ADOPTED RULES An agency may take final action on a section 30 days after a proposal has been published in the Texas Register. The section becomes effective 20 days after the agency files the correct document with the Texas Register, unless a later date is specified or unless a federal statute or regulation requires implementation of the action on shorter notice. If an agency adopts the section without any changes to the proposed text, only the preamble of the notice and statement of legal authority will be published. If an agency adopts the section with changes to the proposed text, the proposal will be republished with the changes. TITLE 4. AGRICULTURE PART II. Texas Animal Health Commission CHAPTER 35.Brucellosis SUBCHAPTER A.Eradication of Brucellosis in Cattle 4 TAC sec.35.2 The Texas Animal Health Commission adopts amendments to Chapter 35, Brucellosis, Subchapter A, by amending sec.35.2, General Requirements, without changes to the proposed text as published in the October 1, 1996, issue of the Texas Register (21 TexReg 9327). The amendments are necessary to raise the slaughter test age on finish fed heifers from 24 months to 36 months and require a slaughter test on eligible cattle from quarantined feedlots. The amendments are also necessary to prohibit the movement of cattle from a quarantined feedlot to market. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Agriculture Code , Texas Civil Statutes, Chapters 161 and 163, which provides the Commission with the authority to adopt rules and sets forth the duties of the Commission to control brucellosis. The amendment implements sec.163.072 of the Texas Agriculture Code which requires the Commission to determine the method of collection of blood samples at slaughter plants and sec.sec.161.061, 163.065, and 163.066 of the Texas Agriculture Code which allows the Commission to establish quarantine requirements for brucellosis exposed cattle. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616660 Terry Beals, DVM Executive Director Texas Animal Health Commission Effective date: December 31, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 719-0714 4 TAC sec.35.6 The Texas Animal Health Commission adopts amendments to Chapter 35, Brucellosis, by amending sec.35.6, Indemnity Payments to Owners of Cattle Exposed to Brucellosis, without changes to the proposed text as published in the October 1, 1996, issue of Texas Register (21 TexReg 9328). The amendments are necessary to clarify that indemnity may be paid for sexually intact exposed cattle that are 18 months of age or older. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Agriculture Code, Texas Civil Statutes, Chapters 161 and 163, which provide the Commission with the authority to adopt rules and sets forth the duties of the Commission to control brucellosis. The amendment implements sec.163.068 of the Texas Agriculture Code which authorizes the Commission to adopt rules regarding indemnity for cattle exposed to brucellosis. Issued in Austin, Texas, on November 15, 1996. TRD-9616661 Terry Beals, DVM Executive Director Texas Animal Health Commission Effective date: December 31, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 719-0714 CHAPTER 43.Tuberculosis SUBCHAPTER C.Eradication of Tuberculosis in Cervidae 4 TAC sec.43.23 The Texas Animal Health Commission adopts amendments to Chapter 43, Tuberculosis, Subchapter C, by amending sec.43.23, Requirements for Entry into Texas, without changes to the proposed text as published in the October 1, 1996, issue of Texas Register (21 TexReg 9328). The amendments are necessary to allow cervids from an AZAA accredited facility to move to another AZAA accredited facility without meeting tuberculosis entry requirements. Cervids moving from an AZAA accredited facility, within the state of Texas or from out-of-state, to other than an AZAA accredited facility would be required to fulfill interstate movement requirements regarding tuberculosis. No comments were received regarding adoption of the amendment. The amendment is proposed under the Texas Agriculture Code, Texas Civil Statutes, Chapter 161, which provide the Commission with the authority to adopt rules and sets forth the duties of the Commission to control tuberculosis. The amendment implements sec.161.054 and sec.161.061 which allow the Commission to regulate the entry of animals into the state. Issued in Austin, Texas, on November 15, 1996. TRD-9616662 Terry Beals, DVM Executive Director Texas Animal Health Commission Effective date: December 31, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 719-0714 TITLE 16. ECONOMIC REGULATION PART II. Public Utility Commission CHAPTER 23. Substantive Rules 16 TAC sec.23.102 The Public Utility Commission of Texas adopts new Substantive Rule sec.23.102, relating to Imputation, with changes to the proposed text as published in the July 12, 1996, issue of the Texas Register (21 TexReg 6405). The rule is necessary to comply with sec.3.454 of the Public Utility Regulatory Act of 1995 (PURA 95), which requires that the commission adopt rules governing imputation of the price of a service not later than December 1, 1996. A public hearing on the proposed rule was held at commission offices on August 15, 1996, at 10:00 a.m. Representatives from AT&T Communications of the Southwest (AT&T), Texaltel, GTE Mobilnet, Alltel, GTE Southwest (GTESW), Office of Public Utility Counsel, and Southwestern Bell Telephone Company (SWBT) attended the hearing. The parties' statements largely reflect their written comments and are summarized herein. The commission received written comments on the proposed rule from AT&T GTESW; MCI Telecommunications Corp. (MCI); SWBT; Sprint Communications Company, United Telephone Company of Texas and Central Telephone Company of Texas (filed jointly) (Sprint); Texas Statewide Telephone Cooperative, Inc. (TSTCI); Teleport Communications Houston and TCG Dallas (filed jointly) (TCG); and Time Warner Communications (TW). Parties were asked to comment on the effect of the Federal Telecommunications Act of 1996 (FTA 96) on the proposed rule. AT&T and SWBT commented that the language of PURA 95 is harmonious with FTA 96. GTE commented that FTA 96 appears to eliminate any possibility of a "price squeeze," thus eliminating the need for the imputation safeguard. MCI argued that the rule's application to incumbent local exchange companies (ILECs) with fewer than one million access lines should be mandatory rather than discretionary. TSTCI urged that the rule's application be narrowed to apply only to Tier 1 LECs and non-Tier 1 LECs that present their own cost studies. The commission believes the application of the rule as proposed is workable and consistent with PURA 95. Several parties commented on the rule's definition of "competitively available." AT&T urged applications of the terms of PURA sec.3.051(e)(2). The commission believes that this statutory language, which enumerates factors to be considered in an evidentiary proceeding, is not appropriate in the context of imputation, in which the commission will be required to make a determination within 45 days. GTE commented that the 60-percent-of-access-lines criterion does not recognize geographic differences in the level of competition and argues that the provision will be abused by competitors. Time Warner objected to the same language, arguing that the provision will be abused by incumbents. MCI and Time Warner commented that the reference to "access lines to which the service will be available" may be abused by incumbents. The commission believes the language as proposed describes a rebuttable presumption and therefore allows affected parties to present evidence that the rule's criteria may not apply in certain circumstances. AT&T took the position that resale under FTA 96 does not replace the imputation requirement of PURA sec.3.345 and urged deletion of (d)(1). MCI supported the rule's language "so long as wholesale inputs are 'competitively available.'" The commission believes the language of the rule reflects the provisions of PURA 95. AT&T urged the commission to affirm that imputation of switched access is implicit in the proposed rule. In its comments, AT&T observed that while the rule does not explicitly replicate the language of PURA 95 sec.3.454(e), it does contain provisions which "capture the essence" of that statutory requirement. The commission agrees with the conclusion of AT&T, and intends that the rule be read as incorporating a requirement that switched access be imputed to the price of each service for which switched access is a component. MCI believed the exemption in PURA sec.3.454(d) is permissive rather than mandatory. TCG commented that the rule should apply to Basket I services provided by GTE and SWB. The commission believes the rule as proposed reflects the meaning of the law. AT&T points out that the rule's exemption of "retail services" capped under Subtitle H is more narrow than the exemption provided in PURA sec.3.454(d). The commission has added the words "local exchange telephone" to (e) of the rule to address the concerns of AT&T and to accurately reflect the law. Sprint believed that Basket-I-type services provided by a non-electing LEC should be exempt from imputation requirements. They pointed out that "until rates are rebalanced, basic local service will not meet an imputation test." The commission believes that Sprint's concerns are addressed by subsection (d)(1) of the rule. AT&T and GTE commented that the 90-day period for the commission to determine whether an imputation study is required is too long. The commission agrees, and has reduced the time period to 45 days. MCI objected to the public interest standard in subsection (i)(1) of the rule. The commission believes the rule as proposed is consistent with PURA 95. SWB and GTE argued that the rule's definition of a "service" is too broad and is inconsistent with PURA sec.1.002(16) and Substantive Rule 23.3. TCG and TW argued that the application of the rule on a service-by-service rather than rate-element-by-rate-element basis makes it ineffective as a competitive safeguard. TW further commented that the failure of the rule to define "function," which appears in subsection (b) of the rule and of PURA sec.3.454, may result in confusion which could frustrate the purpose of the rule. The commission believes the definition of "service" in the rule faithfully implements the provisions of PURA 95. MCI commented that subsection (h) regarding LEC responsibility for the validity of demand forecasts should require an ILEC to provide proof that actual events have borne out its forecast. The commission believes the language of the rule permits the commission to require such follow-up studies as appropriate on a case-by-case basis. This amendment is adopted under PURA sec.1.101, which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; and specifically, sec.3.454, which requires that the commission adopt rules governing imputation of the price of a service not later than December 1, 1996. Cross Index to Statutes: Public Utility Regulatory Act of 1995, Texas Revised Civil Statutes Annotated, articles 1146c-O, sec.sec.1.101, 3.454 (Vernon Supp. 1996) (PURA 95). sec.23.102. Imputation. (a) Application. This section applies to incumbent local exchange companies (ILECs) as that term is defined in the Public Utility Regulatory Act of 1995 (PURA 95), sec.3.002(3). The obligations prescribed by this section may be applied to an ILEC with fewer than one million access lines in the state only on a bona fide request from a party having a justiciable interest. (b) Purpose. This section implements the state's regulatory policy to prevent an ILEC from selling a wholesale service or function to another telecommunications utility at a price that is higher than the rate the ILEC implicitly includes in retail services it provides. (c) Definitions. The following words and terms, when used in this section, shall have the following meaning unless the context clearly indicates otherwise. (1) Competitively available. A service is competitively available when it may be obtained from at least one source other than the ILEC to an extent sufficient to discipline the price charged by the ILEC in the state. In the context of an imputation test for a retail service, there shall be a rebuttable presumption that a wholesale service is competitively available if: (A) the ILEC providing the retail service has elected under Subtitle H of PURA 95 and the wholesale service is in Basket III; or, (B) the service is available from a competitor, other than a pure reseller, to 60% of the access lines to which the retail service is or will be available. (2) Retail service. A telecommunications service is considered a retail service when it is provided to residential or business end users and the use of the service is other than resale. Each tariffed or contract offering which a customer may purchase to the exclusion of other offerings shall be considered a service. For example: the various mileage bands for standard toll services are rate elements, not services; however, individual optional calling plans that can be purchased individually and which are offered as alternatives to each other are services, not rate elements. (3) Wholesale service. A telecommunications service is considered a wholesale service when it is provided to a telecommunications utility and the use of the service is to provide a retail service to residence or business end-user customers. (d) Services for which imputation is required. Except as provided otherwise in subsection (e) of this section, imputation of the price of a wholesale service is required in establishing the rates for a retail service if: (1) the retail service cannot be purchased at wholesale rates for resale by a competitor; and, (2) a wholesale service that is not competitively available is necessary for the competitor to provide its competing service. (e) Rates to which imputation is not required. The price of a retail local exchange telephone service in Basket I of Subtitle H or a retail local exchange telephone service whose rate is capped pursuant to Subtitle I of PURA 95 shall not be subject to the requirements of this section unless: (1) the four year price cap under PURA 95 Subtitle H or the six-year price cap under PURA 95 Subtitle I has expired; (2) the price cap applicable to the service is raised; (3) the ILEC's rates for local exchange telephone service are restructured or rebalanced; or, (4) the service is reclassified from Basket I to Basket II or III. (f) Imputation on a service-by-service basis. Imputation shall be applied on a service-by-service basis, not on a rate-element-by-rate-element basis. (g) Imputation methodology. An imputation study filed pursuant to this section shall demonstrate that the price the ILEC charges for a retail service recovers the cost of providing the service. Alternatively, the study may demonstrate that, no later than the second year after the retail service is first offered, the revenue the ILEC receives from the service recovers the cost of providing the service. For purposes of this section, the cost of providing a retail service is defined as the sum of: (1) specifically tariffed premium rates for the noncompetitive services or service functions, or elements of these noncompetitive services or service functions (or their functional equivalents) that are used to provide the retail service; (2) the total service long-run incremental costs of the competitive services or service functions that are used; (3) any costs, not otherwise reflected in paragraphs (1) or (2) of this subsection, that are specifically associated with provision of the retail service or group of services; and, (4) any cost or surcharge associated with an explicit subsidy that is applied to all providers of the retail service for the purpose of promoting universal service. (h) Imputation study for a new service or a revised rate. In forecasting revenue and costs in an imputation study for a new service or a revised rate, it shall be the responsibility of the ILEC to demonstrate: (1) the validity of the data on which the forecast is based; (2) the validity of the statistical method or model on which the forecast is based; and, (3) the validity of the interpretation and application of the forecast in the imputation study. (i) Timing of imputation studies. An imputation study shall be filed by an ILEC under any of the circumstances set out in paragraphs (1)-(5) of this subsection. (1) Upon complaint by a party, and a finding by the commission that an imputation study is in the public interest, or on the commission's own motion. Upon receiving a complaint calling for an imputation study, the commission shall determine within 45 days whether an imputation study shall be required. (2) When an ILEC files an application to reduce a rate for a retail service for which imputation is required. (3) When an ILEC applies to increase a rate for a wholesale service that: (A) is not competitively available; and, (B) is necessary for a competitor to provide its competing service or is a component of a retail service for which imputation is required. (4) In conjunction with an application to provide a new service or contract that uses a wholesale service that: (A) is not competitively available; and, (B) is necessary for a competitor to provide its competing service. (5) As otherwise ordered by the commission. (j) Confidentiality of data. If a party classifies data filed with the commission as confidential, the party should designate the section of the Public Information Act (Chapter 522, Texas Government Code) that excepts the information from public disclosure. The commission will treat such information as confidential subject to the provisions of the Public Information Act and protective orders issued by the commission applicable to the data. (k) Waiver provisions. (1) The commission may waive the imputation requirement for a public interest service such as 9-1-1 or dual party relay service if the commission determines that the waiver is in the public interest. (2) After notice and hearing, and subject to the requirements of law, the commission may waive any provision of this section for good cause. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616614 Paula Mueller Secretary of the Commission Public Utility Commission Effective date: December 6, 1996 Proposal publication date: July 12, 1996 For further information, please call: (512) 936-7162 TITLE 19. EDUCATION PART VII. State Board for Educator Certification CHAPTER 230. Professional Educator Preparation and Certification The State Board for Educator Certification adopts new Chapter 230, sec.sec.230.1-230.6, 230.91, 230.121, 230.151-230.161, 230.191-230.199, 230.231, 230.261-230.271, 230.301-230.308, 230.310, 230.311, 230.313-230.316, 230.319, 230.361, 230.391, 230.411-230.414, 230.431-230.438, 230.461-230.463, 230.481- 230.484, 230.501-230.507, 230.509-230.511, 230.531, 230.532, 230.551-230.560, 230.601, 230.610, 230.611, and 230.901 concerning Professional Educator Preparation and Certification, without changes to the proposed text as published in the October 1, 1996, issue of the Texas Register (21 TexReg 9333) and will not be republished. Subchapter A concerns the Educator Preparation Accountability System; Subchapter D concerns Local Cooperative Teacher Education Centers; Subchapter E concerns Centers for Professional Development and Technology; Subchapter F concerns Professional Educator Preparation; Subchapter G concerns Program Requirements for Preparation of School Personnel for Initial Certificates and Endorsements; Subchapter H concerns Alternative Certification of Teachers; Subchapter I concerns Standards for Approval of Institutions Offering Graduate Education Programs for Professional Certification; Subchapter J concerns Graduate Education Programs for Professional Certification; Subchapter K concerns Alternative Certification of Administrators; Subchapter L concerns Postbaccalaureate Requirements for Persons Seeking Initial Teacher Certification through Approved Texas Colleges and Universities; Subchapter M concerns Certification of Educators in General; Subchapter N concerns Certificate Issuance Procedures; Subchapter O concerns Texas Certificates Based on Certification and College Credentials from Other States; Subchapter P concerns Requirements for Provisional Certificates and Specialized Assignments or Programs; Subchapter Q concerns Permits; Subchapter R concerns Record of Certificates, Subchapter S concerns Paraprofessional Certification; Subchapter U concerns Assignment of Public School Personnel; Subchapter V concerns Continuing Education; and Subchapter Z concerns General Provisions Relating to the Transition of Authority to the State Board for Educator Certification. This new Chapter is being adopted to allow the State Board for Educator Certification to assume its statutory duties. Senate Bill 1 (74th Legislature) created the State Board for Educator Certification to grant educators the authority to govern their own profession. This new Chapter 230 transfers from the State Board of Education to the State Board for Educator Certification rules that currently exist concerning the preparation and certification of educators. No substantive changes to the existing rules have been made. The only changes proposed deal with transferring authority from the State Board of Education to the State Board for Educator Certification and conforming the rules to the new Texas Education Code. No comments were received regarding adoption of the new rules. SUBCHAPTER A. Educator Preparation Accountability System 19 TAC sec.sec.230.1-230.6 These sections are adopted under Texas Education Code (TEC), sec.21.045, which requires the State Board for Educator Certification to adopt rules establishing standards to govern the continuing accountability of all educator preparation programs. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616579 Mark Littleton Executive Director State Board for Educator Certification Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 469-3004 SUBCHAPTER D. Local Cooperative Teacher Education Centers 19 TAC sec.230.91 This section is adopted under the Texas Education Code (TEC), sec.21.051, which requires the State Board for Educator Certification to adopt rules providing flexible options for field experience or internships required for certification. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616580 Mark Littleton Executive Director State Board for Educator Certification Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 469-3004 SUBCHAPTER E. Centers for Professional Development and Technology 19 TAC sec.230.121 This section is adopted under Texas Education Code (TEC), sec.21.047, which allows the State Board for Educator Certification to adopt rules that create a process to establish centers for professional development. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616581 Mark Littleton Executive Director State Board for Educator Certification Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 469-3004 SUBCHAPTER F. Professional Educator Preparation and Certification 19 TAC sec.sec.230.151-230.161 These sections are adopted under Texas Education Code (TEC), sec.21.045, which requires the State Board for Educator Certification to adopt rules establishing standards to govern the approval of all educator preparation programs. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616582 Mark Littleton Executive Director State Board for Educator Certification Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 469-3004 SUBCHAPTER G. Program Requirements for Preparation of School Personnel for Initial Certificates and Endorsements 19 TAC sec.sec.230.191-230.199 These sections are adopted under Texas Education Code (TEC), sec.sec.21.041(b)(2) and (4), 21.044, 21.048 and 21.050 which require the State Board for Educator Certification to adopt rules that establish the academic, internship, and examination requirements for all candidates for certification as well as the classes of certificates offered. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616583 Mark Littleton Executive Director State Board for Educator Certification Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 469-3004 SUBCHAPTER H. Alternative Certification of Teachers 19 TAC sec.230.231 This section is adopted under Texas Education Code (TEC), sec.21.049, which requires the State Board for Educator Certification to adopt rules providing for alternative certification programs. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616584 Mark Littleton Executive Director State Board for Educator Certification Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 469-3004 SUBCHAPTER I. Standards for Approval of Institutions Offering Graduate Education Programs for Professional Certification 19 TAC sec.sec.230.261-230.271 These sections are adopted under Texas Education Code (TEC), sec.21.045, which requires the State Board for Educator Certification to adopt rules establishing standards to govern the approval of all educator preparation programs. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616585 Mark Littleton Executive Director State Board for Educator Certification Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 469-3004 SUBCHAPTER J. Graduate Education Programs for Professional Certification 19 TAC sec.sec.230.301-230.308, 230.310, 230.311, 230.313-230.316, 230.319 These sections are adopted under Texas Education Code (TEC), sec.sec.21.041(b)(2) and (4), 21.044, 21.048, and 21.050 which require the State Board for Educator Certification to establish the academic, internship, and examination requirements for all candidates for certification as well as the classes of certificates offered. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616586 Mark Littleton Executive Director State Board for Educator Certification Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 469-3004 SUBCHAPTER K. Alternative Certification of Administrators 19 TAC sec.230.361 This section is adopted under Texas Education Code (TEC), sec.21.049, which requires the State Board for Educator Certification to adopt rules providing for alternative certification programs. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616587 Mark Littleton Executive Director State Board for Educator Certification Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 469-3004 SUBCHAPTER L. Postbacalaureate Requirements for Persons Seeking Initial Teacher Certification through Approved Texas Colleges and Universities 19 TAC sec.230.391 This section is adopted under Texas Education Code (TEC), sec.sec.21.041(b)(2) and (4), 21.044, 21.048, and 21.050 which require the State Board for Educator Certification to adopt rules that establish the academic, internship, and examination requirements for all candidates for certification as well as the classes of certificates offered. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616588 Mark Littleton Executive Director State Board for Educator Certification Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 469-3004 SUBCHAPTER M. Certification of Educators in General 19 TAC sec.sec.230.411-230.414 These sections are adopted under Texas Education Code (TEC), sec.sec.21.041(b)(2) and (4), 21.044, 21.048, 21.050, and 22.082 which require the State Board for Educator Certification to adopt rules that establish the academic, internship, and examination requirements for all candidates for certification; specify the classes of certificates offered; and to obtain all criminal history information that relates to an applicant for certification. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616589 Mark Littleton Executive Director State Board for Educator Certification Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 469-3004 SUBCHAPTER N. Certificate Issuance Procedures 19 TAC sec.sec.230.431-230.438 These sections are adopted under Texas Education Code (TEC), sec.sec.21.041(b)(4) and (c), and 21.048 which require the State Board for Educator Certification to adopt rules that specify the standards, assessments, and fees required for the issuance of an educator certificate. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616590 Mark Littleton Executive Director State Board for Educator Certification Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 469-3004 SUBCHAPTER O. Texas Educator Certificates Based on Certification and College Credentials from Other States 19 TAC sec.sec.230.461-230.463 These sections are adopted under Texas Education Code (TEC), sec.sec.21.041(b)(5) and 21.052 which require the State Board for Educator Certification to adopt rules that provide for the issuance of an educator certificate to a person holding a similar certificate issued by another state. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616591 Mark Littleton Executive Director State Board for Educator Certification Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 469-3004 SUBCHAPTER P. Requirements for Provisional Certificates and Specialized Assignments or Programs 19 TAC sec.sec.230.481-230.484 These sections are adopted under Texas Education Code (TEC), sec.sec.21.041(b)(2), (4), and (6) which require the State Board for Educator Certification to adopt rules that specify the classes of certificates offered, the requirements for the issuance of an educator certificate, and to provide for special or restricted certification of educators. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616592 Mark Littleton Executive Director State Board for Educator Certification Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 469-3004 SUBCHAPTER Q. Permits 19 TAC sec.sec.230.501-230.507, 230.509-230.511 These sections are adopted under Texas Education Code (TEC), sec.21.041(b)(2) which requires the State Board for Educator Certification to adopt rules that specify the classes of certificates offered. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616593 Mark Littleton Executive Director State Board for Educator Certification Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 469-3004 SUBCHAPTER R. Record of Certificates 19 TAC sec.230.531, sec.230.532 These sections are adopted under Texas Education Code (TEC), sec.21.041(b)(8) which requires the State Board for Educator Certification to adopt rules that provide for an educator code of ethics. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616594 Mark Littleton Executive Director State Board for Educator Certification Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 469-3004 SUBCHAPTER S. Paraprofessional Certificate 19 TAC sec.sec.230.551-230.560 These sections are adopted under Texas Education Code (TEC), sec.21.041(b)(2) which requires the State Board for Educator Certification to adopt rules that specify the classes of certificates offered. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616595 Mark Littleton Executive Director State Board for Educator Certification Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 469-3004 SUBCHAPTER U. Assignment of Public School Personnel 19 TAC sec.230.601 This section is adopted under Texas Education Code (TEC), sec.21.041(b)(2) which requires the State Board for Educator Certification to adopt rules that specify the classes of certificates to be offered. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616596 Mark Littleton Executive Director State Board for Educator Certification Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 469-3004 SUBCHAPTER V. Continuing Education 19 TAC sec.230.610, 230.611 These sections are adopted under Texas Education Code (TEC), sec.21.044 and 21.054 which require the State Board for Educator Certification to adopt rules that require an induction year program and establish continuing education requirements for educators. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616597 Mark Littleton Executive Director State Board for Educator Certification Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 469-3004 SUBCHAPTER Z. General Provisions Relating to the Transition of Authority to the State Board for Educator Certification 19 TAC sec.230.901 This section is adopted under Section 63(h), Senate Bill 1, 74th Texas Legislature (1995), which provides for the creation of the State Board for Educator Certification and requires that all authority under the Texas Education Code (TEC), Chapter 21, Subchapter B, be assumed by the Board no later than November 1, 1997. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616598 Mark Littleton Executive Director State Board for Educator Certification Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 469-3004 TITLE 22. EXAMINING BOARDS PART XVII. Texas State Board of Plumbing Examiners CHAPTER 361.Administration Election of Board Officers 22 TAC sec.361.29 The Texas State Board of Plumbing Examiners adopts a new rule sec.361.29, concerning Election of Board Officers, without changes to the proposed text as published in the October 1, 1996, issue of the Texas Register (21 TexReg 9396). The new rule defines the process used for election of the Board officers, date of elections and the length of the terms. No comments were received concerning the adoption of the section. The new section is adopted under Texas Civil Statutes, Article 6243-101, which provide the Texas State Board of Plumbing Examiners with the authority to adopt rules consistent with this Act to carry out its duties in administering this Act. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616530 Ernest Pereyra, CPA Chief Fiscal Officer Texas State Board of Plumbing Examiners Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 458-2145 CHAPTER 363.Examinations 22 TAC sec.363.1 The Texas State Board of Plumbing Examiners adopts an amendment to sec.363.1, concerning Qualifications, without changes to the proposed text as published in the October 1, 1996, issue of the Texas Register (21 TexReg 9397). The amendment allows examination applicants to take the journeyman examination without a high school diploma or a GED if they had begun accumulating their work experience hours prior to September 1, 1993 and apply to take the Journeyman examination by December 31, 1997. During the public comment period 27 letters addressing this amendment were received. 25 of the 27 letters responded this amendment should not be adopted. The 25 letters were from plumbing companies, school districts, Christian schools, the public, cities, and child care services. The letters stated that the amendment sent the wrong message to high school students and the reduction of educational requirements is bad for the plumbing trade. The 2 letters for approval of the amendment were from the public and a plumbing company. The Board decided to adopt the amendment even though there were 25 letters against the amendment because they believed the Board should have originally exempted those individuals which began accumulating their work experience prior to the GED and High School Diploma rule effective date of September 1, 1993. The amendment is adopted under Texas Civil Statutes, Article 6243-101, which provide the Texas State Board of Plumbing Examiners with the authority to adopt rules consistent with this Act to carry out its duties in administering this Act. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616531 Ernest Pereyra, CPA Chief Fiscal Officer Texas State Board of Plumbing Examiners Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 458-2145 CHAPTER 365.Licensing 22 TAC sec.365.5 The Texas State Board of Plumbing Examiners adopts an amendment to sec.365.5, Renewals, with changes to the proposed text as published in the October 1, 1996, issue of the Texas Register (21 TexReg 9398). The amendment specifies that individuals with a medical gas endorsement must take at least two hours of additional continuing education during the third year of their medical gas endorsement in order to renew their license. No comments were received concerning the adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 6243-101, which provide the Texas State Board of Plumbing Examiners with the authority to adopt rules consistent with this Act to carry out its duties in administering this Act. sec.365.5.Renewals. (a)-(d) (No change.) (e) Any journeyman plumber, master plumber, or plumbing inspector wishing to renew a license must submit to the administrator Board-approved documentation of successful completion within the previous license year of six hours of Board approved continuing education, subject to the additional requirement in (f) below. Any journeyman plumber or master plumber no longer required to have a current license because of retirement or of employment in an occupation which does not require the journeyman or master license may be exempted from complying with the continuing education requirements by submitting documentation each year in support of this fact and the license will be marked inactive. Should the individual return to the plumbing trade, he/she will be required to abide by the continuing education requirement before the license may be renewed. No inactive license may be issued or renewed after September 1, 1996. (f) Any license holder with a medical gas endorsement must take at least two additional classroom hours of continuing education within the third year of the endorsement period. The additional classroom hours shall consist of instruction of the most current edition of the NFPA99C and the changes therein. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616532 Ernest Pereyra, CPA Chief Fiscal Officer Texas State Board of Plumbing Examiners Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 458-2145 22 TAC 365.14 The Texas State Board of Plumbing Examiners adopts an amendment to sec.365.14, concerning Continuing Education Programs, without changes to the proposed text as published in the October 1, 1996, issue of the Texas Register (21 TexReg 9398). The amendment specifies that instructors of medical gas endorsement continuing education must comply with the requirements in sec.363.11(a) (Endorsement Training Programs). No comments were received concerning the adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 6243-101, which provide the Texas State Board of Plumbing Examiners with the authority to adopt rules consistent with this Act to carry out its duties in administering this Act. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616533 Ernest Pereyra, CPA Chief Fiscal Officer Texas State Board of Plumbing Examiners Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 458-2145 CHAPTER 367.Enforcement 22 TAC sec.367.2 The Texas State Board of Plumbing Examiners adopts an amendment to sec.367.2, concerning Standards of Conduct, without changes to the proposed text as published in the October 1, 1996, issue of the Texas Register (21 TexReg 9399). The amendment specifies that a licensed plumber s responsibilities do not differ in cities with over 5,000 inhabitants from areas with under 5,000 inhabitants or in unincorporated areas. No comments were received concerning the adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 6243-101, which provide the Texas State Board of Plumbing Examiners with the authority to adopt rules consistent with this Act to carry out its duties in administering this Act. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616534 Ernest Pereyra, CPA Chief Fiscal Officer Texas State Board of Plumbing Examiners Effective date: December 5, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 458-2145 TITLE 34. PUBLIC FINANCE PART I. Comptroller of Public Accounts CHAPTER 3. Tax Administration SUBCHAPTER D. Occupation Tax on Sulphur Producers 34 TAC sec.3.41, sec.3.42 The Comptroller of Public Accounts adopts the repeal of sec.3.41 and sec.3.42, concerning the definition of a sulphur producer and the due date for the sulphur tax reports and payments, without changes to the proposed text as published in the September 17, 1996, issue of the Texas Register (21 TexReg 8903). The comptroller has determined that the consolidation of sections involving similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The sections are being repealed in order to simplify the consolidation of related sections into a single section. The substance of the current sec.3.41 and sec.3.42 will be included in the new sec.3.41, concerning definition and due dates. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeals implement Tax Code, sec.111.002. This agency hereby certifies that the repeals have been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 13, 1996. TRD-9616480 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 4, 1996 Proposal publication date: September 17, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.41 The Comptroller of Public Accounts adopts a new sec.3.41, concerning definition and due dates, without changes to the proposed text as published in the September 17, 1996, issue of the Texas Register (21 TexReg 8903). The comptroller has determined that the consolidation of sections involving similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. Therefore, current sec.3.41, concerning definition of sulphur producers, is being proposed for repeal. The new section consolidates the substance of the current sec.3.41 with the text in sec.3.42, concerning due date for the sulphur tax reports and payments. No comments were received regarding adoption of the new section. This new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Tax Code, sec.sec.203.001, 203.052, and 203.053. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 13, 1996. TRD-9616481 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 4, 1996 Proposal publication date: September 17, 1996 For further information, please call: (512) 463-4062 SUBCHAPTER F.Motor Vehicle Sales Tax 34 TAC sec.3.72, sec.3.89 The Comptroller of Public Accounts adopts the repeal of sec.3.72 and sec.3.89, concerning farm trailers and sales of house trailers, without changes to the proposed text as published in the October 1, 1996, issue of the Texas Register (21 TexReg 9424). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The sections are being repealed in order to simplify the consolidation of related sections into a single section. The substance of the current sec.3.72 and sec.3.89 will be included the new sec.3.72, concerning trailers. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeals implements Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616740 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.72 The Comptroller of Public Accounts adopts new sec.3.72, concerning trailers, without changes to the proposed text as published in the October 1, 1996, issue of the Texas Register (21 TexReg 9424). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. Therefore, current sec.3.72 is being adopted for repeal. The new section consolidates the substance of the current sec.3.72, concerning farm trailers, with the substance of sec.3.89, concerning sales of house trailers. A definition of trailer has been added that includes farm trailers and units previously defined as house trailers. Units such as stingers and converter gears previously added to the definition of motor vehicle by the Legislature are also included in this definition. No comments were received regarding adoption of the new section. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Tax Code, sec.152.001 and sec.152.091. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616738 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.73, sec.3.85 The Comptroller of Public Accounts adopts the repeal of sec.3.73 and sec.3.85, concerning determination of fair market value for replaced vehicles and engaging in business, without changes to the proposed text as published in the October 1, 1996, issue of the Texas Register (21 TexReg 9426). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The sections are being repealed in order to simplify the consolidation of related sections into a single section. The substance of the current sec.3.73 and sec.3.85 will be included in the new sec.3.73, concerning qualifying for fair market value deduction and determination of fair market value for replaced vehicles. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeals implement Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616731 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.73 The Comptroller of Public Accounts adopts new sec.3.73, concerning qualifying for fair market value deduction and determination of fair market value for replaced vehicles, without changes to the proposed text as published in the October 1, 1996, issue of the Texas Register (21 TexReg 9426). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. Therefore, current sec.3.73 is being adopted for repeal. The new section consolidates the substance of the current sec.3.73, concerning determination of fair market value for replaced vehicles, with the substance of sec.3.85, concerning engaging in business. No comments were received regarding adoption of the new section. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Tax Code, sec.152.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616730 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 463-4062 34 TAC sec.sec.3.75, 3.77, 3.83, The Comptroller of Public Accounts adopts the repeal of sec.sec.3.75, 3.77, and 3.83, concerning voided receipt because of bad check, refunds and payments under protest, and payment instruments, without changes to the proposed text as published in the October 11, 1996, issue of the Texas Register (21 TexReg 9769). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The sections are being repealed in order to simplify the consolidation of related sections into a single section. The new sec.3.75, concerning refunds, payments under protest, payment instruments and dishonored payments, consolidates the substance of the current sec.sec.3.75, 3.77, and 3.83. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeals implement Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616739 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 11, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.75 The Comptroller of Public Accounts adopts new sec.3.75, concerning refunds, payments under protest, payment instruments, and dishonored payments, without changes to the proposed text as published in the October 11, 1996, issue of the Texas Register (21 TexReg 9770). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit the taxpayers by providing a more effective means of obtaining information. Therefore, current sec.3.75 is being adopted for repeal. The new section consolidates the substance of the current sec.3.75, concerning voided receipts because of bad check, sec.3.77, concerning refunds and payments under protest, and sec.3.83, concerning payment instruments. Due to legislative changes, definitions of dealer and seller-financed sales are added to subsection (a) of this section and the handling of these refunds is added to subsection (b) of this section. No comments were received regarding adoption of the new section. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Tax Code, sec.sec.111.004, 111.1042, 111.105, 111.107, 111.108, 111.110, 111.207, 112.051, and 112.052. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616728 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 11, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.78, sec.3.91, sec.3.92 The Comptroller of Public Accounts adopts the repeal of sec.3.78, sec.3.91, and sec.3.92, concerning motor vehicles rented in Texas, bad debts, and direct payment qualifications and procedures, without changes to the proposed text as published in the September 24, 1996, issue of the Texas Register (21 TexReg 9140). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The sections are being repealed in order to simplify the consolidation of related sections into a single section. The substance of the current sec.3.78, sec.3.91, and sec.3.92, will be included in the new sec.3.78, concerning motor vehicle rentals. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeals implement Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616549 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 5, 1996 Proposal publication date: September 24, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.78 The Comptroller of Public Accounts adopts new sec.3.78, concerning motor vehicle rentals, with changes to the proposed text as published in the September 24, 1996, issue of the Texas Register (21 TexReg 9141). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. Therefore, current sec.3.78 is being adopted for repeal. The new section consolidates the substance of the current sec.3.78, concerning motor vehicles rented in Texas, with the substance of sec.3.91, concerning bad debts, and sec.3.92, concerning direct payment qualifications and procedures. Language is also added to the definition of gross rental receipts in subsection (a)(1) to address amendments to the Certificate of Title Act by the House Bill 2151, 74th Legislature, 1995, allowing a motor vehicle rental company to make a separate charge for title fees, registration fees, and property taxes. No comments were received regarding adoption of the new section. However, the comptroller made nonsubstantive wording changes to subsections (a)(1)(D); (a)(3); (a)(3)(A), (B), (C); (c)(2)(F); and (d)(2)(B) for consistency. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Tax Code, sec.sec.152.001, 152.003, 152.026, and 152.045. sec.3.78.Motor Vehicle Rentals. (a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Gross rental receipts - Any amount of money or the value of property received by or due the owner of a motor vehicle as consideration for the rental of the vehicle to another including a reimbursement charge for property tax, title fee, and registration fee expenses. Gross rental receipts does not include and tax is not due on: (A) a separately stated fee or charge for insurance; (B) an assessment for damage to the vehicle which occurred during a rental agreement period; (C) separately stated receipts for motor fuel sold by the owner of the vehicle; (D) discounts; or (E) any amount of gross rental receipts tax collected by or due the owner of the vehicle. (2) Owner - The person named in the Texas certificate of title of a motor vehicle as the owner of the vehicle, or a person having exclusive use of a motor vehicle under a rental agreement and who holds the motor vehicle for re-rental. (3) Rental or renting - An agreement whereby: (A) the owner of a motor vehicle gives exclusive use of the vehicle to another for a consideration and for a period of time not to exceed 180 days under any one agreement; (B) an original manufacturer of motor vehicles gives exclusive use of a motor vehicle to another for a consideration; or (C) the owner of a motor vehicle gives exclusive use of the vehicle to another for re-rental purposes, regardless of the period of time covered by the agreement. (4) Rented in Texas - A motor vehicle is "rented in Texas" when the vehicle is delivered to the renter in Texas regardless of the location of the rental agency. A motor vehicle is not "rented in Texas" if the vehicle is delivered to the renter outside the State of Texas or to a common carrier for transportation to the renter outside of Texas. (5) Retailer - Any owner of a motor vehicle who is responsible for collecting and reporting motor vehicle gross rental receipts tax pursuant to the Tax Code, sec.152.045. (b) Application of tax. (1) When a motor vehicle is rented in Texas, all of the rental receipts are subject to the Texas motor vehicle gross rental receipts tax. If a person who rents a motor vehicle in Texas subsequently moves the vehicle to another state and pays a legitimately imposed rental receipts tax or sales and use tax, he may claim a credit in the amount of the tax paid to the other state against any Texas motor vehicle gross rental receipts tax due after payment of the tax to the other state. (2) If a motor vehicle is not rented in Texas, the gross rental receipts from the rental are not subject to the Texas motor vehicle gross rental receipts tax. (c) Bad debt. (1) Tax not due on bad debt. (A) A retailer may take a deduction for rental receipts that are determined to be uncollectible during the same report period in which the rental was made if: (i) the uncollectible amount of gross rental receipts is entered on the retailer's books as a bad debt; and (ii) the bad debt will be claimed as a deduction for federal income tax purposes. (B) A retailer who has previously paid motor vehicle gross rental receipts tax may take a deduction or seek a credit for the tax paid on the gross rental receipts that are determined uncollectible if the uncollectible amount is entered on the retailer's books as a bad debt and claimed as a deduction for federal income tax purposes. (i) The deduction must be taken or credit claimed for the period in which the amount was determined uncollectible. (ii) If the uncollectible amount includes taxable and nontaxable receipts as defined in subsection (a) of this section, a deduction or credit may be claimed for only the amount that represents taxable receipts. (iii) To determine the amount that represents taxable receipts, all payments and credits may be applied proportionally against the fees the customer agreed to pay. (C) If a retailer subsequently collects all or any part of a taxable amount previously determined uncollectible and charged off for income tax purposes as a bad debt, the taxable amount collected, as defined in subparagraph (B)(iii) of this paragraph, must be included in gross rental receipts on the return filed after such collection and the proper amount of tax must be remitted. (2) Records required. To support a claim for a bad debt deduction or credit, a retailer must maintain complete records which document: (A) the vehicle identification number, the year, and the model of the vehicle or vehicles involved; (B) the date of the rental for which a deduction or credit is claimed; (C) the name and address of the customer; (D) the amount the customer agreed to pay; (E) any amount on which the retailer has already paid tax; (F) any payment or other credit applied to the account; and (G) evidence that the amount determined to be uncollectible has been legally charged off as a bad debt for federal income tax purposes. (3) Credit. Credit does not qualify as a bad debt. When a retailer extends credit to a customer making a rental, the amount of credit so extended may not be labeled as a bad debt merely for the purpose of delaying the payment of tax. (d) Direct payment qualifications and procedures. (1) A holder of a motor vehicle rental tax direct payment permit may give an exemption certificate in lieu of paying the taxes for motor vehicles which are rented by the permit holder solely for its own use. A limited sales, excise, and use tax direct payment blanket exemption certificate may not be issued for the rental of motor vehicles. (2) An applicant for a motor vehicle rental tax direct payment permit must comply with the following: (A) The applicant must be a responsible person paying annually at least $800,000 in taxable motor vehicle rentals. (i) The $800,000 does not include any rentals paid by the applicant for vehicles that are to be re- rented. (ii) The $800,000 does not include any payments made on motor vehicle purchases or leases. An application for a permit must be accompanied by a statement that the applicant meets all the conditions of this section, along with sufficient records to support the statement. (B) The applicant must be able to establish to the satisfaction of the comptroller that its accounting methods clearly distinguish between rentals of motor vehicles and leases, rentals, and purchases of other tangible personal property taxed under the Sales Tax Act. A clear description of the applicant's accounting methods must accompany any application for a permit. (C) The applicant must agree to accrue and pay the motor vehicle rental tax on a separate return from the taxes imposed by the Sales Tax Act. The applicant must also agree to make the motor vehicle rental tax payments to the state on or before the 20th day of the month following each month in which the motor vehicles are rented. A written agreement to this effect will be furnished by the comptroller; it must be signed and returned along with any application for a motor vehicle rental direct payment permit. (3) Applicants for a motor vehicle rental direct payment permit should write and request an application from the Comptroller of Public Accounts, Austin, Texas 78774. (4) Any person whose motor vehicle rental direct payment permit is either voluntarily forfeited or cancelled by the comptroller's office must immediately notify all owners of the tax-exempt motor vehicles he rents, advising them that the exemption certificate issued to them is no longer valid. (5) The motor vehicle rental direct payment permit may be used only by the legal entity (including its branches and divisions) to which it is issued. A permit holder may not authorize any other person or firm, including related corporations, to rent a motor vehicle tax free by using its permit. Use by other persons or firms is grounds for revocation of the permit. (6) Under no circumstances may a permit holder give a motor vehicle rental tax direct payment exemption certificate to a contractor making an improvement to realty for the permit holder under either a separated or lump-sum contract. A contractor who does not personally hold a motor vehicle rental direct payment permit and who rents a motor vehicle for use in performing a contract must pay the motor vehicle rental tax to the owner of the rented motor vehicle. (7) The holder of a valid motor vehicle rental tax direct payment permit must accrue the motor vehicle rental tax on any motor vehicles rented in Texas and subsequently used out of state. (8) A motor vehicle direct payment permit holder must file a monthly return whether or not it has any motor vehicle rental tax to report. Failure to file returns timely will subject the holder to penalties and interest and revocation of the permit. (9) A motor vehicle rental tax direct payment exemption certificate must comply substantially with the following certificate description. Each exemption certificate must bear the motor vehicle rental direct payment permit number of the permit holder. Figure: 34 TAC 3.78(d)(9) This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616550 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 5, 1996 Proposal publication date: September 24, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.81 The Comptroller of Public Accounts adopts the repeal of sec.3.81, concerning expiration of out-of-state registration, without changes to the proposed text as published in the October 1, 1996, issue of the Texas Register (21 TexReg 9427). The section is no longer necessary because of recent changes to the Transportation Code that now allow a vehicle owner to operate in Texas under a thirty-day temporary permit. No comments were received regarding adoption of the repeal. The repeal is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeal implements Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616729 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.88, sec.3.89 The Comptroller of Public Accounts adopts the repeal of sec.3.88 and sec.3.93, concerning moveable specialized equipment and off-road vehicles, without changes to the proposed text as published in the September 24, 1996, issue of the Texas Register (21 TexReg 9143). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The sections are being repealed in order to simplify the consolidation of related sections into a single section. The substance of the current sec.3.88 and sec.3.93 will be included in the new sec.3.88, concerning moveable specialized equipment and off-road vehicles. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeals implement Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616522 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 5, 1996 Proposal publication date: September 24, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.88 The Comptroller of Public Accounts adopts a new sec.3.88, concerning moveable specialized equipment and off-road vehicles, without changes to the proposed text as published in the September 24, 1996, issue of the Texas Register (21 TexReg 9144). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. Therefore, current sec.3.88 is being proposed for repeal. The new section consolidates the substance of the current sec.3.88, concerning moveable specialized equipment, with the substance of sec.3.93, concerning off-road vehicles. Language is also included in subsection (a)(2) to address previous legislation that added units such as stingers and converter gears to the definition of motor vehicle. No comments were received regarding adoption of the new section. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Tax Code, sec. 152.001. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616521 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 5, 1996 Proposal publication date: September 24, 1996 For further information, please call: (512) 463-4062 SUBCHAPTER J.Petroleum Products Delivery Fee 34 TAC sec.3.151, sec.3.152 The Comptroller of Public Accounts adopts the repeal of sec.3.151 and sec.3.152, concerning bonds and other security for fees, and imposition and collection of the fee, without changes to the proposed text as published in the September 20, 1996, issue of the Texas Register (21 TexReg 9053). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit fee payers by providing a more effective means of obtaining information. The sections are being repealed in order to simplify the consolidation of related sections into a single section. The new sec.3.151, concerning imposition, collection, and bonds or other security of the fee, includes the substance of the current sec.3.151 and sec.3.152. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeals implement Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616547 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 5, 1996 Proposal publication date: September 20, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.151 The Comptroller of Public Accounts adopts new sec.3.151, concerning imposition, collection, and bonds or other security of the fee, without changes to the proposed text as published in the September 20, 1996, issue of the Texas Register (21 TexReg 9053). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit fee payers by providing a more effective means of obtaining information. Therefore, current sec.3.151, concerning bonds and other security for fees, is being adopted for repeal. The new section consolidates the substance of the current sec.3.151 with sec.3.152, concerning imposition and collection of the fee. No comments were received regarding adoption of the new section. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Water Code, sec.26.3574. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616546 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 5, 1996 Proposal publication date: September 20, 1996 For further information, please call: (512) 463-4062 SUBCHAPTER K.Hotel Occupancy Tax 34 TAC sec.sec.3.161, 3.163, 3.164 The Comptroller of Public Accounts adopts the repeal of sec.sec.3.161, 3.163, and 3.164, concerning definitions, exemptions, and exemption certificate, without changes to the proposed text as published in the October 11, 1996, issue of the Texas Register (21 TexReg 9772). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The sections are being repealed in order to simplify the consolidation of related sections into a single section. The new sec.3.161, concerning definitions, exemptions, and exemption certificate, includes the substance of the current sec.sec.3.161, 3.163, 3.164, and a definition for hotel. The definition for hotel in the current sec.3.162, concerning collection of tax, is being deleted. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeals implement the Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616733 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 11, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.161 The Comptroller of Public Accounts adopts new sec.3.161, concerning definitions, exemptions, and exemption certificate, without changes to the proposed text as published in the October 11, 1996, issue of the Texas Register (21 TexReg 9772). The comptroller has determined that the consolidation of sections dealing with similar matter will benefit taxpayers by providing a more effective means of obtaining information. Therefore, current sec.3.161 is being adopted for repeal. The new section consolidates the substance of the current sec.3.161, with the substance of sec.3.163, concerning exemptions and sec.3.164, concerning exemption certificate. The new section includes a definition for hotel. The definition for hotel in the current sec.3.162, concerning collection of tax, is being deleted. House Bill 2129, 74th Legislature, 1995, eliminated the exemption for federal employees traveling on official business. The 53rd District Court, Travis County, ruled that imposing the hotel tax on federal employees traveling on official business violates the Texas Constitution and United States Constitution. Subsection (b)(4) reinstates the hotel occupancy tax exemption for federal employees traveling on official business. No comments were received regarding adoption of the new section. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Tax Code, sec.sec.156.102, 156.103, 351.006, and 352.007. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616732 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 11, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.162 The Comptroller of Public Accounts adopts an amendment to sec.3.162, concerning collection of tax, without changes to the proposed text as published in the September 24, 1996, issue of the Texas Register (21 TexReg 9144). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The amendment consolidates the text in the current sec.3.162 with the substance of sec.3.165, concerning hotel occupancy tax base. The definition for hotel from the text in the current sec.3.162 will be included in the new sec.3.161, concerning definitions, exemptions, and exemption certificate. Two comments were received from The Texas Hotel & Motel Association. The association suggested that sec.3.162(a)(2) be reworded for clarity and that sec.3.162(b)(2) be deleted to exclude meeting and banquet rooms from the hotel tax base. The comptroller did not include the suggestions because the proposed rule was a consolidation effort only without substantial changes to text, and the second suggestion would require a change in statute. The amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The amendment implements the Tax Code, sec.156.051 and sec.156.053. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616553 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 5, 1996 Proposal publication date: September 24, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.163 The Comptroller of Public Accounts adopts new sec.3.163, concerning refund of hotel occupancy tax, without changes to the proposed text as published in the October 11, 1996, issue of the Texas Register (21 TexReg 9774). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. Therefore, current sec.3.166, concerning refund of hotel occupancy tax, is being adopted for repeal. The new section contains the substance of the current sec.3.166 without the requirement that federal employees traveling on official business pay the hotel occupancy tax. This change is the result of the 53rd District Court decision stating that the requirement was unconstitutional. In addition, the Texas Claim for Refund of Hotel Occupancy Tax form is adopted by reference. No comments were received regarding adoption of the new section. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Tax Code, sec.sec.156.103, 156.154, 351.006, and 352.007. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616735 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 11, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.165 The Comptroller of Public Accounts adopts the repeal of sec.3.165, concerning hotel occupancy tax base, without changes to the proposed text as published in the September 24, 1996, issue of the Texas Register (21 TexReg 9145). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The section is being repealed in order to simplify the consolidation of related sections into a single section. The substance of the current sec.3.165 will be consolidated in the amended sec.3.162. No comments were received regarding adoption of the repeal. The repeal is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeal implements the Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616545 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 5, 1996 Proposal publication date: September 24, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.166 The Comptroller of Public Accounts adopts the repeal of sec.3.166, concerning refund of hotel occupancy tax, without changes to the proposed text as published in the October 11, 1996, issue of the Texas Register (21 TexReg 9775). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The section is being repealed in order to simplify the consolidation of related sections into a single section. The new sec.3.163 includes the substance of the current sec.3.166. No comments were received regarding adoption of the repeal. This repeal is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeal implements the Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616734 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 11, 1996 For further information, please call: (512) 463-4062 SUBCHAPTER L.Motor Fuels Tax 34 TAC sec.sec.3.173, 3.186, 3.188, 3.194 The Comptroller of Public Accounts adopts the repeal of sec.sec.3.173, 3.186, 3.188, and 3.194, concerning refunds on gasoline and diesel fuel tax; tax-free sale of motor fuel to the federal government; invoice documentation for gasoline and diesel fuel tax refund claims; and credit or refund of diesel fuel tax used in power-take-off or auxiliary power unit, without changes to the proposed text as published in the October 1, 1996, issue of the Texas Register (21 TexReg 9428). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The sections are being repealed in order to simplify the consolidation of related sections into a single section. The new sec.3.173, concerning refunds on gasoline and diesel fuel tax, includes the substance of the current sec.sec.3.173, 3.186, 3.188, and 3.194. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeals implements the Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616618 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.173 The Comptroller of Public Accounts adopts new sec.3.173, concerning refunds on gasoline and diesel fuel tax, without changes to the proposed text as published in the October 1, 1996, issue of the Texas Register (21 TexReg 9428). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. Therefore, the current sec.3.173 is being adopted for repeal. The new section consolidates the substance of the current sec.3.173, sec.3.186, concerning tax-free sales of motor fuel to the federal government, sec.3.188, concerning invoice documentation for gasoline or diesel fuel tax refund claims, and sec.3.194, concerning credit or refund of diesel fuel tax used in power-take-off or auxiliary power unit. The Tax Code, Chapter 153, provides for refund of tax paid on losses of motor fuels, and the rules of the comptroller prescribe procedures and records to claim certain categories of refund. This new section prescribes procedures and records required to claim a loss refund for theft by drive away from a retail pump. This new section also identifies the refunds of gasoline and diesel fuel tax that are subject to a four year statute of limitations in subsection (c)(2) of this section. In addition, the language concerning refunds to suppliers for signed statement sales was eliminated to conform with current reporting procedures. A wording change to clarify the definition of exclusive use by a public school district is found in subsection (a) of this section. No comments were received regarding adoption of the new section. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Tax Code, sec.sec.153.104, 153.119, 153.121, 153.203, 153.205, 153.222, and 153.224. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616617 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.180, sec.3.181 The Comptroller of Public Accounts adopts the repeal of sec.3.180 and sec.3.181, concerning signed statement for purchasing diesel fuel tax free, and tax free purchase of diesel fuel not legally usable on public highways and roads, without changes to the proposed text as published in the September 27, 1996, issue of the Texas Register (21 TexReg 9226). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The sections are being repealed in order to simplify the consolidation of related sections into a single section. The substance of the current sec.3.180 and sec.3.181 will be included in the new sec.3.180, concerning signed statements for purchasing diesel fuel tax free. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeals implement the Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616552 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 5, 1996 Proposal publication date: September 27, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.180 The Comptroller of Public Accounts adopts new sec.3.180, concerning signed statements for purchasing diesel fuel tax free, without changes to the proposed text as published in the September 27, 1996, issue of the Texas Register (21 TexReg 9226). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. Therefore, current sec.3.180, concerning signed statement for purchasing diesel fuel tax free, is being adopted for repeal. The new section consolidates the substance of the current sec.3.180 and sec.3.181, concerning tax-free purchase of diesel fuel not legally usable on public highways and roads. No comments were received regarding adoption of the new section. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Tax Code, sec.153.205. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616551 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 5, 1996 Proposal publication date: September 27, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.187 The Comptroller of Public Accounts adopts an amendment to sec.3.187, concerning documentation and reporting of exports and export sales by distributors and suppliers, without changes to the proposed text as published in the September 20, 1996, issue of the Texas Register (21 TexReg 9055). The documentation required from common and contract carriers is being amended to include the same requirements and language as found in sec.3.173, concerning refunds on gasoline and diesel fuel tax. No comments were received regarding adoption of the amendment. This amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The amendment implements the Tax Code, sec.153.104 and sec.153.203. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 13, 1996. TRD-9616478 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 4, 1996 Proposal publication date: September 20, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.191 The Comptroller of Public Accounts adopts the repeal of sec.3.191, concerning gasoline and alcohol mixture credit, without changes to the proposed text as published in the September 27, 1996, issue of the Texas Register (21 TexReg 9228). The rule is being repealed because the section of the law that it interpreted (Tax Code, sec.153.123) expired according to its own terms. No comments were received regarding adoption of the repeal. This repeal is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeal implements the Tax Code, sec.153.123. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 13, 1996. TRD-9616479 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 4, 1886 Proposal publication date: September 27, 1996 For further information, please call: (512) 463-4062 SUBCHAPTER O.State Sales and Use Tax 34 TAC sec.sec.3.290, 3.348, 3.349, 3.359 The Comptroller of Public Accounts adopts the repeal of sec.sec.3.290, 3.348, 3.349, and 3.359, concerning automotive repair and maintenance shops; accessories added to motor vehicles; moveable specialized equipment; motor vehicle and private aircraft, without changes to the proposed text as published in the September 24, 1996, issue of the Texas Register (21 TexReg 9145). The comptroller has determined that the consolidation of sections involving similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The sections are being repealed in order to simplify the consolidation of related sections into a single section. The new sec.3.290 includes the substance of current sec.3.290; sec.3.348, concerning Accessories Added to Motor Vehicles; sec.3.349, concerning Moveable Specialized Equipment; and the portion dealing with motor vehicles in sec.3.359, concerning Motor Vehicles and Private Aircraft. The portion of sec.3.359 dealing with private aircraft is being consolidated into sec.3.292, concerning Repair, Remodeling, Maintenance, and Restoration of Tangible Personal Property. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeals implement the Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616747 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: September 24, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.290 The Comptroller of Public Accounts adopts new sec.3.290, concerning motor vehicle repair and maintenance; accessories and equipment added to motor vehicles; moveable specialized equipment, without changes to the proposed text as published in the September 24, 1996, issue of the Texas Register (21 TexReg 9146). The comptroller has determined that the consolidation of sections involving similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. Therefore, current sec.3.290, concerning automotive repair and maintenance shops; sec.3.348, concerning accessories added to motor vehicles; sec.3.349, concerning moveable specialized equipment, and sec.3.359, concerning motor vehicles and private aircraft are being repealed. The new section sec.3.290 includes the substance of 34 TAC sec.sec.3.290, 3.348, 3.349, and the portion of sec.3.359 dealing with motor vehicles. The portion of sec.3.359 dealing with private aircraft is being consolidated into sec.3.292, concerning repair, remodeling, maintenance, and restoration of tangible personal property. Subsection (n)(2) clarifies policy allowing the sale for resale exemption under Tax Code, Chapter 151, for accessories and equipment attached to motor vehicles that are held for sale, lease, or rental. Comments were received from the Texas Automobile Dealers Association asking that new sec.3.290 address goodwill repairs. The comptroller did not include language regarding goodwill repairs because the proposed rule is a consolidation of several rules without substantial changes to the text. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Tax Code, sec.sec.151.006, 151.007, 151.010, 151.0101, 151.060, 151.102, 151.151, 151.3111, 151.801. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616743 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: September 24, 1996 For further information, please call: (512) 463-3699 34 TAC sec.3.293 The Comptroller of Public Accounts adopts an amendment to sec.3.293, concerning food; food products; meals; food service, without changes to the proposed text as published in the September 20, 1996, issue of the Texas Register (21 TexReg 9056). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The amendment adds the substance of subsection (d) of the current sec.3.320, concerning ice and dry ice, as subsection (f)(7) of this section. The current sec.3.320 is being repealed. No comments were received regarding adoption of the amendment. The amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The amendment implements the Tax Code, sec.sec.151.314, 151.305, and 151.007. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616705 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: September 20, 1996 For further information, please call: (512) 463-3699 34 TAC sec.3.296 The Comptroller of Public Accounts adopts an amendment to sec.3.296, concerning agriculture, animal life, feed, seed, plants, and fertilizer, with changes to the proposed text as published in the October 11, 1996, issue of the Texas Register (21 TexReg 9775). Subsection (a)(2)(A) is clarified to include examples of feed for wildlife, including perishable bait purchased for commercial, sport and recreational fishing. Also, the comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The amendment adds the substance of subsections (b) and (c) of the current sec.3.320, concerning ice and dry ice, as subsections (j) and (k) in this section. The current sec.3.320 is being repealed. The adopted version reflects clarification changes to subsection (j)(3) changing "original grower" to "original producer" and in subsection (j)(4) to reflect the exemption for ice used by "commercial fishermen" rather than by "commercial fishing boats." No comments were received regarding adoption of the amendment. The amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The amendment implements the Tax Code, sec.151.316 and sec.151.342. sec.3.296.Agriculture, Animal Life, Feed, Seed, Plants, and Fertilizer. (a) Sales tax is not due on the receipts from sales of, and the storage, use or consumption of, the following: (1) Horses, mules, work animals, and any form of animal life of a kind the products of which ordinarily constitute food for human consumption. (A) Sales tax is not due on the sale, lease, or rental of horses and mules except when sold, leased, or rented as a part of an amusement service. (B) The term "work animals" shall include any animal exclusively used in the following: (i) The production of food for human consumption or other agricultural products held for sale in the regular course of business. Examples: plow animals or sheep dogs. (ii) The aiding of handicapped individuals or the performance of protective services, providing that the animal has been professionally trained for that specific purpose. (C) "Work animals" shall not include animals raised, trained, or held as pets or for sport or show. (D) Exemption certificates are not required on sale of horses, mules, or any form of animal life of a kind, the products of which ordinarily constitute food for human consumption. Sales tax is due on the sale of all other animals unless the purchaser provides a valid and properly completed resale or exemption certificate. (2) Hay, corn, oats, and any other type of feed normally consumed by farm and ranch animals, animals that are held for sale in the regular course of business, and wildlife. (A) Included in this section is feed for animals covered by paragraph (1) of this subsection, feed for animals held for breeding purposes whose offspring are held for sale in the regular course of business, and wildlife. Examples of feed purchased for wildlife include deer corn and perishable bait used for commercial, sport and recreational fishing. Feed purchased for an animal that might normally be kept as a pet is taxable. Pets normally include, but are not limited to, dogs, cats, rabbits, hamsters, and tropical fish. (B) All persons selling the type of feed that is normally consumed by farm and ranch animals or wildlife may sell the feed tax free without an exemption certificate. Persons selling food for an animal that might normally be kept as a pet should collect sales tax or accept a valid and properly completed resale or exemption certificate from the purchaser. (3) Seeds and annual plants, the products of which ordinarily constitute food for human consumption, are used to produce feed for animals exempted by this section, or are to be sold in the regular course of business. An exemption certificate is not required when purchasing these items. (4) Fertilizers, fungicides, insecticides, herbicides, defoliants, and desiccants exclusively used or employed on farms or ranches in the production of food for human consumption, feed for any form of animal life, or other agricultural products to be sold in the regular course of business. However, when these particular items are used in commercial storage facilities or other storage facilities that are not operated exclusively by the owner or are not located on the farm or ranch, the exemption is lost and the tax must be remitted on the sales price of the items. Fertilizer is taxable if sold for use on lawns, home gardens, or for any uses other than those listed in this paragraph. See subsection (d) of this section regarding exemption certificates. (5) Machinery or equipment used or employed on farms or ranches exclusively in: (A) the production of food for human consumption, production of grass, production of feed for any form of animal life, or other agricultural products to be sold in the regular course of business; and (B) the building or maintaining of roads and water facilities. (6) Containers, bins, or cages used exclusively to transport: (A) fruit or vegetables from the field or place of harvest to a location where the items are processed, packaged, or marketed; or (B) poultry from a poultry farm to a location where the poultry is processed, packaged, or marketed. (b) Sales tax is not due on machinery and equipment exclusively used in, and pollution equipment required as a result of, the processing, packing, or marketing of agricultural products by an original producer at a location operated by the original producer exclusively for processing, packing, or marketing the original producer's own products. (1) "Original producer" means a person who: (A) brings an agricultural product into being and is the owner of the agricultural product from the time it is brought into being until it is processed, packed, or marketed; or (B) is the grower of an agricultural product, exercises predominant operational control over the raising of the agricultural product, and bears a risk of loss of investment in the agricultural product. (2) In order to qualify as an original producer: (A) 50% or more of the agricultural products processed, packed, or marketed at or from the location must be actually produced by the original producer and not purchased or acquired from others; and (B) agricultural products belonging to others, in an amount greater than 5.0% of the total agricultural products processed, packed, or marketed by the producer, may not be processed, packed, or marketed for consideration at or from the location. (3) If a person purchases agricultural products from a grower, processes those products, and subsequently sells the processed products back to the same grower for the purpose of circumventing paragraph (2)(B) of this subsection, the person will not qualify as an original producer. (4) For purposes of determining if 50% or more of the agricultural products were actually grown by the original producer, the period to be reviewed will be the most recently completed calendar year. (A) A producer will be liable for sales tax based on the fair market rental value of machinery and equipment purchased tax free if the producer grew less than 50% of the agricultural products it processed, packed, or marketed. The period of assessment shall be the entire one-year period following the calendar year in which the producer did not meet the 50% criteria, and the assessment will be on the fair market rental value of machinery and equipment used during the period of assessment. The fair market rental value is the amount that a purchaser would pay on the open market to rent the item for use. If the item has no fair market rental value, sales tax is due based upon the purchase price. (B) At any time the producer may stop paying tax on the fair market rental value of the machinery and equipment and instead pay sales tax on the original purchase price. When the person elects to pay sales tax on the original purchase price, credit will not be allowed for taxes previously paid on the fair market rental value. (5) Two or more corporations that operate agricultural activities on the same tract or adjacent tracts of land and that are entirely owned by an individual or a combination of the individual, the individual's spouse, and the individual's children may qualify as an original producer for the purposes of paragraph (1) of this subsection. (6) Machinery and equipment exclusively used in the processing, packing, or marketing of agricultural products by an agricultural cooperative organized under the Agriculture Code, Chapter 52, are not exempt unless the comptroller determines that: (A) the cooperative itself is the original producer of all the agricultural products being processed, packed, or marketed; and (B) the processing, packing, or marketing is being accomplished at a location operated by the cooperative. (c) Persons purchasing trees, shrubs, and ornamental plants for resale are presumed to be marketing these products rather than fostering their growth. The presumption may be overcome by showing that actions were taken that did more than maintain the products prior to sale. An example would be replanting a shrub in a bigger container to encourage growth. Machinery, equipment, and other tangible personal property purchased to maintain the plants prior to sale are taxable. (d) All persons engaged in the business of selling items that are exempt from the sales tax must obtain an exemption certificate from their customers as provided in the Tax Code, sec.151.155 and sec.3.287 of this title (relating to Exemption Certificates). The certificate may be a blanket certificate covering all purchases only when the items being sold are of a type or quantity that would not generally be used except on a farm or ranch. An example is farm machinery or fertilizer purchased in bulk. When a seller sells taxable items and items that may qualify for exemption under this section, the seller may either obtain an exemption certificate for each item that qualifies for exemption or obtain a certificate at the time the customer makes an exempt purchase initially and keep that certificate on file. When subsequent exempt purchases are made, the invoice must be stamped with the words, "Exempt agricultural purposes" and the customer must sign the invoice. (e) All medications, tonics, restoratives, or other therapeutic preparations for farm and ranch animals that are used exclusively on a farm or a ranch are exempt from sales and use tax. See subsection (d) of this section regarding exemption certificates. (f) A farm or ranch is defined as one or more tracts of land used, either wholly or in part, in the production of crops, livestock, and/or other agricultural products held for sale in the regular course of business. This includes feed lots, dairy farms, poultry farms, commercial orchards, commercial nurseries, and similar commercial agricultural operations. Farm or ranch does not include home gardens or timber operations. (g) The terms machinery or equipment include: (1) expendable supplies, such as hand tools, baling wire and binders twine; (2) lubricants for farm machinery and for motor vehicles not licensed for highway use; (3) nuts, bolts, washers, and other hardware. It also includes materials used on or in buildings, structures, or structural components that are classified as machinery or equipment; (4) repair or replacement parts used exclusively on farm or ranch machinery or equipment. This includes tractor tires, tires used on motor vehicles not licensed for highway use, and tires specifically designated by the manufacturer for farm use or off-highway use only; (5) machinery and equipment used exclusively to maintain equipment that qualifies for exemption under this section; (6) those items specifically designed to be assembled into a machine, such as parts of a pumping system or portable irrigation systems; (7) tangible personal property sold for use as a component of an underground irrigation system; (8) fenceposts, cattleguards, gates, and chutes. However, fenceposts, gates and cattleguards used to enclose private driveways, home lawns, gardens, pools, etc., do not qualify for exemption from tax. These items purchased by persons operating commercial nurseries and greenhouses and similar commercial operations for the purpose of preventing trespassing by the public do not qualify for exemption from tax; and (9) the following items and the materials used to build, construct, or fabricate these items (these items are classified as equipment and are therefore exempt), provided they meet the qualifications set out in this section and have not been previously excluded: (A) fences, pens, gates, cattleguards, and chutes used in connection with raising livestock or production of agricultural products; (B) storage facilities specifically designed for and that can be used only to store bulk fungible commodities regardless of whether the facilities are of a portable or fixed nature. Typical facilities on farms or ranches include petroleum products storage tanks, grain storage bins, refrigerated storage structures for unprocessed fruit, silos, and vehicle-mounted fertilizer spreaders or feed mills (not licensed for highway use). General purpose facilities that are used to store bulk fungible commodities, farm produce or equipment do not qualify for exemption from tax. Only those facilities that cannot be used for any purpose other than the storage of fungible goods qualify as farm equipment; (C) a building or structure that is essentially an item of equipment or machinery necessary for agricultural production if it is specifically designed for such use and cannot be economically used for any other purpose. For example, automated laying houses, farrowing houses, and commercial greenhouses. (h) Sales tax is due on the sale of computer hardware for use on farms and ranches unless specifically designed as a part of production equipment, such as a computer-operated feed mixing device. Computer software that is designed specifically to aid in the production, processing, packing, or marketing of agricultural products of the original producer qualifies for exemption. Computer software used for, but not limited to, household budgeting, payrolls, bookkeeping, educational, or recreational purposes is taxable. (i) Buildings and structural components and/or the materials used to build, construct, or fabricate the following facilities are not exempt from the limited sales and use tax. (1) Buildings include any structures or edifices enclosing a space within their walls, and usually covered by a roof, the purpose of which may be to provide storage, shelter, or housing, or to provide working, office, or sales space (for example, houses, offices, barns, storage facilities, warehouses, garages, and stores). (2) Structural components include those parts of a building or machinery in, on, or adjacent to a building, relating to the operation or maintenance of the building (for example, air conditioning or heating systems). However, if the sole justification for installation is to meet humidity or temperature requirements essential for the operation of other machinery or the processing of plants, animals, or foodstuffs, the structural component is exempt. (j) Ice used on agricultural products. (1) Sales or use tax is not due on ice used to remove field heat from agricultural products. (2) Sales or use tax is not due on bunker ice, top ice, or any ice placed on transportation facilities by growers. For example, ice used inside or outside crates of lettuce to cool the lettuce while being shipped is exempt. (3) Sales or use tax is due on the subsequent icing after the initial icing for the purpose of preservation prior to sale except by the original producer, as that term is defined in subsection (b)(1) of this section. (k) Sales or use tax is not due on ice exclusively used by commercial fishermen on commercial fishing boats in the storing of aquatic species, such as shrimp and other crustaceans, finfish, mollusks, and other similar creatures. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616746 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 11, 1996 For further information, please call: (512) 463-3699 34 TAC sec.3.300 The Comptroller of Public Accounts adopts an amendment to sec.3.300, concerning manufacturing; custom manufacturing; fabricating; processing, without changes to the proposed text as published in the September 20, 1996, issue of the Texas Register (21 TexReg 9056). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The amendment adds the substance of subsection (a)(1) of the current sec.3.320, concerning ice and dry ice, as subsection (d)(3)(A) of this section. The current sec.3.320 is being repealed. No comments were received regarding adoption of the amendment. The amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The amendment implements the Tax Code, sec.sec.151.005,151.007, and 151.318. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616706 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: September 20, 1996 For further information, please call: (512) 463-3699 34 TAC sec.3.304, sec.3.334 The Comptroller of Public Accounts adopts the repeal of sec.3.304 and 3.334, concerning monument builders and morticians, without changes to the proposed text as published in the September 27, 1996, issue of the Texas Register (21 TexReg 9228). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more efficient means of obtaining information. The sections are being repealed in order to simplify the consolidation of related sections into a single section. The substance of sec.3.304, concerning morticians, and sec.3.334, concerning monument builders, will be included in new sec.3.304. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeals implement the Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616748 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: September 27, 1996 For further information, please call: (512) 463-3699 34 TAC sec.3.304 The Comptroller of Public Accounts adopts new sec.3.304, concerning morticians and monument builders, with changes to the proposed text as published in the September 27, 1996, issue of the Texas Register (21 TexReg 9229). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more efficient means of obtaining information. The new section consolidates the substance of the current sec.3.304, concerning morticians with 34 TAC sec.3.334, concerning monument builders. An Austin attorney proposed an addition to the rule on the repair and remodeling of monuments. Since the purpose of the new rule is to consolidate rules, the addition will be considered at a later date. The grammatical error in subsection (a)(1) has been corrected. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Tax Code, sec.111.002. sec.3.304.Morticians and Monument Builders. (a) Morticians. (1) The mortician is the consumer of all tangible personal property used, consumed, or furnished to the customer in rendering funeral services, regardless of whether or not a separate charge is stated for any such item. As the consumer, the mortician is required to pay the appropriate amount of tax at the time of purchase of all such tangible personal property used, consumed, or furnished in the performance of services. (2) If a mortician sells caskets, boxes, vaults, or other individual items of tangible personal property separately from an agreement to render funeral services, the mortician becomes a retailer and is required to have a limited sales tax permit, and must collect and report the tax on the agreed price of all such tangible personal property sold. Resale certificates may be given in lieu of the tax at the time of purchase only on those individual items purchased for resale. (b) Monument builders. (1) Monument builders are contractors when they install memorials such as tombstones, vaults, and similar items. The provisions of sec.3.291 of this title (relating to Contractors) apply to their operations. (2) When a monument builder sells a product and no installation is provided, the total charge for the product is taxable. In this instance the monument builder is a manufacturer making a retail sale of the manufactured product. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616749 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: September 27, 1996 For further information, please call: (512) 463-3699 34 TAC sec.3.305 The Comptroller of Public Accounts adopts the repeal of sec.3.305, concerning bottlers, without changes to the proposed text as published in the September 20, 1996, issue of the Texas Register (21 TexReg 9057). The comptroller has determined that the consolidation of sections of similar subject matter will benefit the taxpayers by providing a more effective means of obtaining information. The information contained in this section may be found in 34 TAC sec.3.286, concerning seller's and purchaser's responsibilities and 34 TAC sec.3.300, concerning manufacturing; custom manufacturing; fabricating; processing. No comments were received regarding adoption of the repeal. The repeal is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeal implements the Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616666 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: September 20, 1996 For further information, please call: (512) 463-3699 34 TAC sec.3.311, sec.3.352, The Comptroller of Public Accounts adopts the repeal of sec.3.311 and sec.3.352, concerning auctioneers; letter of waiver, and concerning brokers and factors, without changes to the proposed text as published in the September 17, 1996, issue of the Texas Register (21 TexReg 8904). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The sections are being repealed in order to simplify the consolidation of related sections into a single section. The substance of the current sec.3.311 and sec.3.352 will be included in the new sec.3.311, concerning auctioneers, brokers, and factors; except subsection (e) of sec.3.352, which will be included in the new sec.3.286. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeals implement the Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616744 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: September 17, 1996 For further information, please call: (512) 463-3699 34 TAC sec.3.311 The Comptroller of Public Accounts adopts new sec.3.311, concerning auctioneers, brokers, and factors, with changes to the proposed text as published in the September 17, 1996, issue of the Texas Register (21 TexReg 8904). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. Therefore, current sec.3.311, concerning auctioneers; letter of waiver, is being adopted for repeal. The new section consolidates the substance of sec.3.311 and sec.3.352, concerning brokers and factors. Subsections (d)(1) and (d)(2) of the adopted version reflect the new name for sec.3.316 of this title. No comments were received regarding adoption of the new section. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Tax Code, sec.151.008 and sec.151.024. sec.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 which are exempt from sales tax such as motor vehicles, real property, or livestock. (5) Sales tax is not due on a sale of taxable 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, sec.151.008; and the sale would not otherwise meet the definition of an occasional sale as found in sec.3.316 of this title (relating to 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 sec.3.316 of this title (relating to 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 sec.3.286, of this title (relating to Seller's and Purchaser's Responsibilities). This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616745 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: September 17, 1996 For further information, please call: (512) 463-3699 34 TAC sec.3.314 The Comptroller of Public Accounts adopts an amendment to sec.3.314, concerning wrapping, packing, packaging supplies, containers, labels, tags, export packers, and stevedoring materials and supplies, without changes to the proposed text as published in the September 20, 1996, issue of the Texas Register (21 TexReg 9057). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The amendment adds the substance of subsection (a)(2) of sec.3.320, concerning ice and dry ice, as subsection (b)(4) of this section. The current sec.3.320 is being repealed. No comments were received regarding adoption of the amendment. The amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The amendment implements the Tax Code, sec.sec.151.151, 151.302, 151.322, and 151.329. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616707 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: September 20, 1996 For further information, please call: (512) 463-3699 34 TAC sec.3.320 The Comptroller of Public Accounts adopts the repeal of sec.3.320, concerning ice and dry ice, without changes to the proposed text as published in the September 24, 1996, issue of the Texas Register (21 TexReg 9149). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The information in this section may be found in 34 TAC sec.3.293, concerning Food; Food Products; Meals; Food Service; sec.3.296, concerning Agriculture, Animal Life, Feed, Seed, Plants, and Fertilizer; sec.3.300, concerning Manufacturing; Custom Manufacturing; Fabricating; Processing; and sec.3.314, concerning Wrapping, Packing, Packaging Supplies, Containers, Labels, Tags, Export Packers, and Stevedoring Materials and Supplies. No comments were received regarding adoption of the repeal. The repeal is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeal implements the Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616708 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: September 24, 1996 For further information, please call: (512) 463-3699 34 TAC sec.3.329, sec.3.345 The Comptroller of Public Accounts adopts the repeal of sec.3.329 and sec.3.345, concerning enterprise projects and state sales and use tax refunds to qualified businesses in enterprise zones, without changes to the proposed text as published in the October 1, 1996, issue of the Texas Register (21 TexReg 9432). The comptroller has determined the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. These sections are being repealed in order to simplify the consolidation of related sections into a single section. The new sec.3.329, concerning state sales and use tax refunds available to enterprise projects and to qualified businesses in enterprise zones, includes the substance of the current sec.3.345, concerning the same subject matter and sec.3.329, concerning enterprise projects. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeals implement the Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616709 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 463-3699 34 TAC sec.3.329 The Comptroller of Public Accounts adopts new sec.3.329, concerning state sales and use tax refunds available to enterprise projects and to qualified businesses in enterprise zones, without changes to the proposed text as published in the October 1, 1996, issue of the Texas Register (21 TexReg 9432). The new section implements the following changes enacted by House Bill 2065, 74th Legislature, 1995. Enterprise projects designated after August 31, 1995, may not apply for refunds until September 1, 1997 (see subsection (c)(1)). The maximum amount of refunds to projects designated after August 31, 1995, is $8 million (see subsection (c)(1)). The state tax on electricity and natural gas used in a business (see subsection (c)(3)(C)), and on labor to refurbish buildings in an enterprise zone (see subsection (c)(3)(D)) are eligible for refund to enterprise projects. The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. Therefore, the new section also consolidates the substance of the current sec.3.345, concerning state sales and use tax refunds to qualified businesses in enterprise zones, with sec.3.329, concerning enterprise projects. An additional change involves a reference in subsection (a)(1) to the Texas Enterprise Zone Act that was repealed and re-enacted in the Government Code. The definition of "enterprise project" made reference to Article 5190.7 that is now Government Code, Chapter 2303. No comments were received regarding adoption of the new section. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Government Code, sec.2303.505(a) and the Tax Code, sec.151.431 and sec.151.429(a). This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616710 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 463-3699 34 TAC sec.3.338, sec.3.340 The Comptroller of Public Accounts adopts the repeal of sec.3.338 and sec.3.340, concerning multistate tax credits and allowance of credit for tax paid to suppliers, without changes to the proposed text as published in the September 24, 1996, issue of the Texas Register (21 TexReg 9149). The comptroller has determined that the consolidation of sections involving similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The sections are being repealed in order to simplify the consolidation of related sections into a single section. The substance of the sections being repealed will be included in new sec.3.338, concerning multistate tax credits and allowance of credit for tax paid to suppliers. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeals implement the Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616664 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: September 24, 1996 For further information, please call: (512) 463-3699 34 TAC sec.3.338 The Comptroller of Public Accounts adopts new sec.3.338, concerning multistate tax credits and allowance of credit for tax paid to suppliers, without changes to the proposed text as published in the September 24, 1996, issue of the Texas Register (21 TexReg 9149). The comptroller has determined that the consolidation of sections involving similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The new section consolidates the substance of the current sec.3.338, concerning allowance of credit for tax paid to suppliers, with sec.3.340, concerning multistate tax credits, which are being simultaneously repealed. Language was added to subsection (c)(3) to clarify that the subsection addresses tax paid on taxable items that are not resold but are used for nontaxable purposes. Language was also added to subsection (c)(3)(B) to clarify that it applies to wrapping, packing, or packaging materials used by a manufacturer. No comments were received regarding adoption of the new section. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Tax Code, sec.sec.111.104, 141.001, 151.006, 151.007, 151.010, 151.0101, 151.056, 151.303, 151.427. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616665 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: September 24, 1996 For further information, please call: (512) 463-3699 34 TAC sec.3.351 The Comptroller of Public Accounts adopts the repeal of sec.3.351, concerning the Economic Recovery Tax Act of 1981, without changes to the proposed text as published in the August 27, 1996, issue of the Texas Register (21 TexReg 8086). The section is being repealed because the Internal Revenue Code, sec.168(f)(8), no longer exists. The Tax Equity and Fiscal Responsibility Act of 1982, as Public Law 97-248, repealed the temporary federal tax benefits for the safe- harbor leases formerly described in sec.168(f)(8). No comments were received regarding adoption of the repeal. The repeal is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeal implements the Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616667 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: August 27, 1996 For further information, please call: (512) 463-3699 SUBCHAPTER S.Interstate Motor Carrier Sales and Use Tax 34 TAC sec.sec.3.443-3.448 The Comptroller of Public Accounts adopts the repeal of sec.sec.3.443-3.448, concerning the imposition of tax after the effective date; computation of the proportioned tax - interstate motor vehicles; computation of the proportioned tax - trailers and semitrailers; lease price, sales price, and purchase price; owner-operator contracts; and trip-lease agreements, without changes to the proposed text as published in the October 11, 1996, issue of the Texas Register (21 TexReg 9776). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The sections are being repealed in order to simplify the consolidation of related sections into a single section. The substance of the current sec.sec.3.443-3.448 will be included in the new sec.3.443, concerning computation of interstate motor vehicle sales and use tax. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeals implement the Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616736 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 11, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.443 The Comptroller of Public Accounts adopts new sec.3.443, concerning computation of interstate motor vehicle sales and use tax, with changes to the proposed text as published in the October 11, 1996, issue of the Texas Register (21 TexReg 9776). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. Therefore, current sec.3.443 is being adopted for repeal. The new section consolidates the substance of the current sec.3.443 with sec.3.444, concerning computation of the proportioned tax - interstate motor vehicles, sec.3.445, concerning computation of the proportioned tax - trailers and semitrailers, sec.3.446, concerning lease price, sales price, and purchase price, sec.3.447, concerning owner-operator contracts, and sec.3,448, concerning trip-lease agreements. Saegert, Angenend & Augustine, P.C., suggested that sec.3.443(a)(3)(B) should reference section (3)(A)(i) and (ii) instead of section (2)(A)(i) and (ii). The suggestion is accepted. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Tax Code, sec.sec.157.001, 157.101, and 157.102. sec.3.443.Computation of Interstate Motor Vehicle Sales and Use Tax. (a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Controlling interest - 50% or more of ownership. (2) Interstate commercial motor vehicle - A motor vehicle other than a motorcycle or passenger car which: (A) is designed or used primarily for the transportation of persons or property; (B) operates in two or more states or provinces; and (C) has fuel supply tanks of 60 gallons or more; or (D) any motor vehicle which is operated in two or more states and which has actually been registered on an apportioned basis under the International Registration Plan is also considered to be an "interstate motor vehicle." (3) Interstate motor vehicle. (A) A motor vehicle which: (i) could be registered on an apportioned basis if it were registered in a state or province that is a member of the International Registration Plan; (ii) is operated in two or more states or provinces; and (iii) either: (I) has a gross vehicle weight in excess of 26,000 pounds; (II) has three or more axles; or (III) is used in combination with a trailer or semitrailer, when the gross weight of the combination exceeds 26,000 pounds. (B) Charter buses are interstate motor vehicles if they meet the requirements specified in paragraph (3)(A)(i) and (ii) of this subsection. (C) Any motor vehicle which is operated in two or more states and which has actually been registered on an apportioned basis under the International Registration Plan is also considered to be an interstate motor vehicle. (4) Interstate truck-tractor - A truck-tractor which is operated in two or more states or provinces. (5) Lease - An agreement by an owner of a motor vehicle, trailer, or semitrailer to give to another for longer than 180 days under a single agreement exclusive use of the vehicle without a driver for consideration. (6) Owner-operator - A motor carrier who leases, rents, or otherwise provides a motor vehicle for the use of others and who, in the regular course of business, also provides, procures, or arranges for, directly, indirectly, or by course of dealing, a driver or operator for the vehicle. (7) Preceding year - The period of 12 consecutive calendar months immediately prior to January 1 or to any calendar quarter that is consistently used. (8) Purchase - A lease of, or a transfer of title to, a motor vehicle, trailer, or semitrailer for consideration. (9) Semitrailer - A vehicle of the trailer type so designed or used in conjunction with a motor vehicle that some part of its own weight and that of its load rests upon or is carried by another vehicle. For the purposes of the Tax Code, sec.157.001(7), effective September 1, 1991, "semitrailer" includes dollies, jeeps, stingers, auxiliary axles, and converter gears. (10) Total miles - The mileage of all interstate truck-tractors and interstate commercial motor vehicles which were operated in Texas and which were: (A) owned by the motor carrier; (B) leased to the carrier without a driver and for a time period exceeding 180 days; (C) leased to the carrier by an owner-operator; or (D) leased by the carrier to another pursuant to a trip-lease agreement. (11) Trailer - A vehicle designed or used to carry its load wholly on its own structure and to be drawn by a motor vehicle. (12) Trip-lease agreement - A lease of a vehicle with a driver on a single-trip basis. (13) Truck-tractor - A motor vehicle which is designed or used primarily for drawing other vehicles and which is constructed so as to be able to carry a part of the weight of the vehicle and the load being drawn. (14) Truck-tractor ratio - The percentage of a motor carrier's truck-tractors operated in Texas during a reporting period (i.e., total number of truck- tractors operated in Texas during the reporting period divided by the total number of truck-tractors operated everywhere during the same reporting period). (b) Computation of the proportioned tax - interstate motor vehicles. (1) Divide the carrier's total miles operated in Texas during the preceding year by the carrier's total miles operated everywhere during the preceding year. (2) Multiply the purchase price of each interstate motor vehicle purchased in Texas or first brought into Texas during the reporting period by the current tax rate, and that result by the percentage calculated in paragraph (1) of this subsection. A vehicle "first brought into Texas" includes those entering Texas for the first time ever, and those entering Texas for the first time: (A) after a change in ownership or lease contract, or (B) while they are operated by a different motor carrier. (c) Computation of the proportioned tax - trailers and semitrailers. (1) Computation of the proportioned tax - Method 1. (A) Divide the carrier's total miles operated in Texas during the preceding year by the carrier's total miles operated everywhere during the preceding year. (B) Multiply the purchase price of all trailers and semitrailers purchased during the reporting period by the current tax rate, and that result by the percentage calculated in subparagraph (A) of this paragraph. (C) Multiply the amount calculated in subparagraph (B) of this paragraph by the truck-tractor ratio. (2) Computation of the proportioned tax - Method 2. (A) If a motor carrier can prove that the tax liability for the number of trailers and semitrailers which were actually purchased in Texas or first brought into Texas during the reporting period is less than the amount computed using the method described in paragraph (1) of this subsection, the motor carrier may use the following method: (i) divide the carrier's total miles operated in Texas during the preceding year by the carrier's miles operated everywhere during the preceding year. (ii) multiply the purchase price of each trailer and semitrailer that was purchased in Texas or first brought into Texas during the reporting period by the current tax rate, and that result by the percentage calculated in clause (i) of this subparagraph. (B) If the motor carrier elects to use this method, it will be held responsible for maintaining records which are separate from its records for interstate motor vehicles and interstate commercial motor vehicles and which detail the movements of all trailers and semitrailers purchased during the reporting period. (C) Tax must be paid on any trailers or semitrailers which are first brought into Texas during a subsequent reporting period. (D) A vehicle "first brought into Texas" includes those entering Texas for the first time ever, and those entering Texas for the first time: (i) after a change in ownership or lease contract, or (ii) while they are operated by a different motor carrier. (d) Credit for tax paid to another state. If the motor carrier has previously paid any legally imposed sales or use tax to another state upon a vehicle subject to tax under subsections (b) or (c) of this section, a deduction or credit may be taken in accordance with the Tax Code, sec.157.102(a)(3) or sec.157.102(c)(1)(D). In computing the proportioned credit allowed, credit may not be taken for sales or use tax previously paid to Texas or another state in excess of the current tax rate multiplied by the purchase price of any vehicle. (e) Lease price, sales price, and purchase price computations. (1) Lease price. Lease price may be calculated under either of the following methods. (A) Lease payment method. (i) Lease payment is the sum of all payments specified in the lease contract without any deduction for: (I) lessor's markup; (II) charges for depreciation; or (III) charges for accessories attached to the vehicle and included in the same lease contract. (ii) Lease payment does not include any separately stated charges for: (I) fuel; (II) maintenance (separately stated mileage charges that can be directly and solely related to the repair and maintenance of the leased vehicle will be considered to be separately stated maintenance charges); (III) insurance; (IV) finance charges; or (V) pass-through charges such as federal highway use tax, state sales or use taxes, and title and registration fees. (iii) For purposes of computing the amount of Interstate Motor Carrier Tax that is due, the lease payment may not be less than the amount that would be charged for the lease of the vehicle(s) in the open market for a similar period of time at retail. Retail means 25% of a published standard industry value for the motor vehicle at the inception of the lease for each year or part of a year of the lease contract. (iv) If the lease payment is based on a variable charge (i.e., a flat mileage rate, percentage of revenue) the lease payment shall be 25% of a published standard industry value at the inception of the lease, for that motor vehicle for each and each part of a year for the contract. (B) Optional method. Lease price means the sum of the lessor's purchase price plus the lessor mark-up of the leased vehicle, the combined value of which is typically reflected as the original value of schedule A or similar addendum to a lease contract. This amount may not be less than the lessor's capitalized value. (C) Change of vehicle ownership. No additional tax is due from a motor carrier who had previously been subject to the tax imposed by this chapter on a lease contract provided that the terms of the lease contract and the motor carrier remain unchanged. (2) Sales price. (A) Sales price is the total consideration paid or to be paid for a motor vehicle and all accessories attached at the time of sale, without any deduction for any of the following: (i) the cost of the motor vehicle sold; (ii) the cost of material used, labor or service costs, interest paid, losses, or any other expenses; (iii) the cost of transportation of the motor vehicle prior to its sale or purchase; and (iv) the amount of any manufacturers' or importers' excise tax imposed upon the motor vehicle by the United States. (B) Sales price does not include any of the following: (i) cash discounts allowed on sale; (ii) sales price of a motor vehicle returned by a customer when the full sales price is refunded either in cash or credit; (iii) the amount charged for labor or services rendered in installing, applying, remodeling or repairing the motor vehicle sold; (iv) the amount charged for finance charges, carrying charges, service charges or interest from credit extended on sales of motor vehicles under conditional sale contracts or other contracts providing for deferred payments of the purchase price; (v) the value of a motor vehicle taken by a seller in trade as all or a part of the consideration for sale of another motor vehicle; or (vi) charges for transportation of the motor vehicle after sale. (3) Purchase price - When computing the amount of interstate motor carrier tax that is due, purchase price includes both the sales price of any vehicle that the motor carrier owns and the lease price of any vehicle which the motor carrier leases without a driver for a time period exceeding 180 days. (f) Owner-Operator Contracts. (1) Taxability. (A) If a motor carrier contracts to hire an owner-operator to transport persons or property over the carrier's routes and under the authority of the carrier's permits, the tax rate is $25 per truck-tractor per contract and $25 per trailer or semitrailer per contract. (B) The contract between the motor carrier and the owner-operator must be for more than a single trip. (C) The tax is the responsibility of the motor carrier operating the motor vehicle under the contract (the lessee). (2) Exclusion. If a sales or use tax equal to or greater than the current tax rate under Tax Code, Chapter 152 has been paid on the purchase price of the motor vehicle or if the tax under the Tax Code, sec.157.102(a), (b), or (c) has been paid, the $25 tax is not due. (3) Controlling interest. The $25 tax may not be paid in lieu of the tax due under the Tax Code, sec.157.102(a), (b), or (c) by a motor carrier contracting with an owner-operator who is controlled or who has controlling interest in the motor carrier. (4) Operation of a vehicle under contract to another. The $25 tax may not be paid in lieu of the tax due under the Tax Code, sec.157.102(a), (b), or (c) if the owner-operator operates the motor vehicle in Texas on his own behalf while the motor vehicle is under contract to the other motor carrier. (g) Trip-Lease Agreements. (1) Taxability. (A) If a motor carrier contracts to use equipment under a trip-lease agreement, the tax rate is $5.00 per truck-tractor per contract and $5.00 per trailer or semitrailer per contract. (B) The tax is the responsibility of the motor carrier operating the motor vehicle under the agreement (the lessee). (2) Exclusion. If a sales or use tax equal to or greater than the current tax rate under Tax Code, sec.152 has been paid on the purchase price of the motor vehicle or if the tax under the Tax Code, sec.157.102(a), (b), or (c) has been paid, the $5.00 tax is not due. (3) Controlling interest. The $5.00 tax may not be paid in lieu of the tax due under the Tax Code, sec.157.102(a), (b), or (c) by a motor carrier contracting with a person who is controlled or who has controlling interest in the motor carrier. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616737 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 11, 1996 For further information, please call: (512) 463-4062 SUBCHAPTER T.Manufactured Housing Sales and Use Tax 34 TAC sec.sec.3.481-3.485 The Comptroller of Public Accounts adopts the repeal of sec.sec.3.481-3.485, concerning manufactured home, imposition of tax, exemption certificates, use tax, and interstate sales of manufactured housing, without changes to the proposed text as published in the October 11, 1996, issue of the Texas Register (21 TexReg 9779). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The sections are being repealed in order to simplify the consolidation of related sections into a single section. The substance of the current sec.sec.3.481-3.485 will be included in the new sec.3.481, concerning imposition and collection of tax. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeals implement Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616616 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 11, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.481 The Comptroller of Public Accounts adopts new sec.3.481, concerning imposition and collection of tax, without changes to the proposed text as published in the October 11, 1996, issue of the Texas Register (21 TexReg 9780). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. Therefore, current sec.3.481 is being adopted for repeal. The new section consolidates the substance of the current sec.3.481, concerning manufactured homes, with the substance of sec.3.482, concerning imposition of tax, sec.3.483, concerning exemption certificates, sec.3.484, concerning use tax, and sec.3.485, concerning interstate sales of manufactured homes. The definitions of religious, charitable, or educational organizations are revised to make them more clear and consistent with the definitions in Franchise Tax sec.3.541, Hotel Occupancy Tax sec.3.161, and State Sales and Use Tax sec.3.322. The new section prescribes the contents of the exemption certificate and adopts the form by reference. No comments were received regarding adoption of the new section. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Tax Code, sec.sec.158.002, 158.051, 158.058, and 158.153. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616615 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 11, 1996 For further information, please call: (512) 463-4062 SUBCHAPTER U.Public Utility Gross Receipts Tax 34 TAC sec.sec.3.511-3.513 The Comptroller of Public Accounts adopts the repeal of sec.sec.3.511-3.513, concerning due date for assessment; auditing, records, assessments; and tax rate, gross receipts, exclusions and rates, without changes to the proposed text as published in the September 17, 1996, issue of the Texas Register (21 TexReg 8905). The comptroller has determined that the consolidation of sections involving similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The sections are being repealed in order to simplify the consolidation of related sections into a single section. The substance of the current sec.sec.3.511-3.513, will be included in the new sec.3.511, concerning tax rate, due dates, payments, exclusions, and auditing. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002 and sec.111.0022, which provide the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2, and other functions assigned to the comptroller by law. The repeals implement Tax Code, sec.111.002 and sec.111.0022. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616515 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 5, 1996 Proposal publication date: September 17, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.511 The Comptroller of Public Accounts adopts a new sec.3.511, concerning tax rate, due dates, payments, exclusions, and auditing, with changes to the proposed text as published in the September 17, 1996, issue of the Texas Register (21 TexReg 8906). The comptroller has determined that the consolidation of sections involving similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. Therefore, current sec.3.511, concerning due date for assessment, is being proposed for repeal. The new section consolidates the substance of the current sec.3.511 with sec.3.512, concerning auditing, records, and assessments, and sec.3.513, concerning the tax rate, gross receipts, exclusions, and rates. One comment was received from Houston Industries Incorporated relating to the use of the word "and" rather than the use of the word "or" in subsection (a)(2) immediately following "sec.3.002(9)." The comptroller agrees with the comment and has made the change in order for the language to be consistent with the statute. The new section is adopted under the Tax Code, sec.111.002 and sec.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 the Tax Code, Title 2, and other functions assigned to the comptroller by law. The new section implements Texas Civil Statutes, Article 1446c, sec.sec.1.003(14), 1.351- 1.353, 2.0011(1) and 3.002(9). sec.3.511. Tax Rate, Due Dates, Payments, Exclusions, and Auditing. (a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Gross receipts - Includes receipts from charges for services, products, or commodities that are supplied or sold to an ultimate consumer. The tax assessment is not imposed on receipts derived from the sale of products or services that are purchased for resale. (2) Rate - Every compensation, tariff, charge, fare, toll, rental, and classification, or any of them demanded, observed, charged, or collected whether directly or indirectly by any public utility for any service, product, or commodity included in Texas Civil Statutes, Article 1446c, sec.2.0011(1) or sec.3.002(9), and any rules, regulations, practices, or contracts affecting any compensation, tariff, charge, fare, toll, rental, or classification. (b) Tax rate. Each public utility within the jurisdiction of the Public Utility Commission is assessed a tax equal to one-sixth of 1.0% of its gross receipts from rates charged to the ultimate customers. (c) Exclusions. Charges that represent taxes or assessments levied on a utility taxpayer and that are passed on to its customers, remain a part of the rate charged by the utility, and are receipts subject to the tax. However, taxes that are levied on the consumers and collected by utilities as agents for the taxing authority, are not receipts, and are not subject to the tax. (d) Due date. The assessment imposed by Texas Civil Statutes, Article 1446c, sec.1.351, is due and payable, except as provided in subsection (f) of this section, on August 15 of each year. The payment and the report on the form prescribed by the Comptroller of Public Accounts will be considered timely if received by the comptroller or postmarked no later than midnight on August 15, except as provided in subsection (f)(1)-(3) of this section. The report due on August 15 of each year is for the reporting period of July 1 of the prior year through June 30 of the current year. (e) Quarterly filer. A taxpayer subject to the assessment may elect to make payments of the assessment on a quarterly basis, except as provided in subsection (f) of this section. An election to do so must be in writing and be received by the comptroller at least 30 days prior to August 15. If an election is made, the assessment for the applicable quarters is due and payable as follows: Figure 1: 34 TAC sec.3.511(e) (f) Prepayment dates. A taxpayer subject to the assessment is required to prepay the assessment due for the years 1995, 1996, 1997, and 1998. The prepayments will be based on the taxpayer's estimate of its gross receipts for the next year. After the August 15, 1994, report, all taxpayers will be required to file annual reports. This subsection expires September 1, 1998. The required estimated assessment payments due for August 15, 1995, 1996, 1997, and 1998 reports are payable as follows: Figure 2: 34 TAC 3.511(f) (g) Prepayment calculation. The required estimated assessment payments will be determined in the following manner: (1) the estimated assessments due for the years 1995, 1996, 1997, and 1998 are equal to the assessment due for the previous annual report or previous four quarterly reports, whichever may apply, or the actual assessment due; and (2) any assessment amounts underpaid on assessments due on August 15, 1995, August 15, 1996, or August 15, 1997, must be paid by those respective dates. Any assessment amounts overpaid shall be credited against the following assessments. (h) Penalties and interest. Penalties and interest may apply to the assessment and to the prepayment. (1) If the amount paid pursuant to subsections (f) and (g) of this section is less than the required estimated assessment amount, a penalty of 10% will accrue on the difference between the required estimated assessment amount and the amount actually remitted. (2) If a required estimated assessment payment is not timely, or no required estimated assessment payment is made, a 10% penalty will accrue on the required estimated assessment amount determined pursuant to subsections (f) and (g) of this section. (3) A penalty of 10% will accrue on the additional assessment due, pursuant to subsection (g)(2) of this section, if not paid when the assessment is due. (4) All payments and reports postmarked, or received if not mailed, after the due date are late, and a penalty of 10% of the assessment is due. Amounts delinquent for more than 30 days shall draw interest at the rate of 12% per year on the assessment and penalty due. (i) Records. All taxpayers subject to the tax assessment imposed by Texas Civil Statutes, Article 1446c, must keep adequate records in order to accurately determine the amount of tax due and payable for a period of at least four years, and make the records available to the comptroller or his designated representative upon request. (j) Audits. Taxpayer accounts may be audited by authorized representatives of the Comptroller of Public Accounts at any time during regular business hours of the taxpayer. The audit will be performed by examining any records, books or other information which are maintained by the taxpayer. If the records are inadequate to accurately reflect the gross receipts subject to the tax assessment, the auditor will base the audit report on the best information available. (k) Assessment limitation. The Comptroller of Public Accounts may assess any unpaid tax assessment within four years after the date the assessment was due and payable. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616518 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 5, 1996 Proposal publication date: September 17, 1996 For further information, please call: (512) 463-4062 SUBCHAPTER V. Franchise Tax 34 TAC sec.3.549 The Comptroller of Public Accounts adopts an amendment to sec.3.549, concerning taxable capital: apportionment, with changes to the proposed text as published in the July 26, 1996, issue of the Texas Register (21 TexReg 7019) . A provision is added requiring the same accounting methods for computing gross receipts that are used for computing surplus in accordance with legislation enacted by the 74th Legislature, 1995. A provision has been added reflecting the treatment of distributions from trusts in accordance with agency policy. Definitions of legal domicile and location of payor have been added. Amendments have been made to the provisions for litigation awards, revenues from trademarks, franchises, and licenses, insurance proceeds, and subsidies. A new provision addressing natural gas production has been added. This group of amendments were a result of the Pennzoil decision and agency policy. No comments were received regarding adoption of the amendment, however, a comma was deleted from the first sentence of subsection (d)(5), and language was added to subsection (e)(41)(I) to correct an incomplete sentence. This amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The amendment implements the Tax Code, sec.171.112. sec.3.549. Taxable Capital: Apportionment. (a) Effective date. The provisions of this section apply to franchise tax reports originally due on or after January 1, 1988. (b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Capital asset - Any asset, other than an investment, which is held for use in the production of income, and is subject to depreciation, depletion, or amortization. (2) Commercial domicile - The principal place from which the trade or business of the entity is directed. (3) Investment - Any non-cash asset not a capital asset and not held as inventory or proceeds from the sale of inventory. (4) Generally accepted accounting principles (GAAP) method of accounting - That method of accounting defined under sec.3.547 of this title (relating to Taxable Capital: Accounting Methods). (5) Gross receipts - All revenues that would be recognized annually under a generally accepted accounting principles method of accounting, without deduction for the cost of property sold, materials used, labor performed, or other costs incurred, unless otherwise specifically provided for in this section or the Tax Code, Chapter 171. (6) Legal domicile - The legal domicile of a corporation is its state of incorporation. The legal domicile of a partnership or trust is the principal place of business of the partnership or trust. The principal place of business of a partnership or trust is the location of its day-to-day operations. Where the day-to-day operations are conducted equally or fairly evenly in more than one state, the principal place of business is the commercial domicile. (7) Location of payor - The legal domicile of the payor. (8) Revenue - Except as otherwise specifically provided for in this section or the Tax Code, Chapter 171, revenue means the value of inflows of economic resources from separate legal entities for delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's operations. (c) Apportionment formula. Unless otherwise required under the Tax Code, this section, or the rules applicable under the Tax Code, Chapter 171, a corporation's taxable capital is apportioned to this state to determine the amount of franchise tax due by multiplying the corporation's taxable capital by a fraction, the numerator of which is the corporation's gross receipts from business done in this state and the denominator of which is the corporation's gross receipts from its entire business. Corporations whose taxable capital is derived, directly or indirectly, from the sale of services to or on behalf of a regulated investment company as defined by the Internal Revenue Code, sec.851(a) , should refer to the Tax Code, sec.171.106(c), relating to the apportionment of gross receipts from services for regulated investment companies. (d) General rules for reporting gross receipts. (1) A corporation filing an annual report must report 12 months of gross receipts based on the business done by the corporation during its last accounting period that ends in the year before the year in which the tax is due or, if there is no such accounting period then, for the accounting period ending December 31 of the previous calendar year. (2) When a corporation changes its accounting period ending date, gross receipts for the 12-month period ending with the new accounting period end must be used in calculating the percentage of business done in this state. (3) A corporation filing an initial report must report gross receipts based on its activities beginning on the day the corporation files its Texas charter or is granted a certificate of authority to do business in Texas or the date that a foreign corporation begins doing business in Texas, whichever is earlier, and ending on the last accounting period ending date that is at least six months after the beginning date and at least 60 days before the original due date of the initial report; or if there is no such date, then ending on the last day of a calendar month that is nearest to the corporation's first year of business in Texas. (4) A corporation must report gross receipts based solely on its own financial condition. Consolidated reporting is prohibited. (5) A corporation whose taxable capital is less than $1 million may report its gross receipts according to the method used in the corporation's most recent federal income tax return originally due on or before the date the franchise tax report is originally due. To determine if taxable capital is less than $1 million, the corporation must apply the accounting methods used in computing that federal income tax return unless another method is required under a specific provision of this title or the Tax Code, Chapter 171. See sec.3.547 of this title (relating to Taxable Capital: Accounting Methods) for information on accounting methods or changes in accounting methods. (6) Close and S corporations should see sec.3.548 of this title (relating to Taxable Capital: Close and S Corporations) for information on using the accounting methods used on the corporation's federal income tax return. (7) A corporation may not change its accounting methods used to calculate gross receipts more often than once every four years without express written consent of the comptroller, unless the provisions of the Tax Code, sec.171.111, apply due to an election under that section. (8) Survivors of mergers occurring between the day on which the tax is based and January 1 of the year the report is due should refer to sec.3.565 of this title (relating to Survivors of Mergers) for information on reporting gross receipts for survivors of mergers. (9) Revenues coming into the hands of a receiver of a corporation in receivership are gross receipts of the corporation. (10) Except as otherwise provided under the Tax Code, sec.171.112, a corporation is required to use the same accounting methods in computing gross receipts as it uses in computing surplus. Accounting methods are those methods of allocating the cost, benefit, or expense of an asset or liability to accounting periods. (e) Treatment of specific items in computing gross receipts. (1) Agency reimbursements. Reimbursements from the principal to a corporation acting as its agent for charges incurred by the agent on behalf of the principal, if the reimbursement does not exceed actual expenses paid to a third party, are not gross receipts. (2) Bad debt recoveries. Bad debt recoveries are not gross receipts. (3) Capital assets and investments. Net gains and losses from sales of investments and capital assets must be added together to determine the total receipts from such transactions. (A) If the combination of net gains and losses results in a net loss, the corporation must report zero gross receipts from such transactions. (B) If the combination of net gains and losses results in a net gain and both Texas and out- of-state sales have occurred, a separate calculation of net gains and losses on Texas sales must be made. If the Texas net gain is greater than the total net gain, the Texas net gain to report equals the total net gain. Net gain on sale of intangibles held as capital assets or investments is apportioned to the location of the payor. Examples of intangibles include, but are not limited to, stocks, bonds, commodities, futures contracts, patents, copyrights, licenses, trademarks, franchises, goodwill, and general receivable rights. (4) Cash or trade discounts. Cash or trade discounts are not gross receipts. (5) Club membership fees. Club membership fees are Texas receipts if the place where the club's employees or agents perform the service of providing access to the club benefits is in Texas. (6) Commissions of stockbrokers. Commissions of a stockbroker for services performed in buying and selling on the stock exchanges are apportioned on the basis of the percentage of such services performed in Texas and the percentage performed in other states. (7) Computer services and programs. Receipts from the sale of computer software services are apportioned to the location of where the services are performed. Receipts from the sale of a computer program (as the term "computer program" is defined in sec.3.308 of this title (relating to Computers - Hardware, Software, Services and Sales) are receipts from the sale of an intangible asset and are apportioned to the legal domicile of the payor. (8) Condemnation proceeds. Condemnation proceeds resulting from the taking of property, except to the extent the proceeds exceed the net book value of the property, are not gross receipts. Amounts exceeding the net book value of the property are gross receipts apportioned based on the location of the property condemned. (9) Debt forgiveness. Revenues realized by the debtor when the creditor releases the debtor from indebtedness is a gross receipt apportioned to the legal domicile of the creditor. (10) Debt retirement. Gains on the retirement of a corporation's own indebtedness, such as the purchase by a corporation of its own bonds at a discount, are gross receipts and are apportioned to the corporation's state of incorporation. (11) Demurrage charges. Demurrage charges for the detention or storage of equipment used in the transportation of goods and merchandise in interstate commerce are Texas receipts to the extent that the detention or storage occurs within Texas. (12) DISC/FSC. A DISC (Domestic International Sales Corporation) or a FSC (Foreign Sales Corporation) is treated the same as any other corporation doing business in Texas, except that a commission DISC or FSC may elect to use the percentage of Texas business of its parent which does business in Texas. Receipts from the sale of tangible personal property by a corporation to a DISC or FSC located in Texas are not Texas receipts if the tangible personal property flows uninterrupted from the selling corporation to a foreign purchaser outside of Texas. If a DISC or FSC assembles, packages, repackages, modifies, stores, or otherwise takes physical delivery of tangible personal property in Texas, the receipts from the sale of the tangible personal property are Texas receipts to the selling corporation. (13) Dividends and interest. (A) Dividends and/or interest received from a corporation are apportioned to the state of incorporation of the payor. (B) Dividends and/or interest received from a national bank are apportioned to Texas if the bank's principal place of business is in Texas. See the Tax Code, sec.171.1031, concerning apportionment of dividends and/or interest received by banking corporations and savings and loan associations. (C) Dividends and/or interest received from the United States Treasury on United States government debt instruments are not Texas receipts, but are receipts everywhere. (D) Dividends and/or interest received from Government National Mortgage Association (GNMA), Federal National Mortgage Association (FNMA), and Federal Home Loan Mortgage Corporation (FHLMC) mortgage-backed securities or certificates are apportioned based on the location of the payor. When the payor cannot be determined, 15.78% of the interest or dividend will be considered a Texas receipt. (E) Dividends and/or interest from any other source are apportioned to the legal domicile of the payor. (F) Dividends in excess of the payor's accumulated earnings since acquisition or origination (liquidating dividends) are considered a return of capital and are not gross receipts to the receiving corporation. (14) Equity earnings. Equity earnings of a subsidiary or investee corporation are not gross receipts to the receiving corporation. (15) Exchanges of property. Exchange agreements for the exchange of real or personal property held for sale in the ordinary course of business for similar property to be held for the same purpose do not constitute gross receipts. (16) Purchase discounts and allowances. Returns, discounts, and allowances granted to a purchaser are not gross receipts to the purchaser even if refunds are given in cash. (17) Federal enclave. All receipts from a corporation's sales, services, leases, or other business activities transacted on a federal enclave located in Texas are Texas receipts unless otherwise excepted. (18) Foreign dividend gross-ups. Foreign dividend gross-ups permitted under the Internal Revenue Code are not gross receipts. (19) Freight charges. Reimbursements to the seller from the customer for freight charges paid to a third party for goods and merchandise shipped to a customer are not gross receipts when the charges are entered as a separate item on the sales invoice, if the reimbursement does not exceed actual expenses paid to a third party. (20) Health care supplies and food. Deductions from Texas receipts for sales of health care supplies and food exempted from sales and use tax by the Tax Code, sec.151.313 or sec.151.314(a) , will be allowed only for the initial sale of items shipped from a location outside Texas directly to a purchaser in Texas. The deduction does not apply when the manufacturer ships the items from outside Texas to an outlet or storage facility in Texas and later sells them. (21) Insurance proceeds. (A) Business interruption insurance proceeds are gross receipts when the proceeds are to replace lost net profits, and are apportioned to the legal domicile of the payor of the proceeds. (B) Fire and casualty insurance proceeds in excess of the net book value of the damaged or destroyed property are gross receipts and are apportioned to the location of the damaged or destroyed property. (C) Any gain resulting from life insurance proceeds paid on the death of a corporate officer or other key personnel is a gross receipt and is apportioned to the legal domicile of the payor of the proceeds. (22) Intercorporate expense allocations. Expense allocations by a corporation among one or more related corporations (other than allocations of income taxes for consolidated return purposes) , whether labeled as management fees, administrative overhead, interest, or accounting and legal services, are gross receipts to the parent corporation regardless of whether cash is actually received from the subsidiaries or related corporations, unless an agency relationship exists. (23) Intercorporate receipts. Receipts from intercorporate sales, leases, and charges for services rendered between a parent and subsidiary, or between related corporations are gross receipts to the corporation which makes the sale, lease, or renders the service. (24) Intercorporate tax allocations. Allocations by a parent or holding company among its subsidiaries of income tax liability for the purposes of filing a consolidated return are not gross receipts to the parent or holding company. (25) Leases and subleases. (A) Receipts from the lease or sublease of real property are apportioned to the location of the property. (B) Receipts from the lease or sublease of tangible personal property are apportioned to the location of the property. If the property is in Texas only part of the year, lease payments are apportioned based on the number of days spent at the respective locations. If the amount of receipts due under the lease is based on mileage, then the apportionment is based on the number of miles in Texas divided by the number of miles everywhere. (C) When a lump sum is charged for property leased or subleased but only a portion of which is in Texas, the apportionment of receipts is based on the rental value of each item of property. If the rental value of each item cannot be determined, the apportionment is based on the cost of each item to the lessor (or sublessor) . (D) Receipts from the lease or sublease of a vessel engaging in commerce are apportioned to Texas based on the number of days engaged in commerce in Texas waters divided by the number of days engaged in commerce everywhere. (E) If a lease, sublease, or rental of real or tangible personal property is treated as a sale under GAAP, the receipts from the transaction are apportioned in the same manner as a sale. Any portion of the payments designated as interest by the contracting parties is interest receipts. (26) Litigation awards. Revenues realized from litigation awards are gross receipts with the following exception. Those litigation awards consisting of a recovery of compensatory damages for fire or other casualty losses on property are gross receipts to the extent the recovery exceeds the net book value of the property. Litigation awards are apportioned to the legal domicile of the payor of the proceeds provided that a litigation award for receipts that are otherwise subject to a specific apportionment rule is subject to the specific rule. For example, if a vendor sued to recover on the sales of goods in Texas to a Delaware corporation, a judgment for the amount of the sales would not convert the receipts from Texas receipts to Delaware receipts. Subsection (f)(2) and (7) of this section is controlling for judgments, compromises, or settlements related to natural gas production. (27) Loan principal. The principal of a loan received or repaid is not a gross receipt. (28) Newspapers. All revenues, including out-of-state advertisements, of a newspaper transacting its primary business activities within Texas constitute Texas receipts, except revenues from the sale of newspapers outside Texas. (29) Partnerships and joint ventures. (A) Receipts reflecting the corporation's share of the net profit from a partnership or joint venture, for partnership or joint venture periods ending during the 12 months ending on the date upon which the tax is based, are apportioned to the principal place of business of the partnership or joint venture. A partnership's principal place of business is the location of its day- to-day operations. Effective for reports originally due on or after January 1, 1992, where a partnership's day-to-day operations are conducted equally or fairly evenly in more than one state, then its principal place of business is its commercial domicile. If the corporation's share is a loss, there are zero receipts from the partnership or joint venture. (B) The corporation's share of the gross receipts of a partnership or joint venture may be used as gross receipts if allowed as revenue under GAAP. The receipts must be apportioned based on normal apportionment rules (e.g., location of payor for dividends and interest, place where service is performed, etc.) as though the partnership did not exist and the receipts passed through it directly to the corporation. This method is not allowed for corporations using the federal income tax method. (30) Patents, copyrights, and other intangibles. (A) Receipts from the use of intangible rights. (i) Revenues from a patent are included in Texas receipts to the extent the patent is utilized in production, fabrication, manufacturing, or other processing in Texas. (ii) Revenues from a copyright are included in Texas receipts to the extent the copyright is utilized in printing or other publication in Texas. (iii) Revenues received by the owner of a trademark, franchise, and license are apportioned to the location of payor. In regard to the sale/licensing of computer programs, paragraph (7) of this subsection is controlling. (B) Sales. Sales of intangibles are allocated based on the location of payor. (31) Radio/television. All revenues of a radio or television operation which broadcasts or transmits from stations in Texas constitute Texas receipts, even though some of the listening or viewing audiences are outside Texas, except revenues from programs filmed or otherwise developed by a station in Texas which are sold or leased to the national media for broadcasting or transmitting by the national media. (32) Real property. Receipts from the sale, lease, or sublease of real property are apportioned to the location of the property. (33) Regulatory agency. Temporary or bonded rate increases of a public utility corporation are gross receipts. (34) Sales and services. When a transaction involves elements of both a sale of tangible personal property and a service, but there is no documentation showing separate charges for the sale and service elements, the comptroller may determine the amounts allocable to each based on fair values or on the basis of any available evidence. (35) Sales returns and allowances. Sales returns and allowances allowed by a seller are not gross receipts. They are allowed as a reduction of gross receipts. (36) Sales taxes. State or local sales taxes collected by a seller are not gross receipts when the tax is imposed on the customer. However, discounts on sales taxes allowed a seller do constitute gross receipts to the seller. (37) Service procurement. Receipts for the procurement of services are apportioned to the place where the service procurement is performed. (38) Services. Service receipts are apportioned to the location where the service is performed. (39) Stocks. Receipts from the sale of securities are apportioned based on the location of payor. When securities are sold over a stock exchange and the buyer cannot be determined, 6.5% of the net gain (or gross sales price, if the securities were inventory) is a Texas receipt. Receipts from the issuance by a corporation of its capital stock, are not gross receipts. (40) Subsidies/grants. Subsidies or grants received by a corporation from a governmental agency are gross receipts, except when the funds are required to be expended dollar for dollar (i.e., passed through) to third parties on behalf of the agency. Receipts from a governmental subsidy or grant are apportioned in the same manner as the item to which the subsidy/grant was attributed. For example, if a corporation qualifies for a grant to conduct research for the government, the receipts from that grant would be considered receipts from a service and would be apportioned to the location where the research is performed. (41) Tangible personal property. Examples of transactions involving the sale of tangible personal property and which result in Texas receipts include, but are not limited to, the following: (A) the sale of tangible personal property which is delivered in Texas to a purchaser. Delivery is complete upon transfer of possession or control of the property to the purchaser, an employee of the purchaser, or to transportation vehicles leased or owned by the purchaser. F.O.B. point, location of title passage, or other conditions of the sale are not relevant to the determination of Texas gross receipts; (B) the sale of tangible personal property delivered in Texas to an employee or transportation agent of an out-of-state purchaser. A carrier is an employee or agent of the purchaser if the carrier is under the supervision and control of the purchaser with respect to the manner in which goods are transported; (C) the sale and delivery in Texas of tangible personal property which is loaded into a barge, truck, airplane, vessel, tanker, or any other means of conveyance leased and controlled or owned by the purchaser of the property. The sale of tangible personal property which is delivered in Texas to an independent contract carrier, common carrier, or freight forwarder hired by a purchaser of the property results only in gross receipts everywhere if the carrier transports or forwards the property to the purchaser outside this state; (D) the sale of tangible personal property with delivery to a common carrier outside Texas and shipment by that common carrier to a purchaser in Texas; (E) the sale of oil or gas to an interstate pipeline company, with delivery in Texas; (F) the sale of tangible personal property which is delivered in Texas to a warehouse or other storage facility owned or leased by the purchaser; (G) the sale of tangible personal property which is delivered to and stored in a warehouse or other storage facility in Texas at the purchaser's request, as opposed to a necessary delay in transit, even though the property is subsequently shipped outside Texas; (H) the drop shipment of tangible personal property in Texas. A drop shipment is a shipment of tangible personal property from a seller directly to a purchaser's customer, at the request of the purchaser, without passing through the hands of the purchaser. This results in Texas gross receipts for the seller and the purchaser; (I) sales to which the throwback rule applies. For reports due on or after October 2, 1984, each sale of tangible personal property shipped from this state to a purchaser in another state in which the seller is not subject to taxation is thrown back to Texas as a Texas receipt (i.e., the throwback rule). This subparagraph will control if it conflicts with any other provision of this rule. Another state means a state of the United States, the District of Columbia, Puerto Rico, or any territory or possession of the United States. Subject to taxation means constitutional nexus. The seller need not pay tax to the other state; it only has to have enough contact with the other state that the other state could tax the seller. If the seller is doing business, has a certificate of authority, or is incorporated in the other state, the seller is subject to taxation in that state. Voluntarily collecting or paying tax to another state, by itself, is not enough contact to make sales to the other state non- Texas receipts. A corporation which performs any of the activities listed in sec.3.546(c) of this title (relating to Taxable Capital: Nexus) for taxation of taxable capital in the other state will be considered subject to taxation in the other state. The selling corporation must have nexus in the other state during the accounting year upon which the tax is based. The corporation has the burden of proving it is subject to taxation in the other state. (42) Tax refunds. Tax refunds are not gross receipts. However, interest awarded on tax refunds are gross receipts. (43) Telephone company receipts. All receipts for calls of a telephone company in Texas are Texas receipts, except for receipts from interstate calls. (44) Transactions in Texas waters. Receipts from transactions occurring in Texas waters are Texas receipts. The dividing line between Texas waters and international waters is established at 10.359 statute miles or nine nautical miles from the Texas coastline. (45) Transportation companies. Transportation companies must report Texas receipts from transportation services by: (A) including receipts derived from the transportation of goods or passengers in intrastate commerce; or (B) multiplying total transportation receipts by total mileage in transporting goods and passengers picked up and delivered within Texas (in intrastate commerce) divided by total mileage everywhere. (46) Unrealized gains and losses. Unrealized gains and losses recorded on foreign currency transactions or translations, marketable security investments or reclassification of marketable security investments, are not gross receipts. (47) Trusts. Distributions to the beneficiaries of a trust are apportioned based on the legal domicile of the trust. See subsection (b) (6) of this section regarding the legal domicile of a trust. (f) Natural gas production. (1) Revenues realized by a producer of gas that relate to the price of gas produced and taken by the purchaser pursuant to the terms of a contract for the sale of gas are gross receipts and are apportioned to Texas if the gas is delivered in Texas. (2) Revenues realized by a producer of gas in connection with any judgment, compromise, or settlement agreement relating to the recovery of the contract price of gas produced are gross receipts and are apportioned to Texas to the extent the contract specified delivery in Texas. (3) Revenues realized by a producer of gas from payments by a purchaser under a contract for the sale or purchase of gas to be produced, if the gas is never produced and delivered to the purchaser pursuant to that contract, are gross receipts and are apportioned to the legal domicile of the payor. (4) Revenues realized by a producer of gas from breach of contract litigation awards, reimbursements for litigation-related expenses (e.g., documented attorney's fees or court costs) , or interest (agreed upon by the parties, determined by or from the records of the producer, or an amount ordered by a court) are gross receipts and are apportioned to the legal domicile of the payor. (5) Revenues realized by a producer of gas for payments made by a purchaser to terminate a gas purchase contract are gross receipts and are apportioned to the legal domicile of the payor. (6) Revenues realized by a producer of gas for payments made by a purchaser to amend any provision in the gas purchase contract are gross receipts and are apportioned to the legal domicile of the payor. Any revenues realized by a producer as a result of an amended provision affecting the price of the gas sold will be recognized as receipts from the sales of gas and apportioned to Texas if delivery is in Texas. (7) Those revenues realized by a producer of gas from a judgment, compromise, or settlement among several claims, where there was a pricing dispute and any other issue associated with a gas sales/purchase contract, that is less than the full amount sought by the producer shall be prorated based upon the documented amounts due under the contract for each issue according to the records of the producer. (A) Those revenues attributed to pricing disputes or otherwise attributed to sales of gas shall be apportioned in accordance with paragraphs (1) and (2) of this subsection. For example, a settlement of $100,000 for a pricing dispute of $25,000 and an amount of $225,000 for failure to pay for gas not taken, would result in receipts of $10,000 from gas sales (100,000 X 25,000/250,000) and receipts from other business of $90,000 (100,000 X 225,000/250,000) . (B) For purposes of this subsection, records of the producer shall include, but are not limited to: (i) the contracts and settlement agreements; (ii) accounting entries, including entries reflecting receivables and payables; (iii) court pleadings; and (iv) worksheets, including calculations reflecting settlement amounts. Whenever it is necessary to determine receipts from sales of gas under this subsection, the greatest weight shall be given to the records in the order they are listed in this subparagraph. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 13. TRD-9616477 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 4, 1996 Proposal publication date: July 26, 1996 For further information, please call: (512) 463-4062 SUBCHAPTER Z.Coastal Protection Fee 34 TAC sec.3.692, sec.3.693 The Comptroller of Public Accounts adopts the repeal of sec.3.692 and sec.3.693, concerning definitions and reporting requirements, without changes to the proposed text as published in the September 17, 1996, issue of the Texas Register (21 TexReg 8907). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The sections are being repealed in order to simplify the consolidation of related sections into a single section. The new sec.3.692, concerning definitions, reporting requirements and amount of fee, includes the substance of the current sec.3.692 and sec.3.693. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeals implement Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616520 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 5, 1996 Proposal publication date: September 17, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.692 The Comptroller of Public Accounts adopts new sec.3.692, concerning definitions, reporting requirements, and amount of fee, without changes to the proposed text as published in the September 17, 1996, issue of the Texas Register (21 TexReg 8907). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. Therefore, current sec.3.692, concerning definitions, is being proposed for repeal. The new section consolidates the substance of current sec.3.692 with sec.3.693, concerning reporting requirements. No comments were received regarding adoption of the new section. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Natural Resources Code, sec.40.155(a). This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616519 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 5, 1996 Proposal publication date: September 17, 1996 For further information, please call: (512) 463-4062 SUBCHAPTER AA.Automotive Oil Sales Fee 34 TAC sec.3.701 The Comptroller of Public Accounts adopts an amendment to sec.3.701, concerning reporting requirements, without changes to the proposed text as published in the September 17, 1996, issue of the Texas Register (21 TexReg 8909). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The amendment consolidates the substance of sec.3.701 with 34 TAC sec.3.702, concerning definitions and exemptions. No comments were received regarding adoption of the amendment. The amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The amendment implements the Health and Safety Code, sec.371.003 and sec.371.062. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616695 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: September 17, 1996 For further information, please call: (512) 463-3699 34 TAC sec.3.702 The Comptroller of Public Accounts adopts the repeal of sec.3.702, concerning definitions and exemptions, without changes to the proposed text as published in the September 17, 1996, issue of the Texas Register (21 TexReg 8911). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The section is being repealed in order to simplify the consolidation of related sections into a single section. The contents of this section will be included as an amendment to 34 TAC sec.3.701. No comments were received regarding adoption of the repeal. The repeal is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeal implements the Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616657 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: September 17, 1996 For further information, please call: (512) 463-3699 SUBCHAPTER EE.Boat and Motor Sales and Use Tax 34 TAC sec.3.741, sec.3.743 The Comptroller of Public Accounts adopts the repeal of sec.3.741 and sec.3.743, concerning imposition and collection of tax; definitions and accessories added to boats and boat motors, without changes to the proposed text as published in the September 17, 1996, issue of the Texas Register (21 TexReg 8911). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The sections are being repealed in order to simplify the consolidation of related sections into a single section. The substance of the current sec.3.741 and sec.3.743 will be included in the new sec.3.741, concerning imposition and collection of tax. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeals implement Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616517 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 5, 1996 Proposal publication date: September 17, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.741 The Comptroller of Public Accounts adopts new sec.3.741, concerning imposition and collection of tax, without changes to the proposed text as published in the September 17, 1996, issue of the Texas Register (21 TexReg 8911). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. Therefore, current sec. 3.741 is being proposed for repeal. The new section consolidates the current sec. 3.741 with sec. 3.743, concerning accessories added to boats and boat motors. The definitions for accessories and commercial use were added for clarity. No comments were received regarding adoption of the new section. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Tax Code, sec.sec.160.001, 160.002, 160.021, and 160.041. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1996. TRD-9616516 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 5, 1996 Proposal publication date: September 17, 1996 For further information, please call: (512) 463-4062 SUBCHAPTER GG.Insurance Tax 34 TAC sec.sec.3.801-3.806 The Comptroller of Public Accounts adopts the repeal of sec.sec.3.801-3.806, concerning maintenance tax rates assessed for calendar years 1989-1992, which are obsolete and no longer needed, without changes to the proposed text as published in the October 1, 1996, issue of the Texas Register (21 TexReg 9434). Maintenance tax rates are determined and approved by the Commissioner of Insurance on a year-by-year basis. The prior years' maintenance taxes do not affect current maintenance taxes. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeals implement the Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616619 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.809, sec.3.826 The Comptroller of Public Accounts adopts the repeal of sec.3.809 and sec.3.826, concerning overpayment of premium tax liability; and the tax return and prepayment due dates and penalty and interest for failing to report or the underreporting of tax, without changes to the proposed text as published in the October 1, 1996, issue of the Texas Register (21 TexReg 9435). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. The sections are being repealed in order to simplify consolidation of related sections into a single section. The new sec.3.809 includes the substance of current sec.3.809 and sec.3.826. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeals implement the Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616621 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.809 The Comptroller of Public Accounts adopts new sec.3.809, concerning due dates, penalty and interest, and overpayments, without changes to the proposed text as published in the October 1, 1996, issue of the Texas Register (21 TexReg 9435). The comptroller has determined that the consolidation of sections dealing with similar subject matter will benefit taxpayers by providing a more effective means of obtaining information. Therefore, current sec.3.809, concerning the overpayment of premium tax liability, and sec.3.826, concerning tax return and prepayment due dates and penalty and interest for failing to report or the underreporting of tax, are being adopted for repeal. The new section consolidates the substance of the current sec.3.826 and sec.3.809. No comments were received regarding adoption of the new section. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Insurance Code, Article 4.10, Article 4.11, Article 4.11B, Article 9.59, Article 20A.33 and, Title 2, Tax Code, Subtitles A and B. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616620 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 463-4062 34 TAC sec.sec.3.812-3.816, 3.824, The Comptroller of Public Accounts adopts the repeal of sec.sec.3.812-3.816, and 3.824, concerning insurance tax report forms used by insurers, surplus lines agents, or other entities, for tax years 1989-1992, without changes to the proposed text as published in the September 24, 1996, issue of the Texas Register (21 TexReg 9151). The report forms that the rules require to be completed are obsolete and not used by the comptroller. House Bill 1461, 73rd Legislature, 1993, transferred tax collection responsibilities from the Department of Insurance to the Comptroller of Public Accounts and enacted the Insurance Code, Article 1.04D, (c), which gives the comptroller the authority to prescribe appropriate tax report forms and due dates. No comments were received regarding adoption of the repeals. The repeals are adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeals implement the Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616622 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: September 24, 1996 For further information, please call: (512) 463-4062 34 TAC sec.3.817 The Comptroller of Public Accounts adopts the repeal of sec.3.817, concerning electronic transfers of certain payments by regulated entities to the State Board of Insurance, without changes to the proposed text as published in the October 1, 1996, issue of the Texas Register (21 TexReg 9436). House Bill 1461 transferred the collection, reporting, and administration of taxes and certain fees and assessments to the comptroller effective September 1, 1993, and enacted under Article 1.04D in the Insurance Code. The procedures for electronic fund transfers to the Comptroller of Public Accounts are stipulated in the Government Code, sec.404.095 and in 34 TAC, sec.3.9. No comments were received regarding adoption of the repeal. The repeal is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The repeal implements the Tax Code, sec.111.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616623 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: October 1, 1996 For further information, please call: (512) 463-4062 CHAPTER 5.Funds Management (Fiscal Affairs) Claims Processing — Electronic Funds Transfers 34 TAC sec.5.11 The Comptroller of Public Accounts adopts the repeal of sec.5.11, concerning miscellaneous provisions, without changes to the proposed text as published in the September 17, 1996, issue of the Texas Register (21 TexReg 8913). The section is being repealed because its provisions are being transferred to 34 TAC sec.sec.5.12-5.15 without substantive change. The transfers will make it easier for persons affected by those sections to read and interpret them. No comments were received regarding adoption of the repeal. The repeal is adopted under the Government Code, sec.403.016(j), which requires the comptroller to adopt rules to administer the law about electronic funds transfers. The repeal implements the Government Code, sec.403.016. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616644 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: September 17, 1996 For further information, please call: (512) 463-4062 34 TAC sec.sec.5.12-5.15 The Comptroller of Public Accounts adopts an amendment to sec.sec.5.12-5.15, concerning claims processing - electronic funds transfers, without changes to the proposed text as published in the September 13, 1996, issue of the Texas Register (21 TexReg 8807). The sections are being amended for the following reasons. First, the provisions of 34 TAC sec.5.11 concerning miscellaneous provisions are being incorporated into each of sec.sec.5.12-5.15 to make those sections easier to read and interpret. Second, the various references to "effective date of this section" in sec.sec.5.12-5.15 are being changed to "June 10, 1992," which was the original effective date of each of those sections. These changes are being made to preserve the intent that the original effective date applies instead of the effective dates of subsequent amendments to those sections. Third, various provisions in sec.sec.5.12-5.15 are being deleted because they have been executed and are no longer necessary. Fourth, two clerical errors will be corrected as follows. The reference in sec.5.14(b)(1)(B) to subsection (c)(6) is being changed to subsection (c)(5). The reference in sec.5.15(k)(4)(D)(i) to "vendor" is being changed to "governmental entity." No comments were received regarding adoption of the amendment. The amendment of these sections is adopted under the Government Code, sec.403.016(j), which requires the comptroller to adopt rules to administer the law about electronic funds transfers. The amendment implements the Government Code, sec.403.016. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1996. TRD-9616643 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: December 6, 1996 Proposal publication date: September 13, 1996 For further information, please call: (512) 463-4062 TITLE 37. PUBLIC SAFETY AND CORRECTIONS PART XIII. Texas Commission on Fire Protection CHAPTER 521. Fire Extinguisher Rules 37 TAC sec.sec.521.11, 521.14, 521.22, 521.23 The Texas Commission on Fire Protection adopts amendments to sec.sec.521.11, 521.14, 521.22 and 521.23, concerning regulation of the business of inspecting, planning, certifying, leasing, selling, servicing, testing, installing, and maintaining fire extinguishers or fire extinguishing devices and systems, without changes to the proposed text as published in the September 3, 1996, issue of the Texas Register (21 TexReg 8437). The justification for this section is that the public benefit will be enhanced through a clearer indication of any deficiencies in extinguisher systems and devices, as well as through the notification of local officials. The amendment to sec.521.11 concerning fire extinguisher licenses allows a license holder or registered firm to submit written notification of the loss or destruction of a license in order to obtain a duplicate. The changes to sec.521.14 concerning applications remove the requirement for a registering firm to submit a copy of their identifying mark (symbol) with an application for a certificate of registration. It also removes irrelevant language that deals with Type PL licenses processed prior to September 1, 1989. The changes to sec.521.22 concerning service tags delete the requirement for submitting a sample service tag after each new printing. It also changes the format on the current service tag to require inspectors to include the type of service performed. The language in sec.521.22(h) is also being moved to sec.521.23 concerning red tags. Other changes to sec.521.23 include removing the requirement for submitting a sample red tag after each printing. The amendments have a proposed effective date of January 1, 1997. There were no comments received on the proposed amendments. The amendments are adopted under Texas Insurance Code, Article 5.43-1, Sections 2A, 8, and 9 which provides the Texas Commission on Fire Protection with the authority to adopt rules necessary for the protection and preservation of life and property in controlling the requirements for the installation or servicing of portable fire extinguishers and the planning, certifying, installing, or servicing of fixed fire extinguisher systems. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 13, 1996. TRD-9616447 Jack Woods General Counsel Texas Commission on Fire Protection Effective date: January 1, 1997 Proposal publication date: September 3, 1997 For further information, please call: (512) 918-7189 CHAPTER 531.Fire Alarm Rules 37 TAC sec.sec.531.11, 531.13, 531.14 The Texas Commission on Fire Protection adopts amendments to sec.sec.531.11, 531.13 and 531.14, concerning regulation of the business of inspecting, planning, certifying, leasing, selling, servicing, testing, installing, monitoring, and maintaining fire alarm or fire detection devices and systems, without changes to the proposed text as published in the September 13, 1996, issue of the Texas Register (21 Taxer 8819). Section 531.7 and sec.531.10 were sent back to the advisory committee for review and possible changes. The justification for this section is that the public benefit anticipated as a result of enforcing the sections will be enhanced by the anticipated reduction in false alarm calls. Affected business, whether small or large, should experience a reduction in current expenses through the issuance of the new monitoring technician's license. The changes to sec.531.11 add a new license for fire alarm monitoring technicians. The changes to sec.531.13 concerning applications add a requirement for individuals applying for a fire alarm monitoring technician license to show proof in Texas as a registered engineer, or to complete a technical qualifying examination to be conducted by the State Fire Marshal's Office. Section 531.14 changes the format for the fee schedule and also includes the fee for the new license for fire alarm monitoring technicians. There were no comments received on the proposed amendments. The amendments are adopted under Texas Insurance Code, Article 5.43-2, Sections 4, 4A, and 6 which provides the Texas Commission on Fire Protection with the authority to adopt rules necessary to its administration through the state fire marshal for the protection and preservation of life and property in controlling the requirements for planning, certifying, leasing, selling, servicing, installing, monitoring or maintaining of fire alarms or fire detection devices or systems. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 13, 1996. TRD-9616448 Jack Woods General Counsel Texas Commission on Fire Protection Effective date: December 4, 1996 Proposal publication date: September 13, 1996 For further information, please call: (512) 918-7189 TITLE 40. SOCIAL SERVICES AND ASSISTANCE PART II. Texas Rehabilitation Commission CHAPTER 102. Texas Rehabilitation Advisory Council 40 TAC sec.102.4 The Texas Rehabilitation Commission (TRC) adopts an amendment to sec.102.4, concerning Functions of the Council, without changes to the proposed text as published in the October 22, 1996, issue of the Texas Register (21 TexReg 10431). The justification to the adopted amendment will be to provide the public with information on the new functions of the Council. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Human Resources Code Annotated, Title 7, sec.111.018, which provides the Texas Rehabilitation Commission with the authority to promulgate rules. The Texas Human Resources Code, Chapter 111, Title 7, sec.111.016 is affected by this adopted addition. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 13, 1996. TRD-9616464 Charles W. Schiesser Associate Commissioner for Legal Services Texas Rehabilitation Commission Effective date: December 4, 1996 Proposal publication date: October 22, 1996 For further information, please call: (512) 424-4051