| (C) Effective January 1, 2010, a fire control, prevention,
and emergency medical services district organized under Local Government
Code, Chapter 344 that imposes sales tax under Tax Code, §321.106,
or a crime control and prevention district organized under Local Government
Code, Chapter 363 that imposes sales tax under Tax Code, §321.108,
that is located in all or part of a municipality that imposes a tax
on the residential use of natural gas and electricity as provided
under Tax Code, §321.105 may impose tax on residential use of
natural gas and electricity at locations within the district. A list
of the special purpose districts that impose tax on residential use
of natural gas and electricity and those districts eligible to impose
the tax that do not currently do so is available on the comptroller's
website.
(2) Telecommunication services. Telecommunications
services are exempt from all local sales taxes unless the governing
body of a city, county, transit authority, or special purpose district
votes to impose sales tax on these services. However, since 1999,
under Tax Code, §322.109(d), transit authorities created under
Transportation Code, Chapter 451 cannot repeal the exemption unless
the repeal is first approved by the governing body of each city that
created the local taxing jurisdiction. The local sales tax is limited
to telecommunications services occurring between locations within
Texas. See §3.344 of this title. The comptroller's website provides
a list of local taxing jurisdictions that impose tax on telecommunications
services.
(3) Emergency services districts.
(A) Authority to exclude territory from imposition
of emergency services district sales and use tax. Pursuant to the
provisions of Health and Safety Code, §775.0751(c-1), an emergency
services district wishing to enact a sales and use tax may exclude
from the election called to authorize the tax any territory in the
district where the sales and use tax is then at 2.0%. The tax, if
authorized by the voters eligible to vote on the enactment of the
tax, then applies only in the portions of the district included in
the election. The tax does not apply to sales made in the excluded
territories in the district and sellers in the excluded territories
should continue to collect local sales and use taxes for the local
taxing jurisdictions in effect at the time of the election under which
the district sales and use tax was authorized as applicable.
(B) Consolidation of districts resulting in sales tax
sub-districts. Pursuant to the provisions of Health and Safety Code, §775.018(f),
if the territory of a district proposed under Health and Safety Code,
Chapter 775 overlaps with the boundaries of another district created
under that chapter, the commissioners court of each county and boards
of the counties in which the districts are located may choose to create
a consolidated district in the overlapping territory. If two districts
that want to consolidate under Health and Safety Code, §775.024
have different sales and use tax rates, the territory of the former
districts located within the consolidated area will be designated
as sub-districts and the sales tax rate within each sub-district will
continue to be imposed at the rate the tax was imposed by the former
district that each sub-district was part of prior to the consolidation.
(4) East Aldine Management District.
(A) Special sales and use tax zones within district;
separate sales and use tax rate. As set out in Special District Local
Laws Code, §3817.154(e) and (f), the East Aldine Management District
board may create special sales and use tax zones within the boundaries
of the District and, with voter approval, enact a special sales and
use tax rate in each zone that is different from the sales and use
tax rate imposed in the rest of the district.
(B) Exemptions from special zone sales and use tax.
The sale, production, distribution, lease, or rental of; and the use,
storage, or other consumption within a special sales and use tax zone
of; a taxable item sold, leased, or rented by the entities identified
in clauses (i) - (vi) of this subparagraph are exempt from the special
zone sales and use tax. State and all other applicable local taxes
apply unless otherwise exempted by law. The special zone sales and
use tax exemption applies to:
(i) a retail electric provider as defined by Utilities
Code, §31.002;
(ii) an electric utility or a power generation company
as defined by Utilities Code, §31.002;
(iii) a gas utility as defined by Utilities Code, §101.003
or §121.001, or a person who owns pipelines used for transportation
or sale of oil or gas or a product or constituent of oil or gas;
(iv) a person who owns pipelines used for the transportation
or sale of carbon dioxide;
(v) a telecommunications provider as defined by Utilities
Code, §51.002; or
(vi) a cable service provider or video service provider
as defined by Utilities Code, §66.002.
(5) Imposition of city sales tax and transit tax on
certain military installations; El Paso and Fort Bliss. Pursuant to
Tax Code, §321.1045 (Imposition of Sales and Use Tax in Certain
Federal Military Installations), for purposes of the local sales and
use tax imposed under Tax Code, Chapter 321, the city of El Paso includes
the area within the boundaries of Fort Bliss to the extent it is in
the city's extraterritorial jurisdiction. However, the El Paso transit
authority does not include Fort Bliss. See Transportation Code, §453.051
concerning the Creation of Transit Departments.
(m) Restrictions on local sales tax rebates and other
economic incentives. Pursuant to Local Government Code, §501.161,
Section 4A and 4B development corporations may not offer to provide
economic incentives, such as local sales tax rebates authorized under
Local Government Code, Chapters 380 or 381, to persons whose business
consists primarily of purchasing taxable items using resale certificates
and then reselling those same items to a related party. A related
party means a person or entity which owns at least 80% of the business
enterprise to which sales and use taxes would be rebated as part of
an economic incentive.
(n) Prior contract exemptions. The provisions of §3.319
of this title (relating to Prior Contracts) concerning definitions
and exclusions apply to prior contract exemptions.
(1) Certain contracts and bids exempt. No local taxes
are due on the sale, use, storage, or other consumption in this state
of taxable items used:
(A) for the performance of a written contract executed
prior to the effective date of any local tax if the contract may not
be modified because of the tax; or
(B) pursuant to the obligation of a bid or bids submitted
prior to the effective date of any local tax if the bid or bids and
contract entered into pursuant thereto are at a fixed price and not
subject to withdrawal, change, or modification because of the tax.
(2) Annexations. Any annexation of territory into an
existing local taxing jurisdiction is also a basis for claiming the
exemption provided by this subsection.
(3) Local taxing jurisdiction rate increase; partial
exemption for certain contracts and bids. When an existing local taxing
jurisdiction raises its sales and use tax rate, the additional amount
of tax that would be due as a result of the rate increase is not due
on the sale, use, storage, or other consumption in this state of taxable
items used:
(A) for the performance of a written contract executed
prior to the effective date of the tax rate increase if the contract
may not be modified because of the tax; or
(B) pursuant to the obligation of a bid or bids submitted
prior to the effective date of the tax rate increase if the bid or
bids and contract entered into pursuant thereto are at a fixed price
and not subject to withdrawal, change, or modification because of
the tax.
(4) Three-year statute of limitations.
(A) The exemption in paragraph (1) of this subsection
and the partial exemption in paragraph (3) of this subsection have
no effect after three years from the date the adoption or increase
of the tax takes effect in the local taxing jurisdiction.
(B) The provisions of §3.319 of this title apply
to this subsection to the extent they are consistent.
(C) Leases. Any renewal or exercise of an option to
extend the time of a lease or rental contract under the exemptions
provided by this subsection shall be deemed to be a new contract and
no exemption will apply.
(5) Records. Persons claiming the exemption provided
by this subsection must maintain records which can be verified by
the comptroller or the exemption will be lost.
(6) Exemption certificate. An identification number
is required on the prior contract exemption certificates furnished
to sellers. The identification number should be the person's 11-digit
Texas taxpayer number or federal employer's identification (FEI) number.
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