34 TAC §3.378
The Comptroller of Public Accounts proposes and amendment
to §3.378 concerning natural gas and electricity. The amendment reflects
changes to the Tax Code, §151.317, enacted by the 76th Legislature, 1999,
making nonsubstantive revisions and codifying the agency's long-standing policy
of using predominant use to determine the taxability of natural gas or electricity
measured through a single meter when used for exempt or taxable purposes.
References to the 1.0% local tax rate were deleted because since 1987, certain
cities have imposed the 1/2% additional sales and use tax for property tax
relief and others have imposed development corporation sales and use tax in
1/8% increments up to 1/2%. The procedures for cities to reimpose sales tax
on residential use of natural gas and electricity are amended to clarify the
statutory requirements a qualifying city had to fulfill before the city could
continue taxation or reimpose the tax.
Mike Reissig, director of estimates, 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. Reissig 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 new information regarding 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 amendment 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 amendment implements the Tax Code, §151.317
§3.378.Natural Gas and Electricity.
(a)
Natural gas and electricity: imposition of the tax.
(1)
The [
1.0%
] local tax applies to sales of natural
gas and electricity [
when sold
] for [
residential or commercial
] use in a city
that
[
which
] has adopted the local
tax and must be collected for the city in which delivery is made to the consumer.
[
The tax on residential use may be exempted as provided in subsection
(b) of this section.
]
(2)
When a city adopts the local tax, the tax does not
apply to sales of natural gas and electricity during a customer's regular
monthly billing period
that
[
which
] begins before the
effective date of the adoption of the tax. The tax shall apply to each regular
monthly billing period beginning on or after the effective date of the tax.
[
(3)
See §3.295 of this
title (relating to Natural Gas and Electricity) for a discussion of definitions,
specific exemptions relating to the sale or use of natural gas and electricity,
and the circumstances under which the predominant use theory may be applied.]
(b)
Natural gas and electricity: exemptions from tax.
[
Residential use of gas and electricity.
]
(1)
Certain uses of natural gas and electricity are exempt
from local tax. See §3.295 of this title (relating to Natural Gas and
Electricity) for a discussion of definitions, specific exemptions relating
to the sale or use of natural gas and electricity, and the circumstances under
which the predominant use theory may be applied. Residential use of natural
gas and electricity in a city is exempt unless the tax is imposed by a city
as provided in paragraph (2) of this subsection.
[
Abolition of
local sales tax on sales of gas and electricity for residential use. Effective
October 1, 1979, the sale of natural gas and electricity for residential use
is exempt from taxation under the Local Sales and Use Tax Act unless:
]
[
(A)
the city votes for early abolition
(see paragraph (2) of this subsection);]
[
(B)
the city votes to continue
taxation (see paragraph (3) of this subsection); or]
[
(C)
the city votes to reimpose
tax (see paragraph (4) of this subsection).]
(2)
Residential use of natural gas and electricity.
[
Early abolition. At any time before October 1, 1979, by a majority
vote of the membership of the governing body of a city, the governing body
may exempt from the 1.0% local tax the sale of natural gas and electricity
for residential use. After the results of the vote are entered into the minutes
of the city, the city secretary must forward to the comptroller by registered
or certified mail a certified copy of the ordinance. On receipt of notification,
one whole calendar quarter shall elapse prior to the exemption becoming effective
(see §3.372(d)(1) of this title (relating to Adoption or Abolition City
Tax) for an illustration of this procedure) unless notification is received
by the comptroller by registered or certified mail postmarked no later than
September 10, 1978; in which case, the exemption is effective on October 1,
1978.
]
(A)
Effective October 1, 1979,
the sale of natural gas and electricity for residential use is exempt from
taxation under the Local Sales and Use Tax Act unless:
(i)
the city voted for early abolition (see paragraph
(B) of this subsection);
(ii)
the city voted to continue taxation (see paragraph
(C) of this subsection); or
(iii)
the city voted to reimpose tax (see paragraph
(D) of this subsection).
(B)
Early abolition. At any time
before October 1, 1979, by a majority vote of the membership of the governing
body of a city, the governing body could exempt from the local tax the sale
of natural gas and electricity for residential use. After the results of the
vote were entered into the minutes of the city, the city secretary must have
forwarded to the comptroller by registered or certified mail a certified copy
of the ordinance. On receipt of notification, one whole calendar quarter must
have elapsed prior to the exemption becoming effective (see §3.372(d)(1)
of this title (relating to Adoption or Abolition City Tax) for an illustration
of this procedure) unless notification was received by the comptroller by
registered or certified mail postmarked no later than September 10, 1978;
in which case, the exemption was effective on October 1, 1978.
(C)
[
(3)
] Continue taxation. If the
governing body of a city wishes to continue to impose the [
1.0%
]
local tax on the sale of natural gas and electricity for residential use,
the city secretary must
have forwarded
[
forward
] to
the comptroller's office before May 1, 1979, by registered or certified mail
a certified copy of the ordinance reflecting the majority vote of the membership
exempting natural gas and electricity
. If the ordinance
was
[
is
] not received by the comptroller before May 1, 1979, the exemption
from the [
1.0%
] local tax [
will
] automatically
became
[
become
] effective on October 1, 1979.
To continue
the taxation of residential use, the city secretary must have forwarded to
the comptroller's office before June 30, 1979, by registered or certified
mail, a certified copy of the ordinance reflecting the majority vote of the
membership reimposing tax on natural gas and electricity.
(D)
[
(4)
] Reimposition of tax authorized.
The [
1%
] local tax may be reimposed by a majority vote of the membership
of the governing body of
a
[
the
] city
that exempted
residential use of natural gas and electricity before May 1, 1979
. If
the majority of the governing body votes for the reimposition of the [
1.0%
] local tax, the results of the vote must be entered in the minutes
of the city. Thereafter, the city secretary must forward to the comptroller
by registered or certified mail a certified copy of the ordinance reimposing
the tax. Upon receipt of notification by the comptroller, there shall elapse
one whole calendar quarter prior to the reimposition becoming effective. The
reimposition shall take effect beginning on the first day of the calendar
quarter next succeeding the elapsed quarter. (See §3.372(d)(1) of this
title (relating to Adoption or Abolishing City Tax) for an illustration of
this procedure).
(E)
[
(5)
] Effect of billing periods.
The exemption or reimposition of the [
1.0%
] local tax does not
apply to sales of natural gas and electricity for residential use made during
a customer's regular monthly billing period which begins before the effective
date of the exemption or reimposition. The exemption or reimposition shall
apply to each regular monthly billing period beginning on or after the effective
date of the exemption or reimposition.
(F)
[
(6)
] Deadline for cities adopting
the Local Sales and Use Tax Act. Cities adopting the Local Sales and Use Tax
Act and wishing to tax the sales of natural gas and electricity for residential
use must notify the comptroller (See §3.372(c)) of this title (relating
to Adopting or Abolishing City Tax) for notification requirements) no later
than June 30, 1979. Cities that first adopt the local sales and use tax after
October 1, 1979, may not impose the tax on the residential use of natural
gas and electricity.
(G)
[
(7)
] The sale of natural gas and
electricity for residential use is automatically exempt from the additional
city tax imposed under the Tax Code, §321.101(b)
or the Development
Corporation Act of 1979 (Texas Civil Statutes, Art. 5190.6)
, if the
sale of natural gas and electricity is exempt from tax under §321.101(a).
The sale of natural gas and electricity for residential use is automatically
taxed under
Tax Code,
§321.101(b) if the tax under
Tax
Code,
§321.101(a) is imposed on the sale of natural gas and electricity
for residential use.
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 February 10, 2000.
TRD-200001049
Martin Cherry
Special Counsel
Comptroller of Public Accounts
Earliest possible date of adoption: March 26, 2000
For further information, please call: (512) 463-3699