| (C) Taxes imposed by law on the taxable entity itself
are not allowed as flow-through funds and cannot be excluded from
total revenue. Examples include, but are not limited to, the Texas
mixed beverage tax and the Texas franchise tax.
(2) Flow-through funds mandated by contract. Flow-through
funds that are mandated by contract to be distributed to other entities
or persons, limited to:
(A) sales commissions, as that term is defined by subsection
(b)(11) of this section, to non-employees, including split-fee real
estate commissions;
(B) the tax basis as determined under the Internal
Revenue Code of securities underwritten; and
(C) subcontracting payments handled by the taxable
entity to provide services, labor, or materials in connection with
the actual or proposed design, construction, remodeling, or repair
of improvements on real property or the location of the boundaries
of real property;
(3) Principal repayments. A taxable entity that is
a lending institution shall exclude the principal repayment of loans;
(4) Tax basis of securities and loans. A taxable entity
shall exclude the tax basis, as determined under the Internal Revenue
Code, of securities and loans sold;
(5) Legal services. A taxable entity that provides
legal services shall exclude:
(A) the following flow-through funds that are mandated
by law, contract, or fiduciary duty to be distributed to the claimant
by the claimant's attorney or to other entities on behalf of a claimant
by the claimant's attorney:
(i) damages due the claimant;
(ii) funds subject to a lien or other contractual obligation
arising out of the representation, other than fees owed to the attorney;
(iii) funds subject to a subrogation interest or other
third-party contractual claim; and
(iv) fees paid an attorney in the matter who is not
a member, partner, shareholder, or employee of the taxable entity;
(B) reimbursement of the taxable entity's expenses
incurred in prosecuting a claimant's matter that are specific to the
matter and that are not general operating expenses; and
(C) regardless of whether it was included in the calculation
of total revenue under subsection (d) of this section, $500 per pro
bono services case handled by the attorney, but only if the attorney
maintains records of the pro bono services for auditing purposes in
accordance with the manner in which those services are reported to
the State Bar of Texas;
(6) Pharmacy cooperative. A taxable entity that is
a pharmacy cooperative shall exclude flow-through funds from rebates
from pharmacy wholesalers that are distributed to the pharmacy cooperative's
shareholders;
(7) Staff leasing services company. A taxable entity
that is a staff leasing services company shall exclude payments received
from a client company for wages, payroll taxes on those wages, employee
benefits, and workers' compensation benefits for the employees assigned
to the client company. A staff leasing services company cannot exclude
payments received from a client company for payments made to independent
contractors assigned to the client company and reportable on Internal
Revenue Service Form 1099;
(8) Dividends and interest from federal obligations.
A taxable entity shall exclude dividends and interest received from
federal obligations;
(9) Management company. A taxable entity that is a
management company shall exclude reimbursements of specified costs
incurred in its conduct of the active trade or business of a managed
entity, including wages and cash compensation as determined under
Tax Code, §171.1013(a) and (b);
(10) Health care provider. A taxable entity that is
a health care provider shall exclude:
(A) the total amount of payments, including co-payments
and deductibles from the patient or supplemental insurance, received:
(i) under the Medicaid program, Medicare program, Indigent
Health Care and Treatment Act (Health and Safety Code, Chapter 61),
and Children's Health Insurance Program (CHIP), including any plans
under these programs;
(ii) for professional services provided in relation
to a workers' compensation claim under Labor Code, Title 5;
(iii) for professional services provided to a beneficiary
rendered under the TRICARE military health system, including any plans
under this program;
(iv) from a third-party agent or administrator for
revenue earned under clauses (i) - (iii) of this subparagraph; and
(B) the actual costs, regardless of whether it was
included in the calculation of total revenue under subsection (d)(1)
- (6) of this section, of uncompensated care provided, but only if
the provider maintains records of the uncompensated care for auditing
purposes and, if the provider later receives payment for all or part
of that care, the provider adjusts the amount excluded for the tax
year in which the payment is received.
(11) Health care institution. A health care provider
that is a health care institution shall exclude 50% of the exclusion
described in paragraph (10) of this subsection.
(12) Federal government and armed forces. A taxable
entity shall exclude all revenue received that is directly derived
from the operation of a facility that is:
(A) located on property owned or leased by the federal
government; and
(B) managed or operated primarily to house members
of the armed forces of the United States.
(13) Oil and gas. During the dates, certified by the
comptroller, in which the monthly average closing price of West Texas
Intermediate crude oil is below $40 per barrel and the average closing
price of gas is below $5 per MMBtu, as recorded on the New York Mercantile
Exchange (NYMEX), a taxable entity shall exclude total revenue received
from oil or gas produced from:
(A) an oil well designated by the Railroad Commission
of Texas or similar authority of another state whose production averages
less than 10 barrels a day over a 90-day period; and
(B) a gas well designated by the Railroad Commission
of Texas or similar authority of another state whose production averages
less than 250 mcf a day over a 90-day period.
(14) Qualified destination management company. Effective
for reports originally due on or after January 1, 2010, a taxable
entity that is a qualified destination management company as defined
by Tax Code, §151.0565 shall exclude from its total revenue payments
made to other entities or persons to provide services, labor, or materials
in connection with the provision of destination management services
as defined in Tax Code, §151.0565.
|
| Source Note: The provisions of this §3.587 adopted to be effective January 1, 2008, 32 TexReg 10028; amended to be effective January 1, 2009, 33 TexReg 10503; amended to be effective December 31, 2009, 34 TexReg 9470; amended to be effective September 30, 2012, 37 TexReg 7487 |
