News and Insights

Texas Lawmakers Approve Major Telecommunications Sales Tax Rebate

Tax Development May 31, 2013

The Texas Legislature has passed legislation to create a new state sales tax rebate aimed at encouraging increased investments in telecommunications, Internet access, or cable equipment. House Bill 1133, by Representative John Otto (R-Dayton) and Senator Craig Estes (R-Wichita Falls), is on the desk of Governor Rick Perry and, if signed, would take effect on September 1, 2013.

The bill, which passed the Texas Senate on May 21, 2013 and the House of Representatives on May 7, 2013 amends the Tax Code to create a rebate of state sales and use tax paid on the sale, lease, rental or storage, use, or other consumption of property directly used in connection with the distribution of cable television service, the provision of Internet access service, or the transmission, conveyance, routing, or reception of telecommunications services. The rebate provision does not apply to local sales tax. It also does not apply to state sales tax paid on property used or consumed in or during the provision, creation, or production of data processing service or information service. A taxpayer that receives a tax rebate under this provision is not eligible for a property tax abatement for the property under Chapter 313, Tax Code.

Due to the anticipated fiscal impact of the bill, the sponsors agreed to a $50 million per year cap on total tax rebates under this program. In the event that the total amount of tax rebates sought by all providers in a calendar year exceeds the cap, all refunds will be reduced on a pro-rata basis.


Jim Kranjc