| (6) Taxable services. Sales or use taxes paid on maintenance, repair, or remodeling performed on qualifying machinery or equipment from October 1, 2001 through December 31, 2007, are not eligible for the partial refund or credit. A purchaser may claim a partial refund or take a credit for tax paid on separately stated charges for parts, accessories, and lubricants for qualifying machinery or equipment. (7) Rentals and Leases. The amount of partial refund or credit will be determined by the date on which the lessee takes possession of the items. The lessee may not claim a refund or take credit until tax has been paid. The limitations in which the refund or credit must be claimed or taken, as provided in paragraph (4) of this subsection, are based on the date the lessee paid tax. (d) Original producer. (1) The original producer may qualify for the partial refund or credit only if: (A) the processing, packing, or marketing occurs at or from a location operated by the original producer; (B) at least 50% of the value of the timber products processed, packed, or marketed at or from the location during the most recent calendar year is attributable to products produced by the original producer and not purchased or acquired from others; and (C) the original producer does not for consideration process, pack, or market timber products that belong to others, unless the value of the product that belongs to another person is 5.0% or less of the total value of the timber products processed, packed, or marketed by the original producer. (2) Two or more corporations that operate timber activities on the same or adjacent tracts of land and that are entirely owned by the same 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 this paragraph. (e) Exemption for timber items. After December 31, 2007, the purchase, lease, or rental of timber items will be exempt from sales or use tax, and a purchaser may issue a retailer a properly completed exemption certificate in lieu of paying tax on qualifying items that are purchased, leased, or rented after December 31, 2007. After December 31, 2007, taxable services performed on qualifying items will be exempt under Tax Code, §151.3111. (f) Exemption for off-road, heavy-duty diesel equipment. A person who uses off-road heavy-duty diesel equipment in timber operations may claim an exemption from the Texas Emissions Reduction Plan Surcharge imposed by Tax Code §151.0515 provided the equipment is exclusively used in the production of timber for sale. (g) Manufacturing. A person who processes or fabricates tangible personal property to be sold is a manufacturer and may be entitled to manufacturing exemptions provided by Tax Code, §151.318. See §3.300 of this title (relating to Manufacturing; Custom Manufacturing; Fabricating; Processing) for information on tax exemptions for equipment and supplies used in manufacturing. For information regarding wrapping and packaging supplies purchased by manufacturers, see §3.314 of this title (relating to Wrapping, Packing, Packaging Supplies, Containers, Labels, Tags, Export Packers, and Stevedoring Materials and Suppliers). (h) Gas and electricity exemption. Effective October 1, 2001, natural gas and electricity used in timber operations are exempt from sales and use taxes. See §3.295 of this title (relating to Natural Gas and Electricity) for further information regarding the exemption of natural gas and electricity. (i) Buildings. Buildings, structural components of buildings, and/or the materials used to build, construct, or fabricate buildings are not timber items and are taxable. (1) Buildings include any structures or edifices enclosing a space within their walls, and usually are covered by a roof, the purpose of which may be to provide storage, shelter, or housing, or to provide work, office, or sales space. Examples of buildings include residential quarters, offices, storage facilities, and warehouses. (2) A building or structure that is essentially an item of equipment or machinery necessary for timber production may be considered timber equipment if it is specifically designed for such use and cannot be economically used for any other purpose. For example, a commercial greenhouse is timber equipment if it is used to grow seedlings of trees commonly grown for commercial timber. (3) Pollution control equipment and machinery or equipment used in processing, packing, or marketing by an original producer, may qualify even if the machinery and equipment are affixed to real property. For a timber producer to qualify for sales tax refunds or credits on qualifying items that are installed under a contract to improve real property, the timber producer must enter into a separated contract. Additionally, the contract must separately state the charges for the qualifying items from the charges for other tangible personal property. See §3.291 of this title (relating to Contractors) for information regarding new construction contracts. See §3.357 of this title (relating to Nonresidential Real Property Repair, Remodeling, and Restoration; Real Property Maintenance) for information regarding nonresidential real property repair, remodeling, or restoration. (j) Repeal of previous exemption. Effective October 1, 2001, the exemption in Tax Code, §151.3161, that took effect on October 1, 1995, is repealed. That provision allowed a tax exemption for the first $50,000 of the purchase price of each complete unit of machinery or equipment used exclusively in a commercial timber operation to prepare the site, plant, cultivate, or to harvest timber in the regular course of business. |
