error or transposed number that caused more tax to be paid than was due; or

(C)

a misplaced decimal point that caused more tax to be paid than was due; or

(3)

four years from the first day of the calendar month that follows [ following ] the due date of the report on which an overpayment of tax was made [ occurred ] for motor fuel acquired on or after October 1, 1997, by a permitted distributor, supplier, dyed diesel fuel bonded user, or agricultural bonded user who [ that ] determines that taxes were erroneously reported or that more taxes were paid [ more taxes ] than were due [ this state ] because of a mistake of fact or law. The distributor, supplier, dyed diesel fuel bonded user or agricultural bonded user must establish the credit by filing an amended tax report for the period in which the error [ has ] occurred and tax payment made to the comptroller.

(d)

Filing forms and documentation. Each type of claim for refund must be filed on a form that the comptroller furnishes, and documentation of the identification of each vehicle or type of equipment in which the fuel was used and other information to fully substantiate the claim must be maintained. [ Each type of claim for refund must be filed on a form furnished by the comptroller and documentation must be maintained to fully substantiate the claim, including identification of each vehicle or type of equipment in which the fuel was used. ] For refund purposes, the original invoice may be a copy of the original impression if the copy has been stamped "Customer Original Invoice," "Original for Tax Purposes," or similar wording. If a copy is so stamped, the original and all other copies must then be stamped "Not Good for Tax Purposes" or similar wording. Invoices of original impression submitted in support of refund claims must be without the above wording stamped or imprinted [ wording ]. Refund [ Categories of refund ] claims must further comply with the following requirements [ are ]:

(1)

Refund claim for export [ exports ] from Texas by non-permitted purchaser. A claim for refund can be filed only on gasoline or diesel fuel exported in quantities of 100 gallons or more. Invoices that reflect [ reflecting ] that the tax was assessed , and documentation that the fuel was exported , must be maintained. Proof of export must be one of the following:

(A)

proof of export that United States Customs officials have certified, [ certified by United States Customs officials ] if the fuel was exported to a foreign country;

(B)

proof of export that a port of entry official of the state of importation has certified, if the state of importation maintains ports of entry [ proof of export certified by port of entry official of the state of importation if ports of entry are maintained ];

(C)

proof from the taxing officials of the state into which the fuel was imported that shows that the exporter has accounted for the fuel on that state's tax reports [ proof from the taxing officials of the state into which the fuel was imported showing that the fuel has been accounted for by the exporter on that state's tax reports ];

(D)

other proof that the fuel has been reported to [ the gallons have been accounted for to ] the state into which the gasoline or diesel fuel was imported; or

(E)

a common or contract carrier's transporting documents (see §3.182 of this title (relating to Motor Fuel Transporting Documents)) that list [ listing ] the consignor and consignee, the points of origin and destination, the number of gallons shipped or transported, the date of export, and the kind of fuel exported;

(2)

Refund claim for sale to the federal government by dealer or jobber [ sales by dealers and jobbers to the federal government ]. For the purposes of this section, the federal government is [ means ] any department, board, bureau, agency, corporation, or commission that the United States government has created or wholly owns [ created or wholly owned by the United States government ]. Gasoline and diesel fuel may be sold tax-free to the federal government for its exclusive use. Evidence that sales were made to the federal government must be maintained and [ must ] consist of:

(A)

a United States tax exemption certificate--Standard Form [ form ] 1094; or

(B)

copies of the invoice(s) when a United States National credit card--Standard Form 149, was used for the purchase, which invoice must include [ and including ] the license plate number or official vehicle designation , if fuel is delivered into the fuel supply tank of a motor vehicle; or

(C)

a copy of a contract between the dealer or jobber and the federal government that the [ supported by ] sales invoices or purchase vouchers under [ the provisions of ] the contract support ;

(3)

Refund claim for loss by fire, theft , or [ other ] accident. A tax refund may be claimed for a loss of 100 gallons or more that fire, theft, or accident has caused. The claimant must maintain records of the incident that establishes that the exact quantity of fuel that has been claimed as lost was actually lost, and that the loss resulted from that incident [ A loss of 100 gallons or more for which tax refund is claimed must be caused either by fire, theft or other accident. The claimant must maintain a complete record documenting the incident which occurred to establish that the exact quantity of fuel claimed as lost was actually lost as a result of that incident ]. The time limitation prescribed in subsection (c)(1) of this section is determined by the date of the first incident of a multiple incident loss that totals [ multiple incident loss totaling ] 100 gallons or more. A claim for refund for loss by fire, theft , or [ other ] accident shall be accompanied by fire department, police department, or regulatory agency reports as appropriate.

(A)

If the incident is a drive-away theft at a retail outlet (i.e., theft occurs when a person delivers gasoline or diesel fuel into the fuel supply tank(s) of a motor vehicle at a retail outlet without payment [ paying ] for the fuel), the following documentation shall be maintained:

(i)

a police department report or evidence that the incident of drive-away theft has been or will be taken as a deduction on the federal income tax return during the same or the subsequent reporting period; and

(ii)

a separate report for each incident that the employee(s) who witnessed the event prepared and signed [ , prepared and signed by the employee(s) witnessing the event ]. The report must include the date and time of occurrence, type of fuel, number of gallons, outlet location, and , if the theft is reported to a police department, the police case number [ assigned ].

(B)

If the accidental loss was incurred through a leak in a line or storage tank, the minimum proof required is [ required proof includes ]:

(i)

a statement by the person who actually dug up or otherwise examined the hole or leak. Such statement should articulate [ set out ] the extent of the leak, the date of the examination, and the person's name and title; and

(ii)

a statement of the actual loss as determined by computing the measured inventory next preceding the discovery of the accidental leak, plus motor fuel salvaged from the leaky tank or line, if any, less intervening withdrawals for sale or use.

(C)

Claimants who are permitted distributors or suppliers must claim a loss on line 5 of the monthly Texas Fuels Tax Report. If the claim is for a drive-away theft, the claimant must also maintain the documentation and meet the requirements provided in subparagraph (A) of this subsection. If the claim is for loss by leakage, the claimant must also maintain the documentation provided in subparagraph (B) of this subsection.

(D)

Dealers and jobbers must [ are required to ] take inventory on the first of each month and promptly correct the inventory for any loss that has occurred in the preceding month [ so an accident should be discovered no later than at the inventory of the succeeding month's business, and corrected promptly thereafter ]. If inventories have not been accurately or timely measured, or [ and ] if complete records have not been kept of all withdrawals for sale or use as required by law, a refund claim cannot be honored for payment;

(4)

[ claim for refund ] Refund claim for [ on ] gasoline or diesel fuel used off highway. A claim for refund on fuel used solely for off-highway purposes must list each off-highway vehicle or piece of equipment and the total number of gallons [ which have been ] used. Documentation that shows [ showing ] that the state tax was assessed and a schedule that lists [ listing ] the number of gallons of gasoline, dyed diesel fuel, and undyed diesel fuel used in both on- and off-highway vehicles and equipment must be maintained . [ ; ]

(5)

[ claim for refund ] Refund claim for on gasoline or diesel fuel used by a [ the ] lessor of off-highway equipment. The lessor of off-highway equipment who claims [ claiming ] a refund of state fuel tax must maintain documentation that shows [ showing ] that the state tax was assessed and paid, a list of each piece of off-highway equipment, and a schedule of [ listing ] the number of gallons of gasoline, dyed diesel fuel, and undyed diesel fuel used in both on-highway [ on- ] and off-highway vehicles and equipment. A lessor who claims [ claiming ] a refund of state fuel tax may include a separate refueling, fuel reimbursement, or fuel service charge on the invoice ,if the invoice contains a statement [ if there is a statement on the invoice ] that the fuel charge does not include state motor fuel taxes.

(6)

Refund claim for incidental highway use. A refund claim may be filed by a person who used gasoline or undyed diesel fuel in motor vehicles incidentally on the highway , when the incidental travel on the public highway is infrequent, unscheduled, and insignificant to the total operation of the motor vehicle.

(A)

A record that shows [ showing ] the date and miles traveled during each highway trip must be maintained.

(B)

1/4 gallon for each mile of incidental highway travel shall be deducted from the number of gallons claimed;

(7)

Refund claim for sales by diesel fuel dealer or jobber for off-highway use. Diesel fuel dealers or jobbers who have paid [ the ] state tax to their suppliers, or dealers who have made tax included purchases from jobbers, [ supplier ] and thereafter made [ a ] tax-free sales [ sale ] on which [ a ] refund claims are [ claim is ] filed must maintain copies of invoices issued on each tax-free sale. The invoices must have the names and addresses of the dealers stamped or preprinted on the invoices and must also include [ The invoices must have the name and address of the dealer stamped or preprinted on the invoice, and be completed including ]:

(A)

the purchaser's name;

(B)

date of delivery;

(C)

number of gallons delivered;

(D)

type or description of the vehicle into which the delivery was made (e.g., railway engines, motorboat, refrigeration unit, stationary engine, [ or ] off-highway equipment , or nonhighway farm machinery that has traveled between multiple farms or ranches as allowed in §3.183 of this title (relating to On- Highway Travel of Farm Machinery) );

(E)

a statement on the invoices that no tax was collected; and

(F)

signature of the purchaser . [ ; ]

(8)

Refund claim for fuel used in gasoline-powered motor vehicles equipped with power take- off or auxiliary power units. A person who files [ filing ] a refund claim for gasoline used in the operation of power take-off or auxiliary power units must use one of the following methods in determination of [ determining ] the amount of gasoline used:

(A)

direct measurement method. The use of a metering device, as defined by §3.176 of this title (relating to Metering Devices Used to Claim Refund of Tax on Fuel Used in Power Take-Off and Auxiliary Power Units), is an acceptable method for determination of [ determining ] fuel usage. A person who files [ filing ] a refund claim for gasoline used to propel motor vehicles with approved measuring or metering devices that [ which ] measure or meter the fuel used in stationary operations must maintain records on each vehicle so equipped , and the records must reflect:

(i)

the miles driven as shown by any type of odometer;

(ii)

the gallons delivered to each vehicle; and

(iii)

the gallons used as recorded by the meter or other measuring device;

(B)

gasoline-powered ready mix concrete trucks and solid waste refuse trucks equipped with power take- off or auxiliary power units. Operators of gasoline-powered ready mix concrete trucks and solid waste refuse trucks that are equipped with power take-off or auxiliary power units that are mounted on the motor vehicle and use [ using ] the fuel supply tank of the motor vehicle may claim refund on 30% of the total gasoline used in this state by each vehicle. Records that reflect the following information must be maintained [ reflecting ]:

(i)

each motor vehicle so equipped;

(ii)

the miles that each vehicle has traveled, as any type of odometer has recorded [ the miles traveled by each vehicle as recorded by any type of odometer ];

(iii)

the gallons delivered to each vehicle; and

(iv)

the date of delivery;

(C)

proposed alternate methods. Proposals for the use of methods that this section does not specifically cover [ not specifically covered by this section ] to determine the amount of gasoline used in power take-off operations or auxiliary power units may be submitted to the comptroller for approval;

(D)

accurate mileage records must be kept regardless of the method used;

(9)

Refund claims for fuel used in diesel-powered motor vehicles equipped with power take- off or auxiliary power units. Permitted suppliers and agricultural bonded users who use [ using ] diesel fuel in motor vehicles that are equipped with power take-off or auxiliary power units that are mounted on the vehicle and use [ using ] the fuel supply tank of the vehicle may claim a tax credit for the fuel used in power take-off operations or by the auxiliary power unit. Dyed diesel fuel bonded users and other end users [ Users ] who are required to buy tax- paid diesel fuel for use in motor vehicles that are equipped with a power take-off or auxiliary power unit that is mounted on the vehicle may claim tax refund for fuel used in power take-off operations or by the auxiliary power unit. A person who files [ filing ] a refund claim or tax credit for diesel fuel that is used in the operation of power take-off or auxiliary power units must use one of the following methods to determine [ in determining ] the amount of diesel fuel used:

(A)

direct measurement method. The use of a metering device, as defined by §3.176 of this title (relating to Metering Devices Used to Claim Refund of Tax on Fuel Used in Power Take-off and Auxiliary Power Units), to measure fuel used in the power take-off or auxiliary power unit is an acceptable method for determination of [ determining ] fuel usage. A person who files [ filing ] a refund claim for diesel fuel that is used to propel motor vehicles with approved measuring or metering devices that [ which ] measure or meter the fuel used in stationary operations must maintain records on each vehicle so equipped , and the records must reflect:

(i)

the miles traveled [ driven ] as [ shown by ] any type of odometer has recorded ;

(ii)

the gallons delivered to each vehicle; and

(iii)

the gallons used, as the meter or other measuring device has recorded [ the gallons used as recorded by the meter or other measuring device ];

(B)

diesel-powered ready mix concrete trucks and solid waste refuse trucks that are equipped with power take-off or auxiliary power units. Operators of diesel fuel-powered ready mix concrete trucks and solid waste refuse trucks that are equipped with power take-off or auxiliary power units that are mounted on the motor vehicle and use [ using ] the fuel supply tank of the motor vehicle may claim refund on 30% of the total diesel fuel used in this state by each vehicle. Records that reflect the following information must be maintained [ reflecting ]:

(i)

each motor vehicle so equipped;

(ii)

the miles that each vehicle has traveled, as any type of odometer has recorded [ the miles traveled by each vehicle as recorded by any type of odometer ];

(iii)

the gallons delivered to each vehicle; and

(iv)

the date of delivery;

(C)

mileage factor method. The nontaxable use may be determined by computing the taxable use at 1/4 gallon for each mile traveled , as the odometer or hubmeter has recorded, [ as recorded by the odometer or hubmeter ] and subtracting that amount from the total fuel delivered into the motor vehicle fuel supply tanks. The remainder will be considered nontaxable , and a tax credit or tax refund may be claimed on that quantity of fuel.

(D)

two tank method. A motor vehicle may be equipped with two fuel tanks and an automatic switching device that [ operated by ] a spring-activated air release parking brake operates, and that switches [ will switch ] from one tank that is designated for highway use to another tank that is not so designated [ not for highway use ] when the vehicle is stationary. The highway tank and the not-for-highway tank [ not-for-highway-tank ] may not be connected by crossover line or equalizer line of any kind. The tax paid on the fuel delivered to the tank designated not-for-highway use [ not-for-highway-use ] may be taken as a tax credit or claimed as a tax refund. All fuel delivered into the fuel supply tanks of a vehicle that is equipped with an automatic switching device must be invoiced as taxable. Separate invoices must be issued for deliveries of fuel into each tank. A notation that indicates that fuel was delivered into the tank designated not- for-highway use must be made on invoices [ A notation must be made on invoices indicating that fuel was delivered into the tank designated not-for-highway-use ];

(E)

fixed percentage method. In lieu of the use of [ using ] one of the previously mentioned methods, the owner or operator of a motor vehicle that is equipped with a power take-off or auxiliary power unit that is mounted on the vehicle may claim a credit or refund of the tax paid on 5.0% of the total taxable diesel fuel used in this state by each vehicle so equipped;

(F)

proposed alternate methods. Proposals for the use of methods not specifically covered by this section to determine the amount of diesel fuel used in power take-off operations or auxiliary power units may be submitted to the comptroller for approval;

(G)

accurate mileage records must be kept regardless of the method used;

(10)

Refund claims by federal agencies [ agency claim for refund ] on tax-paid purchases [ purchase ]. A federal government agency may file a claim for refund on state taxes paid on gasoline and diesel fuel that such agency has used exclusively. Records that the agency maintains must include the following information [ used exclusively by that agency. Records maintained by the agency must include ]:

(A)

original purchase invoice(s) that shows that the state tax was assessed, and that a United States tax exemption certificate-Standard Form 1094 supports [ original purchase invoice(s) showing that the state tax was assessed and supported by a United States tax exemption certificate--Standard Form 1094 ]; or

(B)

original purchase invoice(s) that shows [ showing ] that the state tax was assessed and is stamped with the imprint of a United States national credit card--Standard Form 149, issued to the agency that purchased [ purchasing ] the fuel;

(11)

Refund claims for sales of gasoline or diesel fuel to a Texas public school district [ in this state ] for its exclusive use, or to a commercial transportation company that provides public school transportation services to a Texas public school district [ in this state ] and that [ used by ] the company uses exclusively to provide those services. The seller of gasoline or diesel fuel on which the tax has been paid may file for refund of the tax on sales to public school districts for the district's exclusive use , and on sales to commercial transportation companies that provide [ providing ] public school transportation services to a public school district exclusively. Sellers who file [ filing ] for refund must maintain copies of invoices that have been issued on each such tax-free sale. The invoice(s) must have the name and address of the seller stamped or preprinted on the invoice , and include:

(A)

the purchaser's name;

(B)

date of delivery;

(C)

number of gallons delivered;

(D)

type of fuel delivered;

(E)

statement on the invoice that no tax was collected; and

(F)

signature of the purchaser;

(12)

Refund claims by public school districts [ public school districts' claim for refund ] on tax- paid purchases. A Texas public school district may file a claim for refund of state taxes paid on gasoline and diesel fuel that the district has used exclusively. Records that the district maintains must include original invoices that show [ used exclusively by the district. Records maintained by the district must include original invoices showing ] that the tax was assessed;

(13)

Refund claims by commercial transportation companies [ commercial transportation companies' claim for refund ] on tax-paid purchases. A commercial transportation company may file a claim for refund of state taxes paid on gasoline and diesel fuel that has been used to provide public school transportation services exclusively for a Texas public school district. Records that the company maintains must include original invoices that show that the state tax was assessed [ Records maintained by the company must include original invoices showing that the state tax was assessed ].

(14)

Refund claims on sales by dealers of undyed kerosene from a blocked pump. A retail dealer who purchased undyed kerosene and paid the state tax to its supplier, or a retail dealer who purchased tax- included kerosene from a jobber, and thereafter makes a tax-free sale of undyed kerosene sold for a non- taxable use from a blocked pump, may file a claim for refund. A blocked pump is a fuel pump at a fixed location that cannot (because, for example, of its distance from a road surface, or the length of its delivery hose) be used to dispense fuel directly into the fuel supply tank of a diesel-powered highway vehicle. A blocked pump must display a legible and conspicuous notice that states, "UNDYED KEROSENE, NONTAXABLE USE ONLY, FOR HEATING, COOKING, LIGHTING AND SIMILAR NONHIGHWAY USE." The invoice that the dealer has issued to the purchaser must include a notice that states "UNDYED KEROSENE, NONTAXABLE USE ONLY, FOR HEATING, COOKING, LIGHTING AND SIMILAR NONHIGHWAY USE, NO STATE MOTOR FUELS TAX COLLECTED." The dealer must maintain records that include the original purchase invoices that show that the state tax was paid on the undyed kerosene and sales invoices that show that no state tax was collected.

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 July 31, 2000.

TRD-200005275

Martin Cherry

Deputy General Counsel for Tax Policy and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: September 10, 2000

For further information, please call: (512) 463-4062


34 TAC §3.180

(Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Comptroller of Public Accounts or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The Comptroller of Public Accounts proposes the repeal of §3.180, concerning signed statements for purchasing diesel fuel tax free. The 76th Legislature, 1999, in Senate Bill 1547, amended the Tax Code, Chapter 153, substantially changing the provisions for purchasing tax-free diesel fuel using a signed statement. A new §3.180 is being proposed to include the legislative changes.

James LeBas, Chief Revenue Estimator, has determined that for the first five years the repeal of the rule will be in effect, there will be no significant fiscal impact on the state or units of local government.

Mr. LeBas also has determined that for the first five years the rule will be in effect, there will be no cost or benefit to the public from the repeal of this rule. This repeal is adopted under the Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. There are no additional costs to persons who are required to comply with the repeal.

Comments on the repeal may be submitted to Bryant K. Lomax, Manager, Tax Policy Division, P.O. Box 13528, Austin, Texas 78711.

This repeal is proposed under the 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 the Tax Code, Title 2.

The repeal implements the Tax Code, §153.205.

§3.180.Signed Statement for Purchasing Diesel Fuel Tax Free.

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 July 31, 2000.

TRD-200005276

Martin Cherry

Deputy General Counsel for Tax Policy and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: September 10, 2000

For further information, please call: (512) 463-4062


The Comptroller of Public Accounts proposes a new §3.180, concerning signed statements for purchasing diesel fuel tax free. The 76th Legislature, 1999, in Senate Bill 1547, amended Tax Code, Chapter 153, requiring anyone wanting to use a signed statement for the purchase of tax-free diesel fuel to register with the comptroller for an end user or agricultural user exemption number. Tax-free signed statement sales of undyed diesel are restricted to agricultural users. New §3.180 provides End User Number and Agricultural User Exemption Number requirements, examples of signed statements, and seller and purchaser limitations on the type of fuel and gallons of fuel sold or purchased.

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 fiscal 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 taxpayers with information regarding their tax responsibilities. This rule is adopted under the 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 new section 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 new section implements Tax Code, §153.205.

§3.180.Signed Statements for Purchasing Diesel Fuel Tax Free.

(a)

Signed statement numbers. A person who wants to use a signed statement to purchase dyed diesel fuel tax-free for use in nonagricultural, nonhighway equipment must apply to the comptroller for an End User Number. A person who wants to use a signed statement to purchase dyed or undyed diesel fuel tax-free for exclusive use in agricultural, nonhighway equipment must apply to the comptroller for an Agricultural User Exemption Number. A person cannot use a signed statement to purchase tax-free diesel fuel unless issued an End User Number or Agricultural User Exemption Number by the comptroller.

(b)

End User Number. A person may purchase dyed diesel fuel tax free if the fuel is for nonagricultural, nonhighway use and the buyer provides the seller with a signed statement, as described in paragraph (1) of this subsection and an End User Number issued by the comptroller. The total number of gallons of dyed diesel fuel purchased using a signed statement shall be subject to the limitations set out in paragraph (2) of this subsection. Copies of the blank signed statements 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 78711-3528. Copies may also be requested by calling our toll-free number 1-800-252-1383. 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.)

(1)

The signed statement must specify that:

(A)

all diesel fuel purchased is of the type that may not legally be used on the pubic highway;

(B)

all diesel fuel will be used by the buyer and will not be resold; and

(C)

none of the diesel fuel will be delivered into the fuel supply tanks of motor vehicles operated on public highways.

(2)

A purchaser may not buy, nor may a supplier sell, dyed diesel fuel tax free using a signed statement if:

(A)

the purchase or sale covering a single delivery is more than 3,000 gallons; or

(B)

the purchaser purchases or the supplier makes sales of more than 10,000 gallons during a calendar month. The purchase, sale, or delivery that causes the 10,000 gallon limit to be exceeded during a calendar month is not taxable. Any subsequent purchase, sale, or delivery made during the same calendar month is taxable.

Figure: 34 TAC §3.180(b)(2)(B)

(c)

Agricultural User Exemption Number. A person may purchase dyed or undyed diesel fuel tax free if the fuel is exclusively for use in agricultural, nonhighway equipment and the buyer provides the seller a signed statement as provided by paragraph (1) of this subsection and an Agricultural User Exemption Number issued by the comptroller. The combined total number of gallons of dyed and undyed diesel fuel purchased using a signed statement shall be subject to the limitations set out in subsection (b)(2) of this section. Copies of the blank signed statements 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 78711-3528. Copies may also be requested by calling our toll-free number 1-800-252-1383. 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.)

(1)

The signed statement must specify that:

(A)

all diesel fuel purchased will be used exclusively in agricultural, nonhighway equipment;

(B)

all diesel fuel will be used by the buyer and will not be resold; and

(C)

none of the diesel fuel will be delivered into the fuel supply tanks of motor vehicles operated on public highways.

(2)

A purchaser may not buy, nor may a supplier sell, dyed or undyed diesel fuel tax free using a signed statement if:

(A)

the purchase or sale covering a single delivery is more than 3,000 gallons; or

(B)

the purchaser purchases or receives deliveries of, or the supplier makes sales of, more than 10,000 gallons during a calendar month. The purchase, sale, or delivery that causes the 10,000 gallon limit to be exceeded during a calendar month is not a taxable purchase or sale. Any subsequent purchase, sale, or delivery made during the same calendar month is taxable.

(d)

Separate corporate divisions may also use a signed statement to buy diesel fuel tax free if they:

(1)

meet all of the requirements as set out in subsections (b) or (c) of this section;

(2)

do not resell the fuel;

(3)

consume the fuel themselves; and

(4)

maintain separate storage apart from other corporate divisions.

(e)

The signed statement remains in effect until:

(1)

it is revoked in writing by either the buyer or seller; or

(2)

the comptroller notifies the supplier in writing that the buyer may no longer make tax-free purchases.

(f)

The signed statement must be signed by the buyer or the buyer's authorized representative.

(g)

A permitted jobber may purchase dyed diesel fuel using a signed statement under subsection (b) of this section only if the fuel is for the jobber's own use and will not be resold. A permitted jobber may not accept a signed statement for the sale of tax-free diesel fuel.

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 July 31, 2000.

TRD-200005273

Martin Cherry

Deputy General Counsel for Tax Policy and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: September 10, 2000

For further information, please call: (512) 463-4062


34 TAC §3.182

The Comptroller of Public Accounts proposes an amendment to §3.182, concerning motor fuel transporting documents. The 76th Legislature, 1999, in Senate Bill 1547, amended Tax Code, Chapter 153, requiring additional information on shipping documents.

Subsections are being amended to add the phrase "shipping document".

Subsections are being amended to include the additional information that must be printed on a shipping document.

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 taxpayers with a more efficient means of obtaining tax information. This rule is adopted under the 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, §153.004 and §153.018.

§3.182.Motor Fuel Transporting Documents.

(a)

Manifest requirements. The transportation of motor fuel as cargo shall be recorded on a cargo manifest or shipping document that is issued at the time the motor fuel is delivered into a cargo tank . The manifest or shipping document [ and ]shall accompany the cargo until the motor fuel [ it ] is resold or removed from the cargo tank , and shall be retained for four years for audit purposes.

(b)

Information required. The cargo manifest or shipping document shall be issued in not less than duplicate and shall contain the following information :

(1)

the type of motor fuel being transported , and if dyed diesel fuel is being transported, a notice that states "Dyed Diesel Fuel, Nontaxable Use Only, Penalty for Taxable Use" ;

(2)

the name and the federal employer identification number or social security number of the carrier;

(3)

the quantity of motor fuel in gross gallons;

(4)

the temperature and quantity in temperature adjusted gallons when the fuel is loaded at a terminal for export or import or when the sale of gasoline or diesel fuel must comply with §3.190 of this title (relating to Temperature Adjustment Conversion Table);

(5)

the percentage of ethanol or methanol contained in the motor fuel;

(6)

the types and percentages of cosolvents contained in the motor fuel , if methanol has been added;

(7)

the date of loading or movement;

(8)

the name and physical address of the terminal or bulk plant at which the [ point ] cargo was loaded;

(9)

the destination of the cargo;

(10)

the name of the seller, consignor, or shipper;

(11)

the name , federal employer identification number, permit number if applicable, and physical address of the purchaser or consignee; [ and ]

(12)

the method of transportation:

(A)

if by truck, the license or unit number;

(B)

if by barge or boat, the name of the vessel;

(C)

if by railway, the rail car number and initial;

(13)

the name of the person responsible for payment of the tax, if different from the permitted supplier or distributor;

(14)

[ (13) ] the amount of delivery fee assessed under [ the ]Water Code, §27.3574 ; and [ . ]

(15)

any other information the comptroller deems necessary for the proper administration of Tax Code, Chapter 153.

(c)

Waybills or bill of lading. If a carrier transports motor fuel for which a waybill is required under the regulations of the Texas Railroad Commission, or a bill of lading is required under the regulations of the United States Department of Transportation, or if other similar documentation is required by another regulatory agency, these documents may be used in lieu of the manifest or shipping document prescribed in this section, so long as the waybill, bill of lading, or similar document lists the information described in subsection (b) of this section. [ is transporting motor fuel which requires waybills pursuant to the regulations of the Texas Railroad Commission or a bill of lading pursuant to the regulation of the United States Department of Transportation, these documents may be used in lieu of the manifest prescribed in this section if the waybill or bill of lading lists the number of gross gallons, the temperature adjusted gallons, or temperature of motor fuel in the load, if subject to §3.190 of this title (relating to Temperature Adjustment Conversion Table) and the amount of delivery fee assessed under the Water Code, §26.3574. ]

(d)

Delivery of cargo manifest or shipping document [ manifest ]. One copy of the transporting document shall be delivered to the purchaser at the time of fuel delivery, and the seller shall retain one copy. If a common carrier or contract carrier delivers the fuel, the carrier must also retain one copy. [ one copy retained by the seller, and if delivered by common or contract carrier, the carrier must retain one copy. ]

(1)

If the cargo is being loaded at different locations, a notation of the fuel loaded at each location must be made on the cargo manifest , or a separate manifest that covers [ issued covering ] the fuel or blend material loaded at each location must be issued .

(2)

If the cargo is being off-loaded at various locations, then at the time the off-loading is accomplished, a notation of the fuel off-loaded shall be made on the required cargo manifest , or a customer invoice that indicates [ shall be prepared indicating ] the location and amount of motor fuel that [ which ] has been off-loaded at each place shall be prepared . If invoices are used instead of notations on the manifest, the invoices must be attached or cross referenced to the manifest for record purposes. The cargo manifest or a copy of the customer invoice shall be retained with the transporting vehicle until the motor fuel is removed from the cargo tank.

(3)

A cargo manifest is not required on motor fuel that an end user purchases [ purchased ] on a signed statement [ by an end user ] and transports in the user's [ transported in his ] own cargo tank.

(4)

If the delivery fee assessed under [ the ] Water Code, §26.3574, is not shown on the cargo manifest, it must be shown on the invoice that covers [ covering ] the delivery , and be cross referenced to the manifest for record purposes.

(e)

Deliveries at different locations. Deliveries to the same purchaser at different locations may be construed to be single deliveries and qualify for temperature adjustment if the total of all deliveries to that customer is 5,000 gallons or more , and if:

(1)

the fuel off-loaded at different locations is the same product type (gasoline or diesel fuel);

(2)

the delivery is accomplished from the same cargo tank;

(3)

proper notations are made on the cargo manifest or customer invoices, or delivery tickets are prepared and kept with the cargo manifest; and

(4)

the off-loading occurs within a reasonable time that allows [ allowing ] for transit from one location to another.

(f)

Separate deliveries. Deliveries from more than one cargo tank are presumed to be separate deliveries. This presumption may be overcome if:

(1)

the seller is unable to make the requested delivery in a single cargo tank;

(2)

the delivery of all the requested fuel was completed within a reasonable time (usually within 24 hours);

(3)

the customer would have been able to accept the entire amount requested at one time; and

(4)

the customer has previously requested deliveries of 5,000 or more gallons of the type of requested fuel, or the customer has changed business operations and now requires deliveries of 5,000 or more gallons of the type of requested fuel.

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 July 31, 2000.

TRD-200005291

Martin Cherry

Deputy General Counsel for Tax Policy and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: September 10, 2000

For further information, please call: (512) 463-4062


34 TAC §3.183

The Comptroller of Public Accounts proposes an amendment to §3.183, concerning on- highway travel of farm machinery. The amendment provides a tax exemption for fuel used by farm machinery traveling between farms and ranches, regardless of the number of miles traveled.

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 fiscal 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 taxpayers with additional information regarding their tax responsibilities. This rule is adopted under the 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 78711-3528.

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, §153.222.

§3.183.On-Highway Travel of Farm Machinery.

(a)

Owners or operators of multiple farms, ranches, or similar tracts of land in the same vicinity may move farm tractors, combines, and similar self-propelled farm machinery over the public highways [ for up to and including 10 miles ] for the purpose of transferring the base of operation of the machinery. [ Gasoline and diesel fuel used for travel on the highway by such machinery in excess of 10 miles during one trip is taxable. ]

(b)

Gasoline and diesel fuel used for travel on the highway for any purpose other than for moving the machinery from one tract of land to another to change base of operation shall be considered taxable.

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 July 31, 2000.

TRD-200005292

Martin Cherry

Deputy General Counsel for Tax Policy and Agent Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: September 10, 2000

For further information, please call: (512) 463-4062


34 TAC §3.185

The Comptroller of Public Accounts proposes an amendment to §3.185, concerning diesel tax prepaid user permit. The 76th Legislature, 1999, in Senate Bill 1547, amended Tax Code, Chapter 153, to limit the diesel tax prepaid user permit to users whose use of diesel fuel is predominately for a nonhighway agricultural purpose. The amendment to this section adds a new subsection defining agricultural nonhighway purpose.

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 fiscal 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 taxpayers with a more efficient means of obtaining tax information. This rule is adopted under the 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 78711-3528.

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, §153.210.

§3.185.Diesel Tax Prepaid User Permit.

(a)

Those [ Many people ] who qualify for an agricultural [ a ] bonded user permit may [ can ] obtain a diesel tax prepaid user permit instead , if they satisfy the requirements for a diesel tax prepaid user permit .

(b)

To qualify for [ These qualifications must be met to obtain ] a diesel tax prepaid user permit , an applicant must :

(1)

use at least 51% of all [ half ] the diesel fuel purchased by the applicant for agricultural nonhighway [ must be used for non-highway ] purposes;

(2)

not [ applicants must ] own or operate diesel-powered passenger cars or light trucks that are not within [ only in ] the weight classes listed in subsection (e) [ (d) ] of this section; and

(3)

have [ applicants must have their own ] bulk diesel storage tank(s) used only by the applicant .

(c)

An agricultural nonhighway purpose means for the purpose of use in nonhighway equipment, such as a tractor or combine, on a farm or ranch. A farm or ranch is one or more tracts of land used, either in whole or in part, in the production of crops, livestock, and/or other agricultural products held for sale in the regular course of business. A feed lot, dairy farm, poultry farm, commercial orchard, commercial nursery, or similar commercial agricultural operation is a farm or ranch. A home garden or timber operation is not a farm or ranch.

(d)

[ (c) ] An application for a diesel tax prepaid user permit must be made to the comptroller for each vehicle. Permits must be renewed every 12 months.

(e)

[ (d) ] The cost of the permit shall be determined according to the following schedule: [ The following schedule determines permit cost. ]

Figure: 34 TAC §3.185 (e) [ (d) ]

(f)

[ (e) ] Following are the requirements for a nonrefundable credit.

(1)

If the cost of the annual permit is greater than the amount of tax due on the diesel fuel actually consumed during the permit year, a nonrefundable credit equal to the difference may be claimed, provided the required renewal date of the permit is October 1, 1995, or later.

(2)

The credit may only be applied against the cost of renewal or purchase of a new diesel tax prepaid user permit for the following year, and the credit is valid for one year beginning with the required renewal date of the permit.

(3)

The odometer of the vehicle for which a diesel tax prepaid user permit is held must be maintained in working order. If not, a credit claim cannot be approved.

(g)

A claim for a nonrefundable credit must be filed on a form that the comptroller furnishes.[ (f) ] The following records are required for a nonrefundable credit.

(1)

A distribution log must be submitted with an [ a renewal ] application for renewal of a diesel tax prepaid user permit . The distribution log must reflect the following information:

(A)

the date of each delivery of diesel fuel into the fuel supply tank [ tanks ] of the motor vehicle for which the permit is held ;

(B)

the number of gallons delivered;

(C)

the odometer reading of the motor vehicle at the time of delivery; and

(D)

the state license plate number or [ motor ] vehicle identification number of the motor vehicle .

(2)

Purchase invoices for diesel fuel delivered into the fuel supply tank of a motor vehicle for which a diesel tax prepaid user permit is held, [ tanks ] from other than one's own storage , must contain:

(A)

the name of the seller;

(B)

the name of the purchaser;

(C)

the date of delivery;

(D)

the number of gallons delivered;

(E)

the odometer reading of the motor vehicle at the time of delivery ;

(F)

the state license plate number or [ motor ] vehicle identification number of the motor vehicle ; and

(G)

the signature of the recipient.

(3)

Records pertaining to odometer repair or replacement.

[ (g)

A claim for nonrefundable credit must be filed on a form furnished by the comptroller. The form for the distribution log required by subsection (f)(1) of this section is an integral part of the claim for credit.]

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 July 31, 2000.

TRD-200005293

Martin Cherry

Deputy General Counsel for Tax Policy and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: September 10, 2000

For further information, please call: (512) 463-4062


34 TAC §3.187

The Comptroller of Public Accounts proposes an amendment to §3.187, concerning documentation and reporting of exports and export sales by distributors and suppliers. The 76th Legislature, 1999, in Senate Bill 1547, amended Tax Code, Chapter 153, providing definitions of imports and exports, requiring an import verification number for each truck load of gasoline or diesel fuel imported into Texas, requiring a diversion number for each truck load of motor fuel delivered to a state or country different than the state or country printed on the shipping document, and requiring an importer and exporter to possess a shipping document. The amendment is changing the title of the section to more accurately reflect its content.

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 fiscal 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 taxpayers with a more efficient means of obtaining tax information. This rule is adopted under the 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 78711-3528.

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, §§153.001, 153.018, 153.104, and 153.203.

§3.187.Documentation and Reporting of Imports and Exports , Import Verification Numbers, [ and ] Export Sales by Distributors and Suppliers , and Diversion Numbers .

(a)

Imports.

(1)

Imports. Motor fuel imported into Texas by or for a seller constitutes an import by that seller. Motor fuel imported into Texas by or for a purchaser constitutes an import by that purchaser.

(2)

Import Verification Number. An importer must obtain from the comptroller an import verification number for each load of gasoline or diesel fuel imported into Texas by truck. An import verification number must be obtained within 72 hours before or after the gasoline or diesel fuel enters Texas. The importer must write the import verification number on the shipping document issued for that fuel.

(3)

Documentation. An importer must possess a shipping document created by the terminal or bulk plant where the fuel was loaded (see §3.182 of this title (relating to Motor Fuel Transporting Documents)) for motor fuel imported by any means into Texas.

(b)

[ (a) ] Exports and export sales.

(1)

Exports. Motor fuel exported from Texas by or for a seller constitutes an export by that seller. Motor fuel exported from Texas by or for a purchaser constitutes an export by that purchaser. A permitted distributor or a permitted supplier exports motor fuel [ makes an export ] when the distributor or supplier [ he ] ships motor fuel to a point outside the state:

(A)

through facilities that [ operated by ] the permittee operates ; [ or ]

(B)

through delivery by the permittee as consignor to a common or contract carrier, an ocean- going vessel (including ship, tanker, or boat), or a barge , for shipment to a consignee at the out- of-state point; or

(C)

through delivery by the permittee to a customs [ custom ] or forwarding agent , for shipment forthwith outside the state.

(2)

Export sales. A permitted distributor or permitted supplier makes an export sale when he sells motor fuel in Texas to a non-Texas permitted purchaser who then, prior to any other sale or use in Texas, sends or transports the motor fuel [ forthwith ] outside [ of ] the state by a common or contract carrier, an ocean-going vessel (including ship, tanker, or boat), or a barge.

(A)

If the purchaser fails to provide or refuses to divulge the final destination of the fuel , which thereby prevents the proper reporting of the fuel export, then the seller shall collect Texas tax [ to a point outside of Texas, thereby preventing the proper reporting of the fuel exportation, the Texas taxes shall be collected by the seller ] at the time of the sale in Texas.

(B)

A permitted distributor or supplier who makes [ making ] an export sale will not be liable for [ the ] tax on motor fuel that the purchaser diverts, [ diverted by the purchaser ] provided that the seller has obtained, at the time of sale, documentation from the purchaser that shows that [ showing ] the fuel is to be delivered to a destination outside [ of ] Texas.

(C)

When both parties to the transaction in Texas are permitted distributors or permitted suppliers, the transaction will be reported as a distributor-to-distributor or supplier-to-supplier tax-free sale in Texas, followed by an export or export sale. The last Texas permitted distributor or supplier who holds legal title shall report the export or export sale.

(3)

[ (b) ] Documentation.

(A)

Shipping document. An exporter must possess a shipping document created by the terminal or bulk plant where the fuel was loaded (see §3.182 of this title relating to Motor Fuel Transporting Documents) for motor fuel exported by any means from Texas.

(B)

[ (1) ] Common or [ , ] contract carriers. The documents for the distributor's or supplier's records, in addition to other records required, must be supported by a [ the ] bill of lading issued by the common or contract carrier, ocean-going vessel , or barge listing the consignor and consignee, the points of origin and destination, the number of gallons shipped or transported, the date of export, and the kind of fuel exported.

(C)

[ (2) ] Proof of export. The comptroller may request proof of export from the distributor or supplier to verify that the motor fuel was exported from [ the State of ] Texas. This proof may consist of [ be ]:

(i)

[ (A) ] proof of export that a U.S. customs office has certified, [ certified by a U.S. customs office ] if the fuel was exported from this state to a foreign country;

(ii)

[ (B) ] proof of export that a port of entry of the state of importation has certified, [ certified by port of entry of state of importation ] if ports of entry are maintained by that state ;

(iii)

[ (C) ] proof from the tax officials of the state into which the motor fuel was imported , which shows that the exporter has accounted for the motor fuel [ that the motor fuel has been accounted for by the exporter ] on the state's tax reports; or

(iv)

[ (D) ] other proof that the fuel has been reported [ accounted for ] to the state into which the motor fuel was imported.

(c)

Diversion Number. An importer or exporter who diverts the delivery of a load of gasoline or diesel fuel being transported by truck from the destination state or country that is preprinted on the shipping document that has been issued for that fuel to another state or country must obtain a diversion number from the comptroller. A diversion number must be obtained within 72 hours before or after the diversion. The importer, exporter, or common or contract carrier must write the diversion number on the shipping document issued for that fuel.

[ (c)

Reporting. When both parties to the transaction in Texas are permitted distributors or permitted suppliers, the transaction will be treated as a distributor to distributor or supplier to supplier tax-free sale in Texas followed by an export or export sale; the last Texas permitted distributor or supplier who holds legal title shall report the export or export sale.]

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 July 31, 2000.

TRD-200005294

Martin Cherry

Deputy General Counsel for Tax Policy and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: September 10, 2000

For further information, please call: (512) 463-4062


34 TAC §3.195

The Comptroller of Public Accounts proposes an amendment to §3.195, concerning due date for reports and payments. The 76th Legislature, 1999, in Senate Bill 1547, amended Tax Code, Chapter 153, providing reporting requirements for common and contract carriers transporting gasoline or diesel fuel in Texas by truck. New subsections are being added to provide criteria for mandatory electronic filing of reports by distributors, suppliers, and common or contract carriers, and to provide a penalty for failure to file reports electronically. Amendments are being made for nonsubstantive grammatical corrections. The amendment is changing the title of the section to more accurately reflect its content.

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 fiscal 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 taxpayers with a more efficient means of obtaining tax information. This rule is adopted under the 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 78711-3528.

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, §§153.018, 153.118, and 153.221.

Electronic Filing of Reports and Due Date for Odd-Year Estimated Reports and Payments. (a)

Electronic filing of reports and schedules.

(1)

The comptroller may require a distributor, supplier, or common or contract carrier to file reports and schedules by means of electronic transmission under the following circumstances:

(A)

the combined total number of gallons of tax-free gasoline and tax-free diesel fuel that a permitted distributor or permitted supplier receives during the preceding 12 months exceeds five million gallons, or the total number of transactions that a permitted distributor or permitted supplier reports on the monthly report schedules exceeds 100 transactions each month for three consecutive months on an individual permit basis; or

(B)

the total number of transactions that a common or contract carrier reports on the quarterly report schedules exceeds 100 transactions.

(2)

For the purpose of this section, one transaction means a single tax-free purchase, sale, import, or export of gasoline or diesel fuel, or the summary of multiple tax-free purchases, sales, imports, or exports of gasoline or diesel fuel during a reporting period, when the seller, purchaser, fuel type, common or contract carrier, origin state or country, and destination state or country are the same.

(3)

The taxpayer or its authorized agent shall enter into a written agreement with the comptroller to permit electronic filing of reports and schedules. The signature of the taxpayer or its authorized agent on the written agreement into which the parties enter for this purpose shall be deemed to appear on each report filed electronically.

(4)

Electronic transmission of each report and schedule shall be made in a format that the comptroller approves and that is compatible with the comptroller's equipment and facilities.

(5)

The comptroller shall notify the taxpayers to whom this subsection applies no less than 90 days before the taxpayer is required to begin filing its reports and schedules electronically.

(6)

Distributors, suppliers, and common or contract carriers who are required to file reports and supplements electronically, but are unable to do so, may request a waiver from the comptroller.

(7)

The permit of a distributor or supplier who is required to file electronically may be suspended if the distributor or supplier fails to file reports and schedules by means of electronic transmission in an approved format, after being notified of such requirement.

(8)

A common or contract carrier who is required to file reports and schedules electronically and who fails to do so in an approved format, after being notified of such requirement, may be assessed a penalty of $25 for each reportable transaction. The comptroller will send notice to the common or contract carrier about the assessment of the penalty. The common or contract carrier may request a redetermination under the terms of §§1.1-1.42 of this title (relating to Rules of Practice and Procedure). An oral hearing at the office of the Comptroller of Public Accounts in Austin, Texas, may be requested.

[ (a)

Due dates for gasoline distributors and diesel fuel suppliers.]

(b)

Due dates for odd-year estimated reports and payments.

(1)

The due date for the distributor and supplier estimated report and payment of tax for the month of July of each odd-numbered calendar year is August 15 of that year.

(2)

An estimated payment of tax is an amount equal to the tax due for June of the same year or the actual tax due for July, whichever is less. [ is required from gasoline distributors and diesel fuel suppliers on or before August 15 for the month of July of each odd-numbered calendar year. ]

[ (b)

Payment of estimated tax.]

[ (1)

An amount equal to a reasonable estimate of the tax due for gasoline distributors and diesel fuel suppliers for July of each odd-numbered calendar year must be remitted to the comptroller on or before August 15 of that year.]

[ (2)

A reasonable estimate of the tax due for July is equal to the tax due for June of the same year or the actual tax due for July, whichever is less.]

(3)

The regular monthly report and any additional tax due for July in excess of the estimated payment [ reasonable estimate ] must be filed on or before August 25 of that year.

[ (c)

Penalties.]

(4)

[ (1) ] If the estimated payment is less than the amount required in subsection (b) of this section, a penalty of 5.0% will accrue on the difference between the amount paid and the amount due [ required amount ]. If the tax is not paid within 30 days after the due date, an additional 5.0% penalty will accrue.

(5)

[ (2) ] If an estimated payment is not timely made, a 5.0% penalty will accrue on the total [ entire ] amount required to be paid by August 15. If the tax is not paid within 30 days after the due date, an additional 5.0% penalty will accrue.

(6)

[ (3) ] A penalty of 5.0% will accrue on any additional tax due for the month of July on the regular monthly report if it is not paid on or before August 25 of that year. If the tax is not paid within 30 days after the due date, an additional 5.0% will accrue.

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 July 31, 2000.

TRD-200005295

Martin Cherry

Deputy General Counsel for Tax Policy and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: September 10, 2000

For further information, please call: (512) 463-4062


§3.195.34 TAC §3.202

The Comptroller of Public Accounts proposes a new §3.202, concerning common and contract carrier registration, reports, due dates, and administrative remedies. The 76th Legislature, 1999, in Senate Bill 1547, amended Tax Code, Chapter 153, providing registration and reporting requirements for common and contract carriers transporting motor fuel in Texas by truck. The new rule provides that common and contract carriers are required to file a report each calendar quarter, sets out the due date of each quarterly report, and outlines administrative penalties for failure to register or file the required report. The new rule provides that information regarding the transportation of gasoline and diesel fuel in September 2000, should be included with the report filed for the last quarter of 2000.

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 fiscal 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 taxpayers with information regarding their tax responsibilities. This rule is adopted under the 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 78711-3528.

This new section 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 new section implements Tax Code, §153.003 and §153.402.

§3.202.Common and Contract Carrier Registration, Reports, Due Dates, and Administrative Remedies.

(a)

Registration. A common or contract carrier transporting gasoline or diesel fuel by truck in Texas is required to register with the comptroller (see §3.171of this title (relating to Records Required; Information Required)).

(b)

Report required. Every calendar quarter a common or contract carrier must report to the comptroller information relating to the interstate and intrastate transportation of gasoline and diesel fuel by truck. A common or contract carrier that does not receive a report form or does not receive the correct report form from the comptroller is not relieved of the responsibility of filing the report.

(c)

Due date. The common or contract carrier report is due on the 25th day of the month following the end of each calendar quarter. The due date for the quarter ending September 30, 2000 is extended to January 25, 2001. Common or contract carriers must report information regarding the interstate and intrastate transportation of gasoline and diesel fuel by truck during September 2000 on the fourth quarter 2000 report, which is due on or before January 25, 2001.

(d)

Administrative remedies for violation of Tax Code, Chapter 153, Subchapter A.

(1)

The comptroller may assess a penalty not to exceed $200 against a common or contract carrier that fails to register or provide registration information to the comptroller.

(2)

The comptroller may assess a penalty not to exceed $200 against a common or contract carrier that fails to file a report. Each calendar quarter that a common or contract carrier fails to file a report with the comptroller is a separate violation.

(3)

The comptroller may assess a penalty not to exceed $25 for each unreported truck load of gasoline or diesel fuel transported in Texas against a common or contract carrier that fails to file a report detailing the carrier's transportation of gasoline or diesel fuel by truck.

(4)

The comptroller will send notice to the common or contract carrier that a penalty is being assessed. The common or contract carrier may request a redetermination within 30 days of the date of the notice under the terms of §§1.1-1.42 of this title (relating to Rules of Practice and Procedure).

(5)

An oral hearing at the office of the Comptroller of Public Accounts in Austin, Texas, may be requested.

(6)

The standard of proof in an administrative hearing pursuant to this section is by a preponderance of the evidence, unless otherwise provided by statute.

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 July 31, 2000.

TRD-200005296

Martin Cherry

Deputy General Counsel for Tax Policy and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: September 10, 2000

For further information, please call: (512) 463-4062