34 Tex. Admin. Code § 3.329 - Enterprise Projects, Enterprise Zones, and Defense Readjustment Zones
(a) Definitions. The following words and
terms, when used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1)
Enterprise project--A qualified business designated by the Texas Department of
Economic Development as an enterprise project under Government Code, Chapter
2303.406, for a five-year period.
(2) Enterprise zone--An area of the state
designated by the Department of Economic Development as an enterprise
zone.
(3) Equipment and
machinery--Any machinery and equipment, including office furniture and
equipment, used exclusively in an enterprise zone by a qualified business.
These terms do not include building materials or motor vehicles.
(4) Local governing body--A governing body of
a city or county with an enterprise zone within its boundaries.
(5) New permanent job--A job that meets the
criteria of a new permanent job as defined by the Texas Department of Economic
Development for enterprise projects.
(6) One-time refund--The maximum amount that
may be refunded from all claims during the life of a qualified business
regardless of the amount of tax paid or jobs retained in an enterprise
zone.
(7) Period--The five-year
period that the qualified business has been designated as a project unless the
designation is revoked.
(8)
Qualified business--A person, including a corporation or other entity, that the
Texas Department of Economic Development certifies has met the criteria
required under the Texas Enterprise Zone Act.
(9) Qualified employee--An employee who works
for a qualified business and who performs at least 50% of his service for the
business within the enterprise zone.
(10) Retained job--An existing employment
position of a qualified business that has provided employment to a qualified
employee of at least 1,820 hours annually.
(b) Refund for job retention.
(1) Eligibility for a one-time refund of
state sales and use tax. A business is eligible for the refund if:
(A) the business is certified as a qualified
business by a local governing body;
(B) has operated in an enterprise zone's
jurisdiction for at least three consecutive years before filing a
claim;
(C) has retained 10 or more
jobs held by qualified employees during the year; and
(D) has been certified as eligible for a
refund to the Comptroller's Department by the Texas Department of Economic
Development.
(2) When to
apply for a one-time refund. On or after September 1, 1991, a qualified
business may apply for a refund of state sales and use tax immediately upon
receipt of certification from the Texas Department of Economic
Development.
(3) Accumulated
purchases. A qualified business may apply for and receive a refund of tax paid
on equipment and machinery upon which the qualified business paid sales or use
tax within four years of the date of application. The allowed refund is up to
$500 per qualified employee retained, for a total of not more than $5,000. See
§
3.325 of this title (relating to
Refunds, Interest, and Payments Under Protest) for information on the statute
of limitations on refunds.
(4) How
to apply for a one-time state sales or use tax refund. After a qualified
business has been certified as eligible for a refund by the local governing
body sponsoring the enterprise zone and by the Texas Department of Economic
Development, the qualified business may obtain a refund by applying directly to
the Comptroller of Public Accounts. A refund request submitted to the
comptroller must:
(A) be in writing on forms
provided by the comptroller;
(B) be
accompanied by copies of the certification by the Department of Economic
Development; and
(C) list each item
purchased, the name of each seller, invoice or contract number, dollar amount
of each purchase, and amount of state tax paid on each purchase.
(5) The refund applies to state
tax only. No city, county, transit, special purpose district tax, or any other
local sales and use tax may be obtained from the state. Information regarding
city tax refunds may be obtained from the city having an enterprise zone within
its boundaries.
(6) Manufacturers.
A qualified business engaged in manufacturing that claims a sales tax refund
under both §
3.300 of this title (relating to
Manufacturing; Custom Manufacturing; Fabricating; Processing) and this section
on the same machinery and equipment, may not claim more than the total amount
of state sales or use tax paid on the machinery and equipment.
(c) Enterprise projects.
(1) An enterprise project qualifies for a
refund of state sales and use tax of $2,000 for each job that has been retained
or each new permanent job the enterprise project creates for a qualified
employee during its designation as an enterprise project. A qualified business
receiving its designation as an enterprise project after August 31, 1995, may
not apply for a refund of taxes until after August 31, 1997. Not more than $8
million in state sales and use taxes may be refunded to enterprise projects
designated during the biennium beginning September 1, 1995.
(2) Only items of the type described in
paragraph (3) of this subsection which are purchased by the enterprise project
during the designated period or 90 days prior to its designation may be
considered in determining the amount of refund available to the
project.
(3) Subject to the
limitations of paragraphs (1), (2), (4), (5), and (6) of this subsection, a
refund will be made based on state tax paid purchases of:
(A) machinery or equipment for use in the
enterprise zone in which the enterprise project is located;
(B) building materials for use in
constructing, rehabilitating, or remodeling a structure in the enterprise zone
in which the enterprise project is located;
(C) labor for remodeling, rehabilitating, or
constructing a structure in an enterprise zone; and
(D) electricity and natural gas purchased and
consumed in the normal course of business in the enterprise zone.
(4) An enterprise project is not
entitled to a refund of any taxes paid by a contractor under a lump-sum
contract unless the contractor has received designation as the enterprise
project.
(5) Sales and use taxes
paid on taxable services are not eligible for refund. Taxes paid on materials
purchased in conjunction with services will qualify for refund only when the
charge for materials is separated from the charge for services and the amount
of tax paid on materials is separated.
(6) Subject to the limitations prescribed in
this subparagraph, refunds will be paid directly to the project.
(A) An enterprise project is eligible for a
maximum refund of $250,000 in each state fiscal year.
(i) The total amount refunded to an
enterprise project may not exceed the total amount of state tax paid on
qualifying purchases, or the amount determined by multiplying $250,000 by the
number of state fiscal years during the designated period of the enterprise
project, whichever is less. The refund may not exceed $2,000 for each job
retained or each new job created for a qualified employee.
(ii) An enterprise project that qualifies for
a refund that exceeds $250,000 during a state fiscal year may carry the excess
to a subsequent year subject to the $250,000 limitation in each year.
(iii) Any carry-over or other eligible
refunds must be applied for no later than the end of the next state fiscal year
that follows the fiscal year in which the designation as an enterprise project
expires or is removed by the Texas Department of Economic
Development.
(B) Claims
for refund must be in writing and must indicate the period for which the refund
is claimed and must reflect the written approval of the Texas Department of
Economic Development with respect to the number of jobs retained or new
permanent jobs created during the period. A claim for refund may be made
annually or semiannually. Annual claims cover the period from September-August
of each fiscal year. Semiannual claims cover the period from September-February
and from March-August of each fiscal year.
(7) For refunds applied for after August 31,
1991, the following conditions apply:
(A) the
qualified business must maintain the same level of employment of qualified
employees for three years as existed at the time it qualified for a
refund;
(B) annually, the Texas
Department of Economic Development shall certify that the correct level of
employment has been maintained; and
(C) the comptroller shall assess the
qualified business that portion of the refund attributable to any decrease in
employment, plus penalty and interest from the date of the refund.
(8) An enterprise project must
retain records substantiating each claim for refund. The records must be
verifiable by audit and include copies of invoices showing the item purchased,
the date of purchase, amount of purchase, the amount of tax paid, and the
identity of the seller. The records must also show that the machinery and
equipment and building materials purchased are for use within the zone.
Employment records must also be kept verifying the number of new jobs
created.
(d) Defense
economic readjustment zones.
(1) Definitions
applicable to subsection (d) only:
(A)
Defense readjustment project--A person designated by the Texas Department of
Economic Development as a defense readjustment project under the Government
Code, Title 10, Subtitle G, Chapter 2310.
(B) Qualified business--A person certified as
a qualified business under Government Code, §
2310.302.
(C) Qualified employee--A person who:
(i) works for a qualified business;
and
(ii) performs at least 50% of
the person's service for the business in the readjustment zone.
(D) Readjustment zone--An area
designated as a defense economic readjustment zone under the Government Code,
Chapter 2310.
(2) Tax
refunds for defense readjustment projects.
(A) A defense readjustment project is
eligible for a refund in the amount provided by this section of the state sales
and use taxes imposed by this chapter on purchases of:
(i) equipment or machinery sold to a defense
readjustment project for use in a readjustment zone;
(ii) building materials sold to a defense
readjustment project for use in remodeling, rehabilitating, or constructing a
structure in a readjustment zone;
(iii) labor for remodeling, rehabilitating,
or constructing a structure, not qualifying as a new construction, by a defense
readjustment project in a readjustment zone; and
(iv) electricity and natural gas purchased
and consumed in the normal course of business in the readjustment
zone.
(B) Subject to the
limitations provided by subparagraph (C) of this paragraph, a defense
readjustment project qualifies for a refund of taxes under this section of
$2,500 for each new permanent job or job that has been retained by the defense
readjustment project for a qualified employee.
(C) The total amount of tax refund that a
defense readjustment project may apply for in a state fiscal year may not
exceed $250,000. If a defense readjustment project qualifies in a state fiscal
year for a refund of taxes in an amount in excess of the limitation provided by
this subsection, it may apply for a refund of those taxes in a subsequent year,
subject to the $250,000 limitation for each year. However, a defense
readjustment project may not apply for a refund under this section after the
end of the state fiscal year immediately following the state fiscal year in
which the defense readjustment project's designation as a defense readjustment
project expires or is removed. The total amount that may be refunded to a
defense readjustment project under this section may not exceed the amount
determined by multiplying $250,000 by the number of state fiscal years during
which the defense readjustment project created one or more jobs for qualified
employees.
(D) Only qualified
businesses that have been certified as eligible for a tax refund under this
section by the Texas Department of Economic Development to the comptroller and
the Legislative Budget Board are entitled to the tax refund.
(E) To receive a state tax refund under this
section, a defense readjustment project must apply to the comptroller for the
refund. A refund request submitted to the comptroller must:
(i) be in writing in a format prescribed by
the comptroller;
(ii) be
accompanied by copies of the certification by the Texas Department of Economic
Development;
(iii) list each
qualifying item purchased, the name of each seller, invoice or contract number,
dollar amount of each purchase, and amount of state tax paid on each
purchase.
(F) A defense
readjustment project applying for a refund of state taxes under this subsection
must retain records substantiating each claim for refund. The records must be
verifiable by audit and include copies of invoices showing the item purchased,
the date of purchase, amount of purchase, the amount of tax paid, and the
identity of the seller. The records must also show that the qualifying taxable
items purchased were for use within the zone. Employment records must also be
kept verifying the number of new jobs created or retained.
(G) For possible local tax abatements, see
the Government Code, §
2310.405.
Notes
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
No prior version found.