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If a manufacturer uses tax exempt manufacturing equipment to make repairs on a product under the terms of its warranty, it constitutes divergent use of the exempt equipment for purposes of sales tax in Texas. The manufacturing process ceases once the tangible personal property (the packaged product) has been transferred to the buyer. At that point, any use of the tax exempt equipment to repair the product is considered divergent and may trigger tax liability. This letter reverses a previously issued letter to the same taxpayer in 2004. (Letter No. 201003824L, Texas Comptroller of Public Accounts, March 15, 2010, released August 2010).

(01/09/2011)

A telecommunications services provider’s roaming charges for when its Texas customers traveled to Mexico and placed or received calls that originated and terminated in Mexico, were not subject to Texas sales tax. The Mobile Telecommunications Sourcing Act (MTSA) provides a uniform national rule which assumes that all mobile telecommunications service charges are deemed to be provided by the customer’s home service provider and are subject to tax according to the place of primary use rule. However, the Act’s place of primary use rule does not apply when a wireless telecommunications subscriber travels to a foreign country and uses a wireless device to place or receive calls that originate and terminate in the foreign country because the subscriber is not using facilities located in the United States. The wireless telecommunications services at issue were provided in Mexico and Texas did not have the authority to impose tax (Decision, Hearing No. 100,587, Texas Comptroller of Public Accounts, June 4, 2010).

(11/14/2010)

The Texas Comptroller of Public Accounts issued a newsletter that discusses, among other things, the annual Memorial Day weekend Energy Star Sales Tax Holiday. The 2010 Holiday will begin at 12:01 a.m. on Saturday, May 29, and end at 11:59 p.m. on Monday, May 31. The holiday applies to state and local sales tax, and use tax on purchases of energy efficient products, including some Internet, catalog, and layaway plan purchases. The following products qualify for the exemption, provided that the Energy Star logo is displayed on the appliance, packaging, or Energy Guide label: room and central unit air conditioners priced under $6000, clothes washers, ceiling fans, dehumidifiers, dishwashers, incandescent and fluorescent light bulbs, programmable thermostats, and refrigerators priced under $2000. Since Energy Star does not currently label any clothes dryers, these are excluded from the holiday. (Tax Policy news, Texas Comptroller of Public Accounts, April 2010)

(05/17/2010)

Effective September 1, 2009, Texas legislation exempts aircraft from Texas sales and use tax if sold to a person for use exclusively in connection with an agricultural use. To qualify for the exemption the aircraft must be used 95% of the time for the following agricultural services: 1) predator control, 2) wildlife or livestock capture, 3) wildlife or livestock surveys, 4) census counts of wildlife or livestock, 5) animal or plant health inspection services, or 6) crop dusting, pollination, or seeding. In addition, the aircraft must travel more than 30 miles each way to a location to perform one of the listed services in order to qualify. The person claiming the exemption must maintain and make available to the comptroller flight records for all uses of the aircraft. Additional rules and regulations may apply. (S.B. 958, Laws 2009, effective September 1, 2009)

(04/05/2010)

A taxpayer’s purchase of gas and electricity used to power equipment related to cleaning, sanitizing, and wrapping plastic containers were not exempt from Texas sales and use tax under the agricultural exemption. To qualify for the agricultural exemption, purchases of gas and electricity must be used for agricultural purposes. The taxpayer’s activities of cleaning and sanitizing tangible personal property were not considered an agricultural use (Decision, Hearing No. 100,486, Texas Comptroller of Public Accounts, November 24, 2009, released March 2010)

(03/30/2010)

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