Telecom Providers May Claim Texas Sales Tax Refund

Telecommunication providers may claim a Texas sales tax refund for qualifying purchases.

Service Providers Eligible for Refund

The refund is available to service providers of:

– cable television;

– internet; or

– telecommunications.

Subsidiaries of a provider can also request a refund. The associated provider must be identified on the refund request.

Qualifying Purchases

A qualifying purchase is tangible personal property:

– purchased, leased or rented by a provider or its subsidiary;

– directly used or consumed by the provider or subsidiary in or during these activities:

– the distribution of cable television service;

– the provision of internet access service; or

– the transmission, conveyance, routing or reception of telecommunications services; and

– on which the provider or its subsidiary paid Texas state sales and use tax in the prior calendar year.

The refund is based on the sales price assessed at the time of purchase. Delivery and installation charges are included in the sales price.

Purchases That Do Not Qualify

The refund does not apply to local sales and use tax. It also does not apply to sales and use tax paid on property directly used or consumed in or during the provision, creating or production of data processing or information services. However, certain equipment used to provide services as part of a single charge for internet access service does qualify.

Refund Application Deadline

The deadline to submit a refund request for tax paid in 2018 is April 1, 2019.

Refund Amounts

The total amount of all refund requests is capped at $50 million each calendar year. If the total amount of refund requests exceeds this cap, each provider will receive a pro rata share.

New Consolidated Refund for Related Taxpayers

Related taxpayers have a new option this year for requesting refunds. Related entities that are also qualified service providers may request one consolidated refund.

Refund Program Information

Additional information on the refund program can be found at https://comptroller.texas.gov/taxes/sales/refunds/cit-refunds.php.

Release, Texas Comptroller of Public Accounts, January 23, 2019

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