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059-11 Sales and Use Tax Exemption Changes as a Result of House Bill 268, 82nd Legislative Session

Registration and Title Bulletin - #059-11

Date: December 27, 2011

To:

All County Tax Assessor-Collectors

Subject: Sales and Use Tax Exemption Changes as a Result of House Bill 268, 82nd Legislative Session

PURPOSE

To notify you of changes made by HB 268 to Chapter 151 of the Texas Tax Code.

DETAILS

Effective January 1, 2012, purchasers of certain timber, farm or ranch items who claim sales and use tax exemption are required to apply for an exemption number from the comptroller. The exemption number will be issued by the comptroller and shown on an exemption certificate. Exemption numbers will be subject to renewal every four years.

Currently, when a sales tax exemption is requested, Farm/Ranch is selected as the Exempt Reason in the Registration and Title System (RTS) on the Sales Tax screen (TTL012); however, the Tax Permit Number field is disabled. With the implementation of HB 268 the exemption number is required to be entered in RTS in the Tax Permit Number box on the Sales Tax screen.

Programming to enable the Tax Permit Number field when Farm/Ranch is selected as the Exempt Reason is scheduled for Spring 2012. Until this programming can be completed, the exemption will only be captured on the Form 130-U in the Sales and Use Tax Computation portion of the application (box 21). In this section, check the "Exemption Claimed Under the Motor Vehicle Sales and Use Tax Law because" box and enter the customer's exemption number and reason in the field below.

Once programming is completed, these transactions will be processed in the same manner as seller-financed and rental transactions that are exempt from motor vehicle sales tax currently are. It will be important that the applicable "Exempt Reason" and sales tax permit number be entered on the Sales Tax screen (TTL012) accurately.

COUNTY ACTION

On January 2, 2012, all counties will need to require that the Form 130-U include the tax exemption number (box 21) for all customers wishing to claim the sales and use tax exemption for certain timber, farm or ranch items. You will be notified when the tax exemption number will be able to be captured in the Sales Tax screen (TTL012).

CONTACT

If you have any questions, please contact your local TxDMV Regional Service Center.

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