Trouble viewing this email? Please click here to view the email online.

September 2007     • www.salestaxtexas.com

 
Changes Concerning the Collection and Reporting of Local Sales and Use Taxes

The State Comptroller’s Office recently issued Publication 98-827 reflecting legislative changes in Texas local sales and use taxes.

House Bill 142 – Change of Location for Imposition of Transit Taxes

Effective September 1, 2007, sellers will collect sales taxes for all transit jurisdictions based on the seller’s place of business instead of the point of delivery, unless an exception applies as noted below. This change means that local transit taxes will now be collected in the same manner as all other local sales and use taxes. The law change does not apply to sales of waste removal services, cable television services, amusement services, natural gas and electricity, nonresidential repair or remodeling services, contractors or telecommunications services. Sellers of these items should continue to collect local sales and use taxes as outlined in Publication 94-105.

Under the law prior to September 1, 2007, transit sales and use taxes were due based on where an item was delivered, meaning that a seller with a place of business in a transit jurisdiction only collected the transit tax on sales of taxable items shipped or delivered to a location within the boundaries of a transit jurisdiction. Transit sales and use tax was not collected on sales made outside of the transit jurisdiction.

Under HB 142, transit sales taxes are due based on the location of the seller’s place of business and is collected on all sales of taxable items shipped or delivered to a location in Texas from a place of business inside the boundaries of a transit jurisdiction, including sales shipped or delivered outside the boundaries of the transit authority.

For example, for sales prior to September 1, 2007, when a seller engaged in business in Dallas (inside the Dallas MTA) took an order from a buyer in Allen (outside the Dallas MTA) and shipped property to the buyer, only state sales tax of 6.25 % and Dallas city sales tax of 1% was due. Effective September 1, 2007, the additional 1% Dallas MTA is due.

House Bill 3319 – Nonresidential Repair and Remodeling

Effective September 1, 2007, all persons providing nonresidential repair and remodeling services must collect local sales and use taxes based on the location of the job site – not the service provider’s place of business. This conforms with how local taxes are collected on separated contracts for new construction and residential remodeling.

For example, assume a company located in Dallas is hired to remodel a commercial structure in Allen. Prior to September 1, 2007, the service provider would collect local sales tax of 1% city of Dallas. (Dallas MTA would not have been due, as explained above). Effective September 1, 2007, the service provider will collect local tax of 2% city of Allen.

House Bill 3319 – Repeals Previous Changes Under House Bill 2425

Effective September 1, 2007, taxable service providers, unless an exception as noted below applies, should collect local sales taxes based on their place of business. Note: this law change only reverses a prior law that was never implemented. But some taxpayers may have been aware of the prior law and concerned about its implementation. This change does not apply to sales of waste removal services, cable television services, amusement services, natural gas and electricity, nonresidential repair or remodeling services, contractors or telecommunications services. Sellers of these items should continue to collect local sales and use taxes as outlined in Publication 94-105.

For example, a pest control company located in Dallas will collect 8.25% sales tax, consisting of 6.25% state sales tax, 1% Dallas city sales tax and 1% Dallas MTA transit tax on all taxable services originating from the Dallas location and provided in Texas.

A taxpayer whose place of business is located in an area with a total sales tax rate of less than 8.25% may still be required to collect additional local use taxes based on the job site/point of delivery, if engaged in business in those local jurisdictions.

About Sales Tax Specialists of Texas

Sales Tax Specialists of Texas provides sales tax audit defense services to all taxpayers and sales tax refund reviews to taxpayers in the following industries:
 

  • Manufacturing
  • Oil & Gas
  • Residential Communities
    (Apartments and Nursing Homes)
  • New Construction
    (Homebuilders and Non-residential)

     
  • Restaurants
  • Printers
  • Agriculture
  • Golf Courses
  • Janitorial Companies
     

To learn more about Sales Tax Specialists of Texas, visit our website at www.salestaxtexas.com.

To request a consultation, click here to email Sales Tax Specialists of Texas.

Texas Sales Tax Update is published on an as-appropriate basis and is a service of Sales Tax Specialists of Texas.