TITLE 34.PUBLIC FINANCE

Part 1. COMPTROLLER OF PUBLIC ACCOUNTS

Chapter 3. TAX ADMINISTRATION

Subchapter B. NATURAL GAS

34 TAC §3.15

(Editor's note: The text of the following section proposed for repeal will not be published.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 a repeal of §3.15, concerning gas marketing costs. The repeal is necessary because the entire text of §3.15 was incorporated into the tax code by House Bill 2425, 78th Legislature, 2003, which amended Tax Code, Chapter 201.

John Heleman, Chief Revenue Estimator, has determined that repeal of the rule will not result in any fiscal implications to the state or to units of local government.

Mr. Heleman also has determined the repeal would benefit the public by clarifying the information available to taxpayers regarding their tax responsibilities. There would be no anticipated significant economic cost to the public. This repeal is adopted under 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 proposal may be submitted to Bryant K. Lomax, Manager, Tax Policy Division, P.O. Box 13528, Austin, Texas 78711.

This repeal is proposed under Tax Code §111.102, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2.

The repeal implements Tax Code §201.101.

§3.15.Gas Marketing Costs.

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 May 31, 2006.

TRD-200602964

Martin Cherry

Chief Deputy General Counsel

Comptroller of Public Accounts

Earliest possible date of adoption: July 16, 2006

For further information, please call: (512) 475-0387


Subchapter F. MOTOR VEHICLE SALES TAX

34 TAC §3.68

The Comptroller of Public Accounts proposes to amend §3.68, concerning United States and foreign military personnel stationed in Texas. The amendment updates the members of the North Atlantic Treaty Organization and provides information on identifying domicile and legal residence.

John Heleman, Chief Revenue Estimator, has determined that for the first five-year period the rule will be in effect, there will be no significant revenue impact on the state or units of local government.

Mr. Heleman also has determined that for each year of the first five years the rule is in effect, the amendment would benefit the public by clarifying for motor vehicle dealers their tax responsibilities on sales of motor vehicles to certain United States and foreign military personnel stationed in Texas.. This rule is adopted under Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the proposed rule.

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

This amendment is proposed under Tax Code, §111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2.

The amendment implements Tax Code §§152.021, 152.022, and 152.023.

§3.68.United States and Foreign Military Personnel Stationed in Texas.

(a) North Atlantic Treaty Organization (NATO) foreign military personnel. [ Non-United States members of the North Atlantic Treaty Organization are: Belgium, Canada, Denmark, France, West Germany, Greece, Iceland, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Turkey, and the United Kingdom. Foreign military personnel, their dependents, and military employed foreign civilians, if attached to a member of NATO and stationed in Texas, are: ]

(1) Foreign military personnel, their dependents, and military-employed foreign civilians, if attached to a member of NATO and stationed in Texas, are exempt from the motor vehicle sales or use tax on any motor vehicle [ which is ]purchased in Texas or brought into Texas while stationed in Texas. [ ; and ]

(2) Non-United States members of the North Atlantic Treaty Organization as of December 14, 2005 include: Belgium, Bulgaria, Canada, Czech Republic, Denmark, Estonia, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Lithuania, Luxembourg, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Turkey, and The United Kingdom. [ exempt from the motor vehicle use tax on any motor vehicle purchased outside Texas and brought into the state either upon initial entry or upon subsequent reentry while already stationed in Texas. ]

(b) United States military personnel and foreign military personnel other than NATO personnel. A member of the United States military residing in Texas on military orders and foreign military personnel, their dependents, and military employed foreign civilians, other than NATO related personnel referred to in subsection (a) of this section, are:

(1) subject to the motor vehicle sales tax on any motor vehicle purchased in Texas and not immediately removed from Texas for use exclusively outside of Texas pursuant to Tax Code, §152.092 and §3.90 (relating to Motor Vehicles Purchased for Use Outside of Texas) ; and

(2) subject to the motor vehicle use tax or the motor vehicle new resident use tax on any vehicle purchased outside of Texas and subsequently brought into Texas for use in Texas. The domicile and legal residence for United States military personnel is the person's "home of record" as designated in their military records [ the state ].

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 June 1, 2006.

TRD-200602996

Martin Cherry

Chief Deputy General Counsel

Comptroller of Public Accounts

Earliest possible date of adoption: July 16, 2006

For further information, please call: (512) 475-0387


Subchapter O. STATE SALES AND USE TAX

34 TAC §3.292

The Comptroller of Public Accounts proposes an amendment to §3.292, concerning repair, remodeling, maintenance, and restoration of tangible personal property. Subsections (b) and (e) are amended to reflect the new titles of §3.290 and §3.357 referenced. Other changes are amended for clarity.

John Heleman, Chief Revenue Estimator, has determined that for the first five-year period the rule will be in effect, there will be no significant revenue impact on the state or units of local government.

Mr. Heleman also has determined that for each year of the first five years the rule is in effect, the public benefit anticipated as a result of enforcing the rule will be in providing additional information concerning taxpayer responsibilities. This rule is adopted under Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the proposed rule.

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

This 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 amendment implements Tax Code, §151.0101.

§3.292.Repair, Remodeling, Maintenance, and Restoration of Tangible Personal Property.

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Commercial vessel--A ship of eight or more tons displacement that is used exclusively in a commercial enterprise including commercial fishing, but excludes any ship used for sports fishing or pleasure.

(2) Extended warranty or service policy--This contract is sold to the buyer of the product for an additional amount. The provisions of the contract become effective after the manufacturer's warranty expires.

(3) Maintenance--All work on operational and functioning tangible personal property necessary to sustain or support safe, efficient, continuous operations, or to keep in good working order by preventing the decline, failure, lapse, or deterioration of tangible personal property.

(4) Manufacturer's written warranty--A guarantee by the manufacturer that the product at the time of sale is operable and will remain operable for specified period of time. The manufacturer's warranty is provided without additional cost to the buyer.

(5) Remodel--To modify the style, shape, or form of tangible personal property belonging to another without causing a loss of its identity or without causing the item to operate in a new or different manner.

(6) Repair--To mend or restore to working order or operating condition tangible personal property that was broken, damaged, worn, defective, or malfunctioning.

(7) Repairman--Any person who, under either lump-sum or separated contracts, restores, repairs, performs maintenance services, or replaces a component of an inoperable or malfunctioning item.

(8) Private aircraft--An aircraft that is operated or used for a purpose other than as a certificated carrier of persons or property or by a flight school for the purpose of training pilots. Persons repairing aircraft belonging to or operated by a certificated carrier of persons or property or flight schools should refer to §3.297 of this title (relating to Carriers).

(b) Services to tangible personal property other than aircraft, commercial vessels, and motor vehicles. Persons who repair, restore, remodel, or maintain tangible personal property belonging to another are providing taxable services. Persons who remodel motor vehicles are also covered by this section. Persons who repair, maintain, or restore private aircraft should refer to subsection (i) of this section. Persons who repair, maintain, or restore motor vehicles should refer to §3.290 of this title (relating to Motor Vehicle Repair and Maintenance; Accessories and Equipment Added to Motor Vehicles; Moveable Specialized Equipment [ Motor Vehicle Repair and Maintenance ]).

(1) A service provider is a retailer and must obtain a tax permit and collect sales or use tax on the entire charge for materials, parts, labor, consumable supplies, equipment, and any charges connected to the repair, remodeling, restoration, or maintenance service.

(2) A service provider may issue a resale certificate instead of paying sales or use tax to the supplier when purchasing materials that will be transferred to the care, custody, and control of a customer.

(3) A service provider must collect sales or use tax on services (labor) under an agreement that [ which ] provides that the customer will furnish the parts and materials required for the repair.

(4) A service provider may accept an exemption certificate instead of sales or use tax when performing a taxable service for a customer exempt from tax or on an item that is exempt from tax , see subsection (g) of this section .

(c) Consumable supplies and equipment. Sales or use tax must be paid by the service provider on supplies, tools, and equipment that are purchased for use in the performance of the repair but that are not transferred to the care, custody, and control of the customer.

[ (d) Responsibilities of remodelers. The responsibilities of remodelers of tangible personal property are the same as the responsibilities of persons providing taxable repair services. ]

(d) [ (e) ] Repairs under warranties.

(1) Manufacturer's warranties. No tax is due on parts or labor furnished by the manufacturer to repair tangible personal property under a manufacturer's warranty or recall campaign.

(A) Records must be kept by the service provider to document [ that show ] that the service and parts were used in repairing an item under a manufacturer's warranty or recall.

(B) The service provider may purchase parts to be used in repairs under a manufacturer's warranty or recall tax free by issuing an exemption certificate to the supplier.

(2) Extended warranties and service contracts for [ of ] tangible personal property [ with the exception of ] ( motor vehicles and private aircraft [ ( ]see subsection (i) [ (j) ](4) of this section).

(A) Tax is due on the sale of an extended warranty, service contract or service policy for the repair or maintenance of tangible personal property.

(B) The person who warrants the item and is obligated to perform services under the terms of the agreement may issue a resale certificate for parts or service to be used in performing the repair or maintenance services covered by the contract.

(C) If the person obligated to perform the services uses a third-party [ third party ] repairman to do the work, the repairman may accept a resale certificate from the warrantor [ of the item instead of collecting tax on the charges to the warrantor ].

(D) The repairman or warrantor performing the service must collect tax on any charge to the customer [ owner ] for labor or parts not covered by the extended warranty.

(e) [ (f) ] Contractors and persons who perform real property repair and remodeling. Persons who build new improvements to real property, or repair, restore, or remodel residential real property should refer to §3.291 of this title (relating to Contractors). Persons who repair or remodel nonresidential real property should refer to §3.357 of this title (relating to Nonresidential Real Property Repair, Remodeling, and Restoration; Real Property Maintenance [ Labor Relating to Nonresidential Real Property Repair, Remodeling, Restoration, Maintenance, New Construction, and Residential Property ]).

(f) [ (g) ] Fabricating or processing. Persons who fabricate or process tangible personal property for another should refer to §3.300 of this title (relating to Manufacturing; Custom Manufacturing; Fabricating; Processing).

(g) [ (h) ] Services performed on certain tangible personal property.

(1) Labor to repair, remodel, maintain, or restore certain tangible personal property that, if sold, leased, or rented, at the time of the performance of the service, would be exempted under Tax Code, Chapter 151, because of the nature of the property, its use, or a combination of its nature or use is exempted from sales and use taxes.

(2) The exemption provided in paragraph (1) of this subsection does not apply to:

(A) tangible personal property sold by an organization exempted by Tax Code, Chapter 151;

(B) tangible personal property exempted from use tax because sales tax was paid on the purchase;

(C) tangible personal property acquired tax free in a transaction qualifying as an occasional sale under Tax Code, §151.304, or as a joint ownership transfer exempted under Tax Code, §151.306;

(D) taxable boat or motor defined by Tax Code, §160.001;

(E) clothing and footwear purchased tax-free during a sales tax holiday; or

(F) machinery and equipment used in timber operations.

(h) [ (i) ] Exemption for labor to repair tangible personal property in a disaster area.

(1) Labor to repair, restore, remodel, or maintain tangible personal property is exempt if:

(A) the amount of the charge for labor is separately itemized; and

(B) the repair is to property damaged within a disaster area by the condition that caused the area to be declared a disaster area.

(2) The exemption does not apply to tangible personal property transferred as part of the repair.

(3) In this subsection, "disaster area" means:

(A) an area declared a disaster area by the Governor of Texas under Government Code, Chapter 418; or

(B) an area declared a disaster area by the President of the United States under 42 United States Code, §5141.

(i) [ (j) ] Responsibilities of repairman or remodelers of private aircraft.

(1) Responsibilities under a lump-sum contract.

(A) Labor to maintain, repair or remodel private aircraft is not taxable. A person maintaining, repairing or remodeling a private aircraft for a lump-sum price is not a retailer of a taxable item and may not issue a resale certificate for parts or material used or consumed in such repair or remodel.

(B) Under a lump-sum contract, the repairman or remodeler is the ultimate consumer of consumable supplies, tools, equipment, and all materials incorporated into the private aircraft. The lump-sum repairman or remodeler must pay the tax to suppliers at the time of purchase. The repairman will not collect tax from customers on the lump-sum charge or any portion of the charge. Under this type of contract, the repairman will pay the tax on materials even when the property is repaired for an exempt customer.

(C) A lump-sum repairman may use materials from inventory that were originally purchased tax free by use of a resale certificate. In those instances, the repairman incurs a tax liability based upon the purchase price of the materials and must report and remit the tax to the comptroller.

(2) Responsibilities under a separated maintenance, repair or remodeling contract. Under a separated [ repair ] contract, the repairman of a private aircraft is a retailer and may issue a resale certificate in lieu of tax to suppliers for materials that will be incorporated into the private aircraft of the customer; the repairman must then collect tax from the customer on the agreed contract price of the materials, which must not be less than the amount the repairman paid to suppliers. The repairman must obtain a tax permit to be able to issue a resale certificate in lieu of tax when materials are purchased. The repairman may also use materials from inventory upon which tax was paid to the supplier at the time of purchase. In these instances, tax will be collected from the customer on the agreed contract price of the materials as if the materials had been purchased with a resale certificate; however, the repairman will remit tax to the comptroller only on the difference between the agreed contract price and the price paid to the supplier. See §3.338 of this title (relating to Multistate Tax Credits and Allowance of Credit for Tax Paid to Suppliers). A repairman of private aircraft is the ultimate consumer of consumable supplies, tools, and equipment used that [ which ] are not incorporated into the private aircraft being repaired. The repairman must pay tax to suppliers [ of these items ] at the time of purchase. The repairman may not collect tax from customers on any charges for these items.

(3) Repairing jet turbine aircraft engines. Persons engaged in overhauling, retrofitting, or repairing jet turbine aircraft engines and their component parts should refer to §3.300 of this title (relating to Manufacturing; Custom Manufacturing; Fabricating; Processing).

(4) Warranties.

(A) Manufacturer warranties. Manufacturer's warranties are treated in the same manner as those for tangible personal property (see subsection (d) [ (e) ](1) of this section).

(B) Extended warranties and service contracts. A repairman performing services under an extended warranty covering a private aircraft must collect tax on the parts as required under paragraph (2) of this subsection.

[ (5) Maintenance. Tax is not due on the labor to maintain private aircraft. Refer to paragraphs (1) and (2) of this subsection for the repairman's responsibilities for tangible personal property used in maintenance. ]

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 May 31, 2006.

TRD-200602965

Martin Cherry

Chief Deputy General Counsel

Comptroller of Public Accounts

Earliest possible date of adoption: July 16, 2006

For further information, please call: (512) 475-0387


34 TAC §3.311

The Comptroller of Public Accounts proposes an amendment to §3.311, concerning auctioneers, brokers, and factors. Subsection (d)(1) and (2) is amended to reflect the new title of §3.316 referenced.

John Heleman, Chief Revenue Estimator, has determined that for the first five-year period the rule will be in effect, there will be no significant revenue impact on the state or units of local government.

Mr. Heleman also has determined that for each year of the first five years the rule is in effect, the public benefit anticipated as a result of enforcing the rule will be in providing additional information concerning taxpayer responsibilities. This rule is adopted under Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the proposed rule.

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

This amendment is proposed under Tax Code, §111.002, 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 section implements Tax Code, §151.008 and §151.024.

§3.311.Auctioneers, Brokers, and Factors.

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context indicates otherwise.

(1) Auction or auctioning--The sale by an auctioneer of tangible personal property by competitive bid.

(2) Auctioneer--A person who owns tangible personal property or to whom tangible personal property has been consigned and who offers the tangible personal property for sale at auction.

(3) Broker--A person who brings other people together to bargain for the sale or purchase of taxable items. In absence of contractual provisions to the contrary, a broker:

(A) may not have possession of property;

(B) cannot cause title of property to be transferred to a purchaser without further action on the part of its owner; and

(C) has disclosed to the purchaser the identity of the broker's principal.

(4) Disclosed principal--A principal is considered to be disclosed if before or at the time of sale the purchaser has been given notice of the principal's identity.

(5) Factor--A person who sells taxable items belonging to a principal on consignment. A factor:

(A) has possession and control of property;

(B) can cause title of property to be transferred to a purchaser without further action on the part of its owner; and

(C) has not disclosed to the purchaser the identity of the factor's principal.

(6) Principal--A person who employs a broker or factor to act in the principal's behalf in negotiating with a purchaser for the sale of a taxable item.

(b) Responsibility of an auctioneer.

(1) Sales tax is due from the purchaser on the sales price of taxable items sold at auction.

(2) An auctioneer is responsible for collecting and remitting to the comptroller any tax due on the sale of taxable items sold at auction by the auctioneer.

(3) An auctioneer who does not receive payment for the item sold, does not issue a bill of sale or invoice to the purchaser of the item, and who does not issue a check or other remittance to the owner of the item sold by the auctioneer is not considered a seller responsible for the collection of the tax. In this instance, it is the owner's responsibility to collect and remit the tax.

(4) An auctioneer should not collect tax on the sale of items that [ which ] are exempt from sales tax such as motor vehicles, real property, or livestock.

(5) Sales tax is not due on a sale of a taxable item [ items ] when the owner of the item subsequently reclaims the property at the auction.

(c) Letter of waiver. A person, who is seeking an auctioneer's license and requires a letter of waiver as proof no sales tax permit is required, may request a letter of waiver from the comptroller.

(1) A request for a letter of waiver from the comptroller as proof no sales tax permit is required must be in writing and must detail the basis or reason no sales tax permit is required.

(2) If the items being auctioned are exempt from sales tax or if the auctioneer is not considered a seller, a letter of waiver will be issued.

(3) A letter of waiver is valid only so long as there is no change in the fact situation as originally presented to the comptroller.

(d) Responsibility of a broker.

(1) Sales tax is due on sales solicited by a broker if the principal is a seller as defined by [ the ] Tax Code, §151.008; and the sale would not otherwise meet the definition of an occasional sale as found in §3.316 of this title (relating to Occasional Sales; Joint Ownership Transfers; Sales by Senior Citizens' Organizations; Sales by University and College Student Organizations; and Sales by Nonprofit Animal Shelters [ Occasional Sales and Other Tax Free Sales ]). The principal is responsible for collecting and reporting the tax.

(2) Sales tax is not due on sales solicited by a broker if the principal is not a seller and the sale would otherwise meet the definition of occasional sale as found in §3.316 of this title (relating to Occasional Sales; Joint Ownership Transfers; Sales by Senior Citizens' Organizations; Sales by University and College Student Organizations; and Sales by Nonprofit Animal Shelters [ Occasional Sales and Other Tax Free Sales ]).

(e) Responsibility of a factor. Sales tax is due on sales made by a factor. A factor is required to collect and report tax on all sales.

(f) Reference. Auctioneers and factors should refer to §3.286 of this title (relating to Seller's and Purchaser's Responsibilities).

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 May 31, 2006.

TRD-200602966

Martin Cherry

Chief Deputy General Counsel

Comptroller of Public Accounts

Earliest possible date of adoption: July 16, 2006

For further information, please call: (512) 475-0387


34 TAC §3.336

The Comptroller of Public Accounts proposes an amendment to §3.336, concerning gold, silver, coins, and currency. Subsection (a) is amended to eliminate obsolete provisions regarding the State Purchasing and General Services Act, §11.05. Subsection (c) is amended to eliminate reference to a rule that is obsolete.

John Heleman, Chief Revenue Estimator, has determined that for the first five-year period the rule will be in effect, there will be no significant revenue impact on the state or units of local government.

Mr. Heleman also has determined that for each year of the first five years the rule is in effect, the public benefit anticipated as a result of enforcing the rule will be in providing additional information concerning taxpayer responsibilities. This rule is adopted under Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the proposed rule.

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

This 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 section implements Tax Code, §151.336.

§3.336.Gold, Silver, Coins, and Currency.

(a) Sales tax is due on the sale in Texas of gold, silver, or numismatic coins or gold, silver, or platinum bullion unless sold to a purchaser in a single transaction in which the total sales price of all the items sold is $1,000 or more. Sales tax is not due on the sale of official State of Texas coins produced under the State Purchasing and General Services Act, §11.05[ , when sold by a person under contract with the State Purchasing and General Services Commission ]. Sellers of gold, silver, platinum, or numismatic coins are required to hold a Texas sales [ or use ] tax permit and to collect sales tax on all taxable sales within the state. See §3.286 of this title (relating to Seller's and Purchaser's Responsibilities).

(b) Texas sales tax is due on a sale made by a seller in Texas when the purchaser takes possession of the item in this state even though the item may be taken outside the state by the purchaser. Texas sales tax is due if the Texas seller retains possession of the item in Texas as a service to the purchaser. The sale of gold or silver bullion within the State of Texas but which is being held in a repository [ repositories ] outside the State of Texas at the time of sale is not subject to the sales tax.

(c) Texas use tax is due on any item purchased for use in Texas and brought into Texas from outside the state. The use tax is based upon the original purchase price regardless of the item's value at the time of entry. See §3.346 of this title (relating to Use Tax) [ and §3.340 of this title (relating to Multistate Tax Credits) ].

(d) Unless exempted as provided by subsection (a) of this section, sales or use tax is due on the sale of coins and currency when sold above face value or without a face value. The face value of United States coins and currency must be subtracted from the sales price before the tax is computed. Tax must be collected on the total sales price of foreign coins and currency. The face value of foreign coins and currency may not be subtracted from the sales price. The exchange of foreign currency at face value is not a taxable transaction.

(e) The sales tax exemption on the sale of gold, silver, or numismatic coins or gold, silver, or platinum bullion in a single transaction of $1,000 or more does not include jewelry or other items of adornment.

(f) The purchase of commodity contracts of gold or silver will not be taxable.

(g) Persons who use gold, silver, or other precious metals or diamonds or other precious stones in lieu of currency in acquiring taxable items for use will be considered to be bartering. Persons who use gold, etc., for bartering owe tax based upon the sales price of the taxable item.

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 May 31, 2006.

TRD-200602967

Martin Cherry

Chief Deputy General Counsel

Comptroller of Public Accounts

Earliest possible date of adoption: July 16, 2006

For further information, please call: (512) 475-0387


34 TAC §3.360

The Comptroller of Public Accounts proposes amendments to §3.360, concerning customs brokers. Customs brokers will now request purchaser identification numbers. A new subsection (a)(3) is added with remaining paragraphs renumbered accordingly, a new subsection (b)(3)(B) is added with remaining subparagraphs relettered accordingly, and a new subsection (q)(3)(W) is added accordingly. Amendments are also made to subsections (p)(6), (p)(10), and (r) for clarity. The adopt by reference form, Licensed Customs Broker Export Certification, is being amended for clarity.

John Heleman, Chief Revenue Estimator, has determined that for the first five-year period the amendments will be in effect, there will be no significant revenue impact on the state or units of local government.

Mr. Heleman also has determined that for each year of the first five years the amendments are in effect, the public benefit anticipated as a result of enforcing the amended rule will be in providing additional information concerning taxpayer responsibilities. This rule is adopted under Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the proposed amendments.

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

The amendments are 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 amendments implement Tax Code §151.1575 and §151.027(c)(1).

§3.360.Customs Brokers [ (Tax Code §§151.157, 151.1575, 151.158, 151.307, and 151.172) ].

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) - (2) (No change.)

(3) Purchaser Identification Number--A number issued by a purchaser's country of residence for purposes of identification. For example, a purchaser from the United Mexican States may have as a purchaser identification number either a "Registro Federal de Contribuyente" or "Registro Federal de Causante," (collectively "RFC"), or Clave Unica de Registro de la Población (Unique Code to Register the Population or "CURP").

(4) [ (3) ] Total value of property--The sales price, as shown on receipts and invoices of all property for which a licensed customs broker issued export certification forms during a calendar quarter.

(5) [ (4) ] Total amount of tax on property--The total amount of all Texas state and local sales and use taxes paid on property for which a licensed customs broker issued export certification forms during a calendar quarter.

(6) [ (5) ] Total amount of tax refunded--The total amount of all Texas state and local sales and use taxes that retailers refunded to a customs broker during a calendar quarter.

(7) [ (6) ] Verification contractor--An independent contractor who, for consideration and under a written contract with a licensed customs broker, monitors the export of property on behalf of a licensed customs broker as provided in subsection (b)(1) of this section. Unless the context clearly indicates otherwise, all references in this section to a verification contractor include an employee of a verification contractor.

(b) Certification of exports. Only a licensed customs broker or an employee of a licensed customs broker may fully or partially prepare, issue, and/or sign a valid export certification form as provided for in this section and in §3.323 of this title (relating to Imports and Exports). A retailer who receives documentation that is valid under this section certifying that delivery was made to a point outside of the territorial limits of the United States should refer to §3.323(e) for information regarding refunds. A licensed customs broker, or an authorized employee of the customs broker, may issue an export certification form only if the custom broker or authorized employee:

(1) - (2) (No change.)

(3) verifies by performing all of the following actions that the purchaser is transporting the property to a destination outside of the territorial limits of the United States:

(A) (No change.)

(B) requests a purchaser identification number;

(C) [ (B) ] requires that the purchaser produce the property and the original receipt for the property so the customs broker or authorized employee can verify that the property is the same property as described in the purchaser's sales receipt;

(D) [ (C) ] requires that the purchaser state the foreign country of destination, which must be the foreign country in which the purchaser resides, the date and time the property is expected to arrive in the foreign country destination, the date and time the property was purchased, the name and address of the retailer from whom the purchaser bought the property, the sales price and quantity of the property, and a description of the property;

(E) [ (D) ] requires that the purchaser sign a form:

(i) that states that purchaser has provided the information and documentation required in paragraph (3) of this subsection;

(ii) that states "Providing false information to a customs broker is a Class B misdemeanor" clearly on the form; and

(iii) that contains a notice to the purchaser that property not exported to a foreign country is subject to Texas sales and use tax and the purchaser is liable for payment of an amount equal to tax on the value of the property, as well as, other possible civil liabilities and criminal penalties, if the purchaser improperly obtains a refund of taxes relating to the property; and

(F) [ (E) ] requires that the purchaser produce the following travel documentation for inspection by the customs broker or authorized employee:

(i) if the purchase was made in a county that does not border the United Mexican States, the purchaser's Form I-94, Arrival/Departure record, or its successor, as issued by the Bureau of Citizenship and Immigration Security of the United States Department of Homeland Security; or

(ii) if the purchase was made in a county that does not border the United Mexican States, the purchaser's travel documentation, e.g. airline or bus ticket; and

(4) (No change.)

(c) - (o) (No change.)

(p) Export certification form and contents. The export certification forms issued by a licensed customs broker must be substantially in the form recommended by the comptroller. A separate form must be completed for each seller. Multiple invoices from a single seller may be listed on a single export certification form only if all the listed items were exported at the same place, on the same date, and at the same time. The required information must be completed in English on the face of the form, in addition to any other language in which the form is completed. The comptroller may immediately confiscate from any person an export certification form that is incomplete on its face, indecipherable, fraudulent, or otherwise in violation of this section. An export certification form must, at a minimum, reflect the following information:

(1) - (5) (No change.)

(6) a description and quantity of the property ; [ , ] a list of Store Keeping Unit (SKU) , Harmonization Systems, Schedule B or other product identification codes ; [ , ] or copies of invoices securely attached to the form and signed and dated individually by the broker or the broker's authorized employee;

(7) - (9) (No change.)

(10) a valid export certification stamp whose expiration date falls within the same calendar quarter as the certification date [ of export ] (regardless of the date of sale);

(11) - (13) (No change.)

(q) License denial, suspension, and revocation. The comptroller may deny, suspend, or revoke a Texas Customs Broker's License for cause.

(1) - (2) (No change.)

(3) Acts or omissions of a licensed customs broker, his employee, his verification contractor, an officer or director, a general partner, or association member (as applicable) that constitute cause for suspension or revocation of a license under this section include, but are not limited to:

(A) - (T) (No change.)

(U) failing to use the website for preparing documentation while the website is available, or if the website becomes unavailable, failing to promptly enter documentation using the website within 48 hours after website becomes available or disabling of interfering with the proper functioning of the website in any manner; [ or ]

(V) failing to pay tax, penalties, or interest that become due or are imposed by the comptroller under the provisions of the Tax Code or this section ; or [ . ]

(W) failing to request a purchaser identification number.

(4) - (9) (No change.)

(r) Form of export certification. An export certification form must be substantially in the form of a Licensed Customs Broker Export Certification. The comptroller adopts that form by reference. Copies are available for inspection at the office of the Texas Register or may be obtained from the Comptroller of Public Accounts, Tax Policy Division[ , 111 W. 6th Street, Austin, Texas 78701-2913 ]. Copies may also be requested by calling our toll-free number 1-800-252-5555. 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.)

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 June 1, 2006.

TRD-200602997

Martin Cherry

Chief Deputy General Counsel

Comptroller of Public Accounts

Earliest possible date of adoption: July 16, 2006

For further information, please call: (512) 475-0387


Subchapter LL. OYSTER SALES FEE

34 TAC §3.1261

The Comptroller of Public Accounts proposes an amendment to §3.1261, concerning reports, payments, and record keeping requirements. Due to a reorganization of the state's health services agencies as a result of legislation, the former Seafood Safety Division is now the Seafood and Aquatic Life Group, and the former Department of Health is now a part of the Department of State Health Services. The proposed amendment conforms the agency references to the legislation.

John Heleman, Chief Revenue Estimator, has determined that for the first five-year period the rule will be in effect, there will be no significant revenue impact on the state or units of local government.

Mr. Heleman also has determined that for each year of the first five years the rule is in effect, the public benefit anticipated as a result of enforcing the rule will benefit the public by conforming agency rules with current legislation. This rule is adopted under Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the proposed rule.

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

This amendment is proposed under Tax Code, §111.002 and §111.0022, which 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, and taxes, fees, or other charges which the comptroller administers under other law.

The amendment implements Health and Safety Code, §436.103.

§3.1261.Reports, Payments, and Record Keeping Requirements.

(a) Definitions. The following words and terms, when used in this section shall have the following meanings, unless the context clearly indicates otherwise.

(1) Barrel--Three 100-pound containers of oysters.

(2) Certificate (Shellfish Certificate of Compliance)--A numbered document that the Seafood and Aquatic Life Group [ Safety Division ] of the Texas Department of State Health Services issues and that authorizes a dealer to process oysters for sale.

(3) Certified location--A plant or place of business that the Seafood and Aquatic Life Group [ Safety Division ] of the Texas Department of State Health Services has inspected and for which that department has issued a Shellfish Certificate of Compliance.

(4) Certified shellfish dealer--A person to whom the Texas Department of State Health Services has issued a Certificate of Compliance that authorizes the activities of molluscan shell stock shipper, shucker-packer, repacker, or depuration processor.

(5) Container--For the purposes of this section, any material holding oysters.

(6) Harvest--The process of gathering or removing oysters from their growing areas.

(7) Pack--All activities involved in placing oysters in containers.

(8) Shell stock--Live oysters in the shell.

(9) Shucked oysters--Oysters, whole or in part, from which one or both shells have been removed.

(10) Take--To catch, hook, net, snare, trap, kill, or capture by any means, including the attempt to take, oysters from their growing areas.

(b) Fee imposed. A fee of $1.00 for each barrel is imposed on the first certified shellfish dealer who harvests, purchases, handles, stores, packs, labels, unloads at dockside, or holds oysters taken from Texas waters.

(c) Reporting period. A certified shellfish dealer must file a report with the comptroller on or before the 20th day of the month following the month in which the barrels of oysters were handled. The report must include the total number of barrels of oysters upon which the fee is imposed. A certified shellfish dealer must file a report, even if the dealer owes no fee for the report period.

(d) Report forms. Each certified shellfish dealer must report the oyster sales fee on the forms prescribed by the comptroller. A certified shellfish dealer who does not receive the forms or does not receive the correct forms from the comptroller is not relieved of the responsibility of paying the required fee and any penalties and/or interest owed.

(e) Reporting Waiver Request. Using a form prescribed by the comptroller, a certified shellfish dealer may request a waiver from the requirement to file the monthly reports when the dealer, at a specified location, is not the first certified shellfish dealer to harvest, purchase, handle, store, pack, label, unload at dockside, or hold oysters taken from Texas waters. If the certified shellfish dealer intends to change plant operations at a later date at the specified location in a manner that will require payment of the oyster sales fee, the dealer must inform the comptroller, in writing, prior to implementing the change.

(f) Payment of the fee. Not later than the 20th day of each month, each certified shellfish dealer shall remit to the comptroller the total fee amount due.

(g) Payment of penalties.

(1) Overweight penalty. A certified shellfish dealer who purchases or packs oysters in containers that exceed 110 pounds in weight is liable for a penalty of $5.00 for each container purchased or packed that exceeds 110 pounds. Payment of an overweight penalty is due with the filing of the report for the month in which the overweight container was handled.

(2) Late filing penalty. A certified shellfish dealer who does not file a monthly report required in subsection (c) of this section or pay the fee required in subsection (b) of this section or the overweight penalty required by paragraph (1) of this subsection in full, is liable for a late filing penalty of 10% of the sum of the fee amount due and the total overweight penalty amount due.

(h) Enforcement provisions. Tax Code, Title 2, Subtitles A and B, apply to the comptroller's administration, collection, and enforcement of Health and Safety Code, §436.103.

(1) Compliance inspections by the comptroller. The comptroller may conduct periodic inspections of plant operations to ensure compliance with the provisions of this section.

(2) Weighing oyster containers. During compliance inspections, the comptroller may weigh all oyster containers in the certified shellfish dealer's possession or use a projection method to determine the number of overweight oyster containers. Containers that weigh more than 110 pounds are overweight and are subject to an overweight penalty. The projection method consists of weighing a portion of oyster containers in the certified shellfish dealer's storage facility or offloading facility. The penalty amount is calculated and assessed based on the percentage of total containers that are overweight. The percentage is determined by dividing the total number of containers that are overweight by the total number of containers weighed. For example, if 15 containers are weighed and five of the 15 are overweight, the comptroller will project that 33% of all oyster containers in the dealer's possession at the time of the inspection are overweight.

(3) Past due fees and penalties. The comptroller may certify to the Texas Department of State Health Services that a fee, overweight penalty, or late filing penalty is past due. On certification from the comptroller, the Texas Department of State Health Services may suspend the shellfish certificate of the certified shellfish dealer until the fee, overweight penalty, or late filing penalty is paid in full.

(4) Refusal to pay past due fees and penalties. The comptroller may certify to the Texas Department of State Health Services that a certified shellfish dealer refuses to pay a fee, overweight penalty, or late filing penalty after written demand by the comptroller. On certification from the comptroller, the Texas Department of State Health Services may revoke the shellfish certificate of a certified shellfish dealer who refuses to pay a fee, overweight penalty, or late filing penalty.

(i) Interest. Interest due on delinquent fees or overweight penalties shall be imposed as provided by Tax Code, §111.060.

(j) Records required.

(1) A certified shellfish dealer must keep all invoices, purchase contracts, installment or credit agreements, and any other records relating to harvesting, purchasing, handling, storing, packing, labeling, unloading at dockside, or holding oysters taken from Texas waters for at least four years after the date each report is filed with the comptroller.

(2) Any person liable for the oyster sales fee must make the person's records or equipment available to the comptroller or the comptroller's representative for examination to verify the accuracy of any report made or to determine the fee liability if no report is filed.

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 June 1, 2006.

TRD-200602995

Martin Cherry

Chief Deputy General Counsel

Comptroller of Public Accounts

Earliest possible date of adoption: July 16, 2006

For further information, please call: (512) 475-0387