Sales Tax and the Upstream Petroleum Industry

The upstream sector of the Petroleum industry involves companies that search for potential underground crude oil and natural gas fields, drill exploratory wells, and subsequently drill and operate the wells that recover and bring the crude oil and/or raw natural gas to the surface. Sales taxes can be a significant cost for the companies exploring, drilling and operating successful oil and gas wells. (more…)

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Sales Tax and Midstream Oil and Gas Companies

Companies involved in the midstream movement of oil and gas from the well sites to the processing or downstream refineries generally utilize pipelines, tanker trucks, barges, rail or oil tankers.

In Texas oil and gas is primarily moved by pipeline. Texas has over 425,000 miles of pipelines within its borders that represent about 1/6 of the total pipeline structure in the United States. The Pipeline safety department of the Texas Railroad Commission is charged with the responsibility of enforcing compliance with federal and state laws and regulation by the more than 1,485 pipeline operators in Texas of intrastate gathering, transmission, distribution and master-metered systems. (more…)

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Buyer Beware: State Tax Consultants Who Charge a Flat Fee

Texas Does NOT Regulate State Tax Consulting Firms

You’ve heard it before. If it sounds too good to be true, it probably is. Some Texas state tax consultants promise to take care of your entire audit (including both the field audit as well as the highly complex and time consuming Administrative Hearings process) for a single flat fee. DON’T BELIEVE IT! (more…)

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Requesting an Independent Audit Review Conference (IARC) to Stop an Incorrect Texas Comptroller State Tax Audit from being Billed

Imagine this uncomfortable scenario. Your business is under audit by the Texas Comptroller’s Office. It is the last day of the Field Audit and you are meeting with the auditor at the Exit Conference. The auditor then hands you a tax bill for an amount that you disagree with. What do you do now? What rights do you have? (more…)

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Occasional Sale Exemption (Sales of Entire Operating Assets) – Tax Rule 3.316 (d)

Imagine that you purchased all the heavy equipment assets of a Texas contractor for $2 million dollars. Then a year later the Texas Comptroller’s Office randomly selects your business for audit.

Next, imagine that the Sales Tax Auditor decided to tax the entire $2 million dollar purchase because he/she believed the entire operating assets were not purchased in a single transaction as required by Tax Rule 3.316 (d) resulting in a Texas Sales & Use Tax bill for almost $200,000 (tax, penalty, interest). (more…)

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Tandem Skydiving – Is It Subject to Texas Sales Tax?

Not according to the U.S. (DOT) Department of Transportation

Welcome to one of the most debated state sales tax ‘amusement service’ issues in the country. In at least four states, excluding Texas, business owners are fighting and winning the battle over whether they have to charge sales tax on their tandem skydiving services. It should be noted that many ‘Sales Tax’ states have a tax on amusement services which usually includes ‘tandem skydiving services’. Tandem skydiving occurs when a student skydiver is harnessed to an instructor who then guides the student through the entire jump process (i.e., ground training, jump, free fall, chute time and landing). (more…)

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Contractors and Texas Sales and Use Tax

I often talk to contractors who have just received their Sales Tax Audit Notices. The majority of the time they have concerns.

The business owner may be performing residential jobs, new or existing commercial work or both. The types of contracts (lump-sum vs. separated) can also dictate when sales tax is either charged to the customer or paid by the contractor. In the case of exempt clients the contractors need to know about exemption documentation and whether to separate the contract charges (i.e., materials and labor). (more…)

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Stop Senate Bill 1808

Hello current and former Texas Tax Group clients and friends.

On Friday March 13, 2015, Texas Senator Paul Bettencourt filed Senate Bill 1808. If passed, this bill would allow the Texas Comptroller to conceal the names of businesses under audit from the general public effective September 1, 2015. (more…)

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Texas Oil & Gas -Southwest Royalties, Inc. vs. Susan Combs Most Likely Heading to Supreme Court

The issue concerning whether tangible personal property placed inside a well (i.e., “downhole”) qualifies for the manufacturing exemption has been pending in the Texas court system for several years. The trial judge ruled in favor of the Comptroller on April 30, 2012, and the Third Court of Appeals heard oral arguments on September 25, 2013. After considering the issue for almost 11 months, the Third Court of Appeals issued an opinion on August 13, 2014, affirming the trial court’s judgment for the Comptroller. (more…)

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Why am I Being Audited?

You just received notification that your business has been selected for a Texas Comptroller state tax examination. Unless you have been through the audit process before, you probably have lots of questions and concerns. Of course one of the first questions most business owners ask is, “Why my business?” Although it’s common to think you did something wrong, this usually isn’t the case. However, if you have been selected for audit, Texas Tax Group has a team of 15 former Texas Comptroller State Tax Auditors who can help you save time and money. (more…)

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Mixed Beverage Tax (Liquor Tax) Audit Statistics

-“Tax Due” Audits Rise to 61% of all Audit Conducted. Almost 2 out of 3 Audits are tax due.

-“Average Tax Due” Assessed is $51,447 – Not including penalties and interest

Fiscal Year Total No Tax Due Audits Total Tax Due Audits Total Assessed Amount for Tax Due Audits Ave Tax Due Amt
FY2008 288 284 $12,048,877.00 $42,425.62
FY2009 253 272 $10,633,260.00 $39,092.87
FY2010 220 255 $12,314,994.00 $48,294.09
FY2011 244 259 $13,179,747.00 $50,887.05
FY2012 285 224 $8,674,052.00 $38,723.45
FY2013 135 211 $10,855,513.50 $51,447.93
Total 1425 1505 $67,706,443.50 $44,987.67

Related Sources:
“Estimated” Sales Tax Audit
A Practical Guide to HB 3572
An Open Letter to All Mixed Beverage Permit Holders in the State of Texas
Audit Division and the Fraud Penalty

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Texas Mixed Beverage Sales Tax Report Forms for 2014

Provided below is the link to the Texas Comptroller’s website where you will be able to download the new Mixed Beverage Sales Tax Reporting Form for 2014.

Remember, this form is IN ADDITION TO the Mixed Beverage Report and the Sales and Use Tax Reports. It does NOT REPLACE any prior reports.

For expert audit representation, call Texas Tax Group today at 1-855-892-8348 and let our experienced team of 15 Former Texas Comptroller State Tax Auditors handle your mixed beverage sales tax audit.

Texas Comptroller Helpful Link:
Texas Mixed Beverage Tax Forms

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“Estimated” Sales Tax Audit

This client owns a bar that does not serve food. The bar had not been remodeled in years, and the only real tax exposure for the state was in the mixed beverage area. However, there are some overly zealous audit supervisors who insist their auditors spin off sales tax audits “in order to protect the state’s interest.” The client did not initially provide any records related to the sales tax audit, so the auditor “estimated” the sales tax audit. (more…)

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A Practical Guide to HB 3572

The 83rd Legislative Session passed House Bill 3572, which impacts all Mixed Beverage Tax permit holders in the state. It increases the overall tax rate paid to the state to 14.95%. The law takes effect beginning on January 1, 2014. This law does the following things:

1) It reduces the Mixed Beverage Gross Receipts Tax rate from the current 14% to 6.7%.
2) It creates a new tax known as the Mixed Beverage Sales Tax (MBST). The rate of this tax is 8.25%. However, this tax is NOT the same as the current Sales Tax and needs to be accounted for and reported separately.
3) You will need to choose how to account and report this new tax: Tax Included or Separate line item showing the tax.
4) It increases your reporting responsibilities.
5) It increases your documentation responsibilities. (more…)

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Audit Division and the Fraud Penalty

In the theoretical world, the Texas Comptroller’s Audit Division serves several very real and legitimate purposes. Good state tax auditors conduct audits for tax compliance (as opposed to revenue generation).  Another purpose is to keep the playing field level for all taxpayers.

It is not right for business A to comply with the law while business B, a competitor of business A, ignores it or intentionally violates it.  When businesses choose or intend to violate the tax laws, the Texas Comptroller’s Audit Division has the option and the responsibility to punish the violator via the additional 50% penalty, also known as the Fraud Penalty. (more…)

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Mixed Beverage Gross Receipts Tax

Mixed Beverage Gross Receipts Tax Rate Lowered; New Mixed Beverage Sales Tax Imposed

House Bill 3572, effective Jan. 1, 2014, lowers the mixed beverage gross receipts tax rate from 14 percent to 6.7 percent. The bill also imposes an 8.25 percent mixed beverage sales tax.

Mixed beverage gross receipts tax is imposed on the mixed beverage permittee and will be administered the same as before but at a lower rate. In addition, a mixed beverage permittee will collect an 8.25 percent tax on each mixed beverage sold, prepared or served. The new sales tax is also due on ice and each nonalcoholic beverage sold, prepared or served to be mixed with an alcoholic beverage and consumed on the permitted premises. (more…)

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An Open Letter to All Mixed Beverage Permit Holders in the State of Texas

Beginning October 1, 2012, Audit Division of the Comptroller’s Office very quietly and without notice changed their policy related to Mixed Beverage audits. The policy change almost guarantees that if you are selected for audit, you will be assessed a liability.

No matter how good the records, internal controls or adherence to the law, any Mixed Beverage audit is by its very nature an estimation. Since the inception of the tax in the 1970’s, the estimation procedure has employed the depletion methodology. In an effort to be fair and in recognition that any estimation is imperfect, first the TABC and currently the Audit Division of the Comptroller’s Office used to compare what the taxpayer reported to the amount they estimated the taxpayer “should have” reported. If a taxpayer with good records had reported within 7.5% of what the auditor estimated, no liability was assessed. If the taxpayer had bad records, the “close enough” amount was 5%. (more…)

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4 Convenient Offices across Texas

Texas Tax Group is the only firm in Texas that has offices in Houston, Dallas, Austin and San Antonio. With our extensive experience as former auditors, we actually still have relationships with some auditors, audit managers, local enforcement officials, hearings attorneys, and attorneys at the Attorney General’s office.

This is something other audit representation firms don’t have access to. Add it all up, and this is why dozens of CPA firms have us handle their clients’ Texas Comptroller tax audits.

Due to our team’s unique experience, we often have more experience than the auditor and we know the audit procedure better than the auditor! Isn’t that the kind of experience and dedicated know-how you want representing you?

Call us toll-free at 855-892-8348 to schedule your FREE Anti-Audit Consultation!

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Practitioners’ Corner

http://www.window.state.tx.us/taxinfo/prac_corner.html

We can also handle defenese for Mixed Beverage Tax Audit, Texas, Sales Tax Defense Texas, and so much more. See our Services page for more information.

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Petitioner is liable for the predecessor’s tax liabilities

“The Texas Comptroller of Public Accounts (the Comptroller) assessed successor
liability against ************** (Petitioner) for the sales and use tax
liability of a predecessor business. Petitioner contends that: (1) it is not
liable as successor because it purchased only two of the three COMPANY A stores
that the predecessor operated; and (2) imposing successor liability without
allowing Petitioner to challenge the underlying tax determination violates due
process.” (more…)

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