| (a) Definitions. The following words and terms, when
used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1) Multistate Tax Compact--The agreement between member
states to promote uniform tax treatment and to avoid double taxation
of multistate taxpayers, of which the State of Texas is a member,
as provided for in Tax Code, Chapter 141.
(2) Sales tax--A tax imposed on the transfer of title
or possession of taxable items for consideration. See Tax Code, §151.005.
(3) Use tax--This term has the meaning given in §3.346
of this title (relating to Use Tax). Use tax is complementary to the
sales tax and is imposed on the storage, use, or other consumption
of taxable items in this state.
(b) Multistate tax credits.
(1) As a member of the multistate tax compact, and
as provided under Tax Code, §151.303(c), Texas will allow as
a credit against Texas use tax due any combined amounts of legally
imposed sales or use taxes paid on the same item to another state
or any subdivision of another state. The credit will be allowed even
though the other state may not be a member of the multistate tax compact.
(2) The credit shall be applied first against the amount
of any use tax due the state. Any remaining credit is then applied
against the amount of local use tax due in the following order:
(A) transit use tax, including use taxes imposed by
a metropolitan transit authority, city transit department, county
transit authority, advanced transportation district, or similar entity
authorized to impose sales and use tax under the Transportation Code;
(B) special purpose district use tax, including use
taxes imposed by a fire control, prevention, and emergency services
district, a crime control and prevention district, or any similar
special purpose district created under Tax Code, Chapter 321 or 323;
(C) county use taxes imposed under Tax Code, Chapter
323; and
(D) municipal use tax imposed under Tax Code, Chapter
321, including additional municipal taxes adopted under Tax Code, §321.101(b).
(3) The following example illustrates the manner in
which the credit should be calculated and applied. A person buys a
laptop computer in Oklahoma for $1300 and pays 5.0% sales tax. The
purchaser then takes the computer to Dallas. Texas state and local
use taxes are due on this purchase at the rate of 8.25%. The 8.25%
use tax is based on 6.25% state tax, 1.0% Dallas city tax, and 1.0%
Dallas MTA tax. The purchaser may receive a credit for the 5.0% tax
that was paid to Oklahoma. A total of 3.25% Texas state and local
tax is due (8.25% Texas state and local tax - 5.0% Oklahoma state
and local sales tax = 3.25%). The credit is first applied to state
use tax. Therefore, state use tax of 1.25% is due (6.25% Texas state
use tax - 5.0% Oklahoma state and local tax = 1.25%). The amount due
for Texas state use tax is $1300 x 1.25% = $16.25. The amount due
for Dallas Metropolitan Transit Authority use tax is $1300 x 1.0%
= $13.00. The amount due for Dallas city use tax is $1300 x 1.0% =
$13.00.
(4) Sales tax legally imposed by the State of Texas
will not be refunded because of payment of a use tax imposed by another
state.
(5) Use tax collected by the State of Texas will be
refunded or allowed as a credit on subsequent sales and use tax returns
to the extent of a subsequent payment of use tax to another state,
if the other state's use tax was imposed as a result of the taxable
item's use in that state prior to its use in Texas.
(6) Credit against use tax collected by the State of
Texas will not be allowed for sales tax paid to another state that
was not legally due and paid to another state.
(7) Credit against the Texas use tax will not be allowed
for any gross receipts tax imposed on retailers in another state,
if that tax is not customarily separated from the sales price of taxable
items, and is not customarily passed on directly to customers as tax,
but, rather, is characterized as a reimbursement or recovery of the
tax owed by the retailer.
(c) Credit for tax paid to suppliers by permitted purchaser.
General information about refund claims and credits that may be claimed
in the context of a refund claim is located in §3.325 of this
title (relating to Refunds and Payments Under Protest).
(1) Credit may be claimed on a permitted purchaser's
return for tax paid to suppliers in error.
(A) Before taking a credit on a return, the permitted
purchaser must have a receipt from a Texas retailer or other seller
authorized to collect the Texas sales and use tax. The receipt must
reflect the amount of tax paid and the selling price of the taxable
item. Receipts from out-of-state sellers must identify the tax as
Texas sales or use tax.
(B) A credit must be claimed within the applicable
statute of limitations. See §3.339 of this title (relating to
Statute of Limitations).
(C) Within the statute of limitations, a credit may
be claimed on a return for a later reporting period or by filing an
amended return for the reporting period in which the tax was paid
in error.
(2) A permitted purchaser may claim a credit for tax
paid on the purchase of taxable items that were resold prior to the
purchaser making a taxable use of the items.
(3) Tax paid to a supplier on taxable items that the
permitted purchaser does not resell but uses for an exempt purpose
may be claimed as a credit on the purchaser's return. For example,
a manufacturer who mistakenly pays tax to a supplier when purchasing
manufacturing equipment that qualifies for exemption under Tax Code, §151.318
may claim a credit for the tax paid on that equipment.
(4) Local sales and use tax credit may also be claimed.
A permitted purchaser who claims a credit for local sales and use
tax paid to a supplier is responsible for taking the credit against
local tax to the same local taxing jurisdictions to which the supplier
reported the tax.
(d) Effect of a person's rights to other deductions.
Nothing in this section shall be construed as limiting a person's
right to the deductions for bad debts, repossessions, returned sales,
or renegotiated selling price as provided in the Tax Code or other
sections of this title.
(e) Texas Emissions Reduction Plan Surcharge. Credit
for tax paid to another state, governmental entity, or county is not
allowed against the Texas Emissions Reduction Plan Surcharge imposed
under Tax Code, §151.0515.
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