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RULE §3.1281Fireworks Tax

(a) This section applies to sales made prior to September 1, 2015. Effective September 1, 2015, the fireworks tax is repealed.

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

  (1) Consignment sale--An arrangement where a consignee pays a distributor only for items that the consignee sells and returns any unsold items.

  (2) Fireworks--Any composition or device that is designed to produce a visible or audible effect by combustion, explosion, deflagration, or detonation that is classified as Division 1.4G explosives by the United States Department of Transportation in 49 C.F.R. Part 173 as of September 1, 1999. Examples of fireworks include items that are commonly known as firecrackers, bottle rockets, Roman candles, and shooting stars.

  (3) Retail sale--Any sale of fireworks directly to the public.

  (4) Sales tax--The tax imposed by Tax Code, Chapter 151.

(c) Imposition. A 2.0% tax is imposed on the retail sale of fireworks in Texas. The fireworks tax imposed under Tax Code, Chapter 161, is in addition to any state and local sales taxes that are due on the retail sale of fireworks.

(d) Collection. Each seller must collect the fireworks tax from the purchaser on the total price of each retail sale of fireworks in Texas. The fireworks tax is collected in the same manner as sales tax. See §3.286 of this title (relating to Seller's and Purchaser's Responsibilities, including Nexus, Permits, Returns and Reporting Periods, and Collection and Exemption Rules) for information on the collection and remittance of sales tax.

(e) Consignment sales. For Texas tax purposes, distributors who make consignment sales of fireworks are considered the sellers of the fireworks and are responsible for reporting and remitting the sales and fireworks taxes due on all retail sales made by consignees.

(f) Exclusions and exemptions.

  (1) The following items are excluded from the fireworks tax base, but retail sales of these items may be subject to sales tax:

    (A) a toy pistol, toy cane, toy gun, or other device that uses a paper or plastic cap;

    (B) a model rocket or model rocket motor that is designed, sold, and used for the purpose of propelling a recoverable aero model;

    (C) a propelling or expelling charge that consists of a mixture of sulfur, charcoal, and potassium nitrate;

    (D) a novelty or trick noisemaker;

    (E) a pyrotechnic signaling device or distress signal that is designed for marine, aviation, or highway use in an emergency situation;

    (F) a fusee or railway torpedo for use by a railroad;

    (G) a blank cartridge that is sold for use in a radio, television, film, or theater production, for signal or ceremonial purposes in athletic events, or for industrial purposes; or

    (H) a pyrotechnic device that is sold for use by a military organization.

  (2) No fireworks tax is due on a sale that is exempt from sales tax.

  (3) A seller who accepts a valid and properly completed resale or exemption certificate for sales tax is not required to collect the fireworks tax. All sales that are unsupported by valid resale or exemption certificates or by other exemption documentation acceptable under the law are considered to be retail sales, and the seller will be liable for the fireworks tax on those sales.

(g) Reports. A seller must report the fireworks tax to the comptroller on forms that the comptroller prescribes. A seller who fails to receive the correct form from the comptroller is not relieved of the responsibility for filing a fireworks tax report and for payment of the tax by the due date.

(h) Due dates for reports and payments. A seller must report and remit fireworks tax on or before the applicable due date for the sales period as specified in this section.

  (1) The due dates are:

    (A) August 20 for tax collected on sales that occur during:

      (i) the period that begins May 1 and ends at midnight on May 5 at a location that is not more than 100 miles from the Texas-Mexico border in a county in which the commissioners court has approved the sale of fireworks during that period; and

      (ii) the period that begins on June 24 and ends at midnight on July 4; and

    (B) February 20 for tax collected on sales that occur during the period that begins December 20 and ends at midnight on January 1.

  (2) Reports and remittances that are due on Saturdays, Sundays, or legal holidays may be submitted on the next business day.

  (3) Reports submitted by mail must be postmarked on or before the due date to be considered timely.

  (4) Reports filed electronically must be completed and submitted by 11:59 p.m., central time, on the due date to be considered timely.

(i) Prepayment and timely filing discounts.

  (1) The 1.75% sales tax prepayment discount does not apply to fireworks tax.

  (2) A seller who timely files the fireworks report and pays the tax due on or before the applicable due date may retain 0.5% of the gross fireworks tax due.

(j) Late filing of reports and payment of tax due; penalty and interest.

  (1) If the tax is paid or postmarked one to 30 days after the due date, a penalty of 5.0% of the tax due is imposed.

  (2) If the tax is paid or postmarked more than 30 days after the due date, a penalty of 10% of the tax due is imposed.

  (3) If the tax is paid or postmarked more than 60 days after the due date, interest is also due on the late payment. Interest is applied at the applicable annual rate to the amount of the delinquent tax due, exclusive of any late penalty. The comptroller publishes the annual interest rate online at www.window.state.tx.us and by phone at 1-877-44RATE4.

  (4) A late filing penalty of $50 is imposed for each report that is not filed on or before the due date. The penalty is due regardless of whether the person subsequently files the report or whether no taxes are due for the reporting period. The $50 penalty is due in addition to any other penalties assessed for the reporting period.

Source Note: The provisions of this §3.1281 adopted to be effective March 19, 2002, 27 TexReg 2053; amended to be effective July 14, 2008, 33 TexReg 5536; amended to be effective December 31, 2013, 38 TexReg 9602; amended to be effective April 6, 2016, 41 TexReg 2493

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