On August 25, 2017, Governor Greg Abbott issued a disaster proclamation suspending the state and local Hotel and Motel Occupancy Taxes for the victims of the Hurricane and personnel helping with relief efforts. The hotel does not have to be located in a declared disaster area. The suspension will last for a period of 14 days, beginning August 23, 2017 and ending September 6, 2017.
Also on August 25, 2017, Texas Comptroller Glenn Hegar announced that taxpayers in declared disaster areas affected by Hurricane Harvey can request up to a 90-day extension to file and pay certain monthly and quarterly state taxes. Extensions must be requested and are granted on a case-by-case basis.
The Comptroller’s website provides additional information on the hotel tax suspension, as well as related sales tax exemptions, motor fuels tax, International Fuel Trade Agreement (IFTA), and exemptions from licensing and registration requirements during declared natural disasters and emergencies. Find the Comptroller’s guidance here.
Texas Sales/Use Tax Relief
Taxpayers in a disaster area can claim exemption from Texas sales tax on the following repair labor charges:
- Separately stated repair labor of nonresidential real property damaged by the disaster.
- Labor charges to repair or restore personal property damaged by the disaster. This exemption also applies to costs to launder or dry clean damaged clothing or other items.
- Labor charges for cutting down damaged branches or cutting up a damaged tree.
Disaster victims making purchases with personal funds are not exempt from paying sales tax unless the items will be donated to an entity exempt from sales tax prior to any use by the purchaser.
Sales and use tax is due on the purchase, lease or rental of tools and other equipment that will be used in declared disaster areas, unless one of the following exemptions applies:
- Governmental agencies and nonprofit entities exempt from Texas sales and use tax can claim an exemption from the tax when buying, renting or leasing the equipment in Texas.
- If a seller or third-party common carrier delivers equipment to a location outside the state, Texas sales and use tax should not be collected.
- No tax is due on taxable items purchased, leased or rented with Federal Emergency Management Agency (FEMA) or Red Cross debit cards and/or vouchers.
Sellers must keep documentation relating to the above situations for four years from the date of sale.
Authored by Shane Stewart and Blake Fuqua. For questions about these or other state and local tax matters, please contact us.