34 Tex. Admin. Code § 3.345 - Annual Refund Program for Providers of Cable Television, Internet Access, or Telecommunications Services

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Cable television services--This term has the meaning as assigned by § 3.313 of this title (relating to Cable Television Services).

(2) Data processing services--This term has the meaning as assigned by § 3.330 of this title (relating to Data Processing Services).

(3) In or during--Within the course of an actual activity, such as transmission or routing. For example, a cable carrying a cable television services' signal to a customer's home is used in or during the conveyance of the signal in order to provide cable television services. In contrast, equipment merely used while the cable is carrying the signal, such as office furniture or an air conditioning system, is not used in or during the conveyance of the services.

(4) Information services--This term has the same meaning as assigned by § 3.342 of this title (relating to Information Services).

(5) Internet access services--This term has the same meaning as assigned by § 3.366 of this title (relating to Internet Access Services).

(6) Provider--A seller, as defined by § 3.286 of this title (relating to Seller's and Purchaser's Responsibilities, including Nexus, Permits, Returns and Reporting Periods, Collection and Exemption Rules, and Criminal Penalties) and § 3.344 of this title (relating to Telecommunications Services), who supplies or otherwise makes available cable television services, Internet access services, or telecommunications services to the public, or a segment of the public, for consideration.

(7) Qualifying purchase--Tangible personal property:

(A) purchased, leased, or rented by a provider or a subsidiary of a provider on which sales and use tax was paid by the provider or the subsidiary; and

(B) that is directly used or consumed by the provider or the subsidiary in or during:

(i) the distribution of cable television services by the sending or relaying of video programming for the fulfillment of cable television services, to subscribing or paying customers;

(ii) the provision of Internet access services by making available to the public, or a segment of the public, for consideration the means or method by which users can connect individual computer terminals, computers, mobile devices, or computer networks to the Internet; or

(iii) the transmission by the process of creating, converting, sending, or propagating, for reception elsewhere, sounds or symbols into an analog or digital information signal, by telegraph, telephone, satellite, facsimile, or any other method now in existence or that may be devised, including Voice over Internet Protocol (VoIP), via any medium, such as wire, coaxial cable, microwave, optical fiber, or radio frequency; conveyance by the carriage, as by an outdoor telephone line or a satellite beam; routing by the selection of conveyance pathways; or reception by the acquisition, as by a satellite dish, of a telecommunications services' signal, where the transmission, conveyance, routing, or reception is specific to the direct provision of the services to the customer or a general or limited area, whether the signal remains in its original form or is subsequently amplified, filtered, encoded, decoded, or otherwise altered.

(C) Qualifying purchases do not include supporting or ancillary functions, such as office operations, field operations, marketing, transportation, warehousing, data storage, or similar operations that do not directly result in the distribution of cable television services; the provision of Internet access services; or the transmission, conveyance, routing, or reception of telecommunications services.

(8) Refund request date--

(A) September 2, 2014, for tax paid September 1, 2013, through December 31, 2013, on qualifying purchases made on or after September 1, 2013.

(B) For tax paid on or after January 1, 2014, on qualifying purchases made on or after September 1, 2013, March 31 of the year immediately following the calendar year in which the tax was paid. If March 31 falls on a Saturday, Sunday, or legal holiday, the refund request date will be the next business day. For example, a refund request for taxes paid during calendar year 2014 on qualifying purchases made on or after September 1, 2013, is due by March 31, 2015.

(9) Requestor--The provider or subsidiary of a provider submitting the refund request.

(10) Subsidiary of a provider--A subsidiary, as defined in Business Organizations Code, § 1.002(85), for which a cable television service provider, Internet access service provider, or telecommunications service provider is the parent, as that term is defined in Business Organizations Code, § 1.002(65).

(11) Telecommunications services--This term has the same meaning as assigned by § 3.344 of this title.

(b) Persons eligible for refund request. Providers of cable television, Internet access, and telecommunications services and their subsidiaries are entitled to request a refund under this section.

(c) Sales and use tax eligible for refund.

(1) State sales and use taxes paid on qualifying purchases made on or after September 1, 2013, are eligible for a refund under this section.

(2) Local sales and use taxes are not eligible for a refund under this section.

(3) Sales and use taxes paid on property directly used or consumed in or during the provision, creation, or production of data processing services or information services are not eligible for a refund under this section, except when those services are provided in conjunction with and are merely incidental to the provision of Internet access services, as set out in § 3.366(a)(2) of this title.

(d) Request for refund.

(1) The total amount of state sales and use tax that can be refunded to all requestors pursuant to this section for any one calendar year is $50 million.

(2) Each requestor must file the refund request electronically or in the format prescribed by the comptroller. The postmark date or its electronic equivalent on a refund request determines the filing date.

(A) A requestor required to file a refund request electronically who is unable to do so due to hardship, impracticality, or other valid reason may submit a written request to the comptroller for a waiver of the requirement and authorization of an alternative filing method. A waiver must be requested no later than 30 days prior to the refund request date. If the 30th day falls on a Saturday, Sunday, or legal holiday, the waiver must be requested by the next business day.

(B) A requestor filing a refund request electronically may use an application provided by the comptroller, software provided by the comptroller, or commercially available software that satisfies requirements prescribed by the comptroller.

(3) The refund request must contain the following information for each transaction for which a refund of sales and use taxes is requested:

(A) the requestor's name, address, and taxpayer identification number;

(B) if the requestor is a subsidiary of a provider, the parent provider's name, address, and taxpayer identification number;

(C) identification of the provider's industry as either, cable television service, Internet access service, or telecommunications service;

(D) the name, address, and taxpayer identification number of the seller of the qualifying purchase for each identified transaction;

(E) the invoice number, if applicable, for each identified transaction;

(F) the amount of sales and use tax paid on the qualifying purchase and the manner in which the tax was paid, such as accrued and paid by the provider or paid to the seller;

(G) the date of each transaction;

(H) a description of each item, or like items, purchased;

(I) the purchase amount of each item subject to refund; and

(J) the total amount of sales and use tax refund requested per item identified.

(4) A refund request submitted pursuant to this section is subject to audit verification.

(A) Additional information may be requested during the verification process.

(B) If the comptroller requests in writing additional information, the person requesting the refund must submit the requested information within 30 calendar days.

(C) A request will be reduced by a determination that the request includes:

(i) items that are not qualifying purchases;

(ii) items on which no sales or use tax was paid;

(iii) items without supporting documentation; or

(iv) items for which additional information requested by the comptroller was not received within 30 calendar days, as required by this subsection.

(5) Tax Code, § 151.3186 does not provide for a refund of interest and therefore no interest will be paid on refunds requested under this section.

(6) Multiple refunds on the same items are not allowed. Requestors may not seek a refund or credit under another provision of Tax Code, Chapter 151 for any item on which sales or use tax was paid and for which a refund was requested under this section unless the refund request under this section for the specific item was denied in full.

(e) Requests for refund filed by the applicable refund request date.

(1) The maximum amount each requestor can be refunded under this section is equal to:

(A) the cumulative amount of state sales and use tax paid by the requestor on qualifying property during the calendar year immediately preceding the refund request date, if the total amount of eligible state sales and use tax refund requests by all requestors for which a refund is approved under this section is equal to or less than $50 million for the calendar year; or

(B) a pro-rated amount of the state sales and use tax paid by the requestor on qualifying property during the calendar year immediately preceding the refund request date, if the total amount of eligible sales and use tax refund requests by all requestors received by the refund request date for which a refund is approved under this section exceeds $50 million for the calendar year.

(2) By no later than December 31, 2014, for the refund request date of September 2, 2014, or thereafter by August 31 for the refund request date of March 31:

(A) the comptroller will issue a warrant to each requestor whose refund claim is approved in whole or in part. The warrant will be equal to:

(i) the total refund amount approved for the requestor, if the total amount of eligible requests for refund is less than or equal to $50 million; or

(ii) if the total amount of eligible requests for refund is greater than $50 million, a pro-rated amount of the $50 million calculated by dividing each requestor's approved refund amount by the total amount of eligible requests for refund; and

(B) if the refund request is denied in full or in part, the comptroller will issue a notice advising the requestor:

(i) that the refund request was denied, in whole or in part; and

(ii) of the requirements of subsection (d)(3) of this section that were not met.

(3) The comptroller will not issue an initial refund to a requestor whose refund request is denied in full.

(4) Requestors whose refund requests are denied, in full or in part, may request a refund hearing within 30 days of notice from the comptroller as set out in § 3.325(e) of this title (relating to Refunds and Payments Under Protest).

(5) Final refund payments will be issued to all eligible requestors once all refund hearings or judicial proceedings related to the same refund request date filed in accordance with Tax Code, Chapter 112, if any, are final.

(A) If the total of all approved refunds is less than or equal to $50 million, each requestor will be issued a final refund payment equal to the requestor's final approved refund amount, less any initial refund payment issued.

(B) If the total of all approved refunds is greater than $50 million, the pro rata distribution formula will be recalculated to determine the total amount of refund due to each requestor for their approved claim as a percentage of all approved claims. Final payments will be issued based on the final pro rata distribution formula less any initial refund payment issued.

(C) In no case shall the total amount of refund issued to a requestor exceed the requested amount in the requestor's refund request.

(6) A refund request filed by the applicable refund request date cannot be amended after the applicable refund request date. If a requestor submits additional items after the applicable refund request date, the additional items will be considered a separate refund request and will be processed according to subsection (f) of this section.

(f) Requests for refund filed after the applicable refund request date.

(1) If the total amount of eligible requests for the applicable refund period received by the applicable refund request date is less than $50 million, the comptroller will issue a warrant to each late-filed requestor whose refund claim is approved in full or in part, on a first-come-first-served basis. Requestors whose refund requests are denied, in full or in part, under this paragraph may request a hearing under subsection (e)(4) of this section.

(2) If the total amount of eligible requests for the applicable refund period received by the applicable refund request date is greater than $50 million, the late-filed request for refund will be denied for lack of funds. Any denial under this paragraph is not eligible for a hearing under subsection (e)(4) of this section.

Notes

34 Tex. Admin. Code § 3.345

The provisions of this §3.345 adopted to be effective September 1, 2014, 39 TexReg 6863