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TITLE 34PUBLIC FINANCE
PART 1COMPTROLLER OF PUBLIC ACCOUNTS
CHAPTER 3TAX ADMINISTRATION
SUBCHAPTER PMUNICIPAL SALES AND USE TAX
RULE §3.378Natural Gas and Electricity

(a) Natural gas and electricity: imposition of the tax.

  (1) The local tax applies to sales of natural gas and electricity for use in a city that has adopted the local tax and must be collected for the city in which delivery is made to the consumer.

  (2) When a city adopts the local tax, the tax does not apply to sales of natural gas and electricity during a customer's regular monthly billing period that begins before the effective date of the adoption of the tax. The tax shall apply to each regular monthly billing period beginning on or after the effective date of the tax.

(b) Natural gas and electricity: exemptions from tax.

  (1) Certain uses of natural gas and electricity are exempt from local tax. See §3.295 of this title (relating to Natural Gas and Electricity) for a discussion of definitions, specific exemptions relating to the sale or use of natural gas and electricity, and the circumstances under which the predominant use theory may be applied. Residential use of natural gas and electricity in a city is exempt unless the tax is imposed by a city as provided in paragraph (2) of this subsection.

  (2) Residential use of natural gas and electricity.

    (A) Effective October 1, 1979, the sale of natural gas and electricity for residential use is exempt from taxation under the Local Sales and Use Tax Act unless:

      (i) the city voted for early abolition (see subparagraph (B) of this paragraph);

      (ii) the city voted to continue taxation (see subparagraph (C) of this paragraph); or

      (iii) the city voted to reimpose tax (see subparagraph (D) of this paragraph).

    (B) Early abolition. At any time before October 1, 1979, by a majority vote of the membership of the governing body of a city, the governing body could exempt from the local tax the sale of natural gas and electricity for residential use. After the results of the vote were entered into the minutes of the city, the city secretary must have forwarded to the comptroller by registered or certified mail a certified copy of the ordinance. On receipt of notification, one whole calendar quarter must have elapsed prior to the exemption becoming effective (see §3.372(d)(1) of this title (relating to Adoption or Abolition City Tax) for an illustration of this procedure) unless notification was received by the comptroller by registered or certified mail postmarked no later than September 10, 1978; in which case, the exemption was effective on October 1, 1978.

    (C) Continue taxation. If the governing body of a city wished to continue to impose the local tax on the sale of natural gas and electricity for residential use, the city secretary must have forwarded to the comptroller's office before May 1, 1979, by registered or certified mail a certified copy of the ordinance reflecting the majority vote of the membership exempting natural gas and electricity. If the ordinance was not received by the comptroller before May 1, 1979, the exemption from the local tax automatically became effective on October 1, 1979. To continue the taxation of residential use, the city secretary must have forwarded to the comptroller's office before June 30, 1979, by registered or certified mail, a certified copy of the ordinance reflecting the majority vote of the membership reimposing tax on natural gas and electricity.

    (D) Reimposition of tax authorized. The local tax may be reimposed by a majority vote of the membership of the governing body of a city that exempted residential use of natural gas and electricity before May 1, 1979. If the majority of the governing body votes for the reimposition of the local tax, the results of the vote must be entered in the minutes of the city. Thereafter, the city secretary must forward to the comptroller by registered or certified mail a certified copy of the ordinance reimposing the tax. Upon receipt of notification by the comptroller, there shall elapse one whole calendar quarter prior to the reimposition becoming effective. The reimposition shall take effect beginning on the first day of the calendar quarter next succeeding the elapsed quarter.

    (E) Effect of billing periods. The exemption or reimposition of the local tax does not apply to sales of natural gas and electricity for residential use made during a customer's regular monthly billing period which begins before the effective date of the exemption or reimposition. The exemption or reimposition shall apply to each regular monthly billing period beginning on or after the effective date of the exemption or reimposition.

    (F) Cities adopting the Local Sales and Use Tax Act. Cities that first adopt the local sales and use tax after October 1, 1979, may not impose the tax on the residential use of natural gas and electricity.

    (G) The sale of natural gas and electricity for residential use is automatically exempt from the additional city tax imposed under the Tax Code, §321.101(b) or the Development Corporation Act of 1979 (Texas Civil Statutes, Art. 5190.6), if the sale of natural gas and electricity is exempt from tax under §321.101(a). The sale of natural gas and electricity for residential use is automatically taxed under Tax Code, §321.101(b) if the tax under Tax Code, §321.101(a) is imposed on the sale of natural gas and electricity for residential use.


Source Note: The provisions of this §3.378 adopted to be effective January 1, 1976; amended to be effective October 25, 1978, 3 TexReg 3571; amended to be effective March 7, 1979, 4 TexReg 554; amended to be effective November 24, 1987, 12 TexReg 4198; amended to be effective August 15, 2000, 25 TexReg 7774

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