34 Tex. Admin. Code § 3.338 - Multistate Tax Credits and Allowance of Credit for Tax Paid to Suppliers
(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.
Notes
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