Texas announces that tax relief is available for taxpayers affected by Hurricane Harvey and those helping with disaster recovery. Texas tax relief will include waiving and exempting hotel taxes and sales taxes. Also, businesses may qualify for an extension to file tax returns.
Hotel Tax Waiver
Evacuees and relief workers can claim a waiver from state and local hotel occupancy taxes. The waiver period runs from August 23, 2017, to September 6, 2017. Importantly, the waiver applies only to:
- persons with a home address in a county mentioned in the Governor’s declared disaster area; and
- relief workers in one of those counties.
Taxpayers who want to claim the waiver should give the hotel manager Form 12-302, Texas Hotel Occupancy Tax Exemption Certificate. When filling out the form, they should:
- mark the box “Exempt by Other Federal or State Law”; and
- write “Hurricane Harvey” anywhere on the form.
The Federal Emergency Management Agency
In addition, the Federal Emergency Management Agency (FEMA) pays for hotel rooms for evacuees and relief workers. Sometimes FEMA requests that taxes be added to the room charges. In that case, the hotel should include the FEMA room charges as taxable receipts on its return.
Texas Tax Relief for Disaster Related Purchases
In addition, Texas allows temporary exemptions from sales tax for purchases related to a declared natural disaster.
Labor service charges are not subject to tax when the charge is for:
- repairing or restoring nonresidential real property;
- repairing or restoring personal property (e.g., furniture);
- cutting down damaged branches; and
- cutting up a damaged tree.
FEMA Cards and Red Cross Vouchers
Certain purchases made with vouchers or debit cards provided by FEMA or the Red Cross are not exempt from sales tax.
For instance, taxable items purchased, leased, or rented with FEMA or Red Cross debit cards and/or vouchers are not subject to tax. However, retailers must keep documentation that the items were purchased with FEMA or Red Cross debit cards and/or vouchers.
Also, prepared food is not subject to tax when purchased with a FEMA or Red Cross debit card or voucher. Prepared food includes ready-to-eat meals from a fast food restaurant. This exemption, however, does not apply to purchases of alcohol or tobacco. Again, retailers must keep copies of receipts, and the receipts must be:
- marked “FEMA” or “Red Cross”; and
- signed by the purchaser.
Items purchased with a Salvation Army voucher are not subject to state and local sales and use taxes.
In addition, a school district or PTA can claim an exemption on purchases of school supplies and clothing that will be given to students who are victims of a declared natural disaster.
Texas Tax Relief for Out-of-State Businesses
Texas will exempt an out-of-state entity doing disaster-related work from the requirements of:
- registering with the Secretary of State, or
- filing or paying state or local taxes.
In order to be exempt from these requirements, the entity must be in Texas only to perform disaster- or emergency-related work. Also, such work must involve repairing and/or restoring damaged critical infrastructure. This exemption lasts only for the disaster response period.
Further, an out-of-state entity does not owe use tax on equipment it brings into Texas to perform the disaster- or emergency-related work. However, the entity must remove the equipment from Texas after the disaster response period.
Similarly, an out-of-state business entity is exempt from the requirements when it does disaster-or emergency-related work at the request of an in-state business entity:
- under a mutual assistance agreement, or
- that is an affiliate of an in-state business entity.
Further, the entity is not required, during a disaster response period, to collect sales and use tax on:
- its sales of taxable items in Texas; or
- on its purchases of taxable items that are sold or transferred to its customers.
Texas Tax Relief Through Tax Return Extensions
Finally, businesses affected by the hurricane can request extensions to file tax returns. The Comptroller can grant an extension of up to 90 days to a business affected by a declared disaster. However, the comptroller handles requests on a case-by-case basis. To request an extension or get more information, taxpayers can call the tax assistance line at 800-252-5555.
The complete release is available at https://comptroller.texas.gov/taxes/resources/disaster-relief.php.
Announcement, Texas Comptroller of Public Accounts, August 25, 2017