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Even the Refunds Are Bigger: Texas to Return Up to $50 Million in Sales and Use Taxes Paid by Cable, Internet and Telecom Service Providers

By Sahang-Hee Hahn and Andrew Appleby

Effective September 1, 2013, Texas will refund state sales and use taxes paid by providers of c

July 24, 2013

By Sahang-Hee Hahn and Andrew Appleby

Effective September 1, 2013, Texas will refund state sales and use taxes paid by providers of cable television, Internet access or telecommunications services on tangible personal property used in their businesses. On June 14, 2013, Governor Rick Perry signed H.B. 1133 into law, authorizing such refunds. Under the new legislation, a provider is entitled to a refund of sales and use taxes paid on the sale, lease, rental, storage or use of tangible personal property if it meets two requirements. First, the provider or one of its subsidiaries must sell, lease, rent, store, consume or otherwise use the tangible personal property on which taxes were paid. Second, the provider or one of its subsidiaries must directly use or consume such property in the provision of cable television, Internet access or telecommunications services. Purchases made for data processing or information services do not qualify for a refund. The legislation includes a $50 million limitation on the amount of the refund. If the total tax paid by all providers and subsidiaries eligible for a refund is not more than $50 million for a calendar year, then the refund amount will be the amount paid by the provider or the subsidiary. If this $50 million threshold is exceeded, then the refund amount will be a pro rata share of $50 million. Tex. Tax Code Ann. ยง 151.3186 (2013).

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