SECTION 3.320. Texas Emissions Reduction Plan Surcharge; Off-Road, Heavy-Duty Diesel Equipment

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Off-road, heavy-duty diesel equipment--Diesel-powered equipment of 50 horsepower or greater, other than motor vehicles and equipment used directly in oil and gas exploration and production at an oil or gas well site. See §3.96 of this title (relating to Imposition and Collection of a Surcharge on Certain Diesel Powered Motor Vehicles) for information about the imposition of the surcharge on motor vehicles. Off-road, heavy-duty diesel equipment includes accessories and attachments sold with the equipment. Off-road, heavy-duty diesel equipment includes, but is not limited to, the following diesel-powered equipment:

(A) backhoes;

(B) bore equipment and drilling rigs, except drilling rigs used to drill oil and gas wells;

(C) bulldozers;

(D) compactors (plate compactors, etc.);

(E) cranes;

(F) crushing and processing equipment (rock and gravel crushers, etc.);

(G) dumpsters and tenders;

(H) excavators;

(I) forklifts (rough terrain forklifts, etc.);

(J) graders;

(K) light plants (generators) and signal boards;

(L) loaders;

(M) mining equipment;

(N) mixers (cement mixers, mortar mixers, etc.);

(O) off-highway vehicles and other moveable specialized equipment (equipment, such as a motorized crane, that does not meet the definition of a motor vehicle because it is designed to perform a specialized function rather than designed to transport property or persons other than the driver);

(P) paving equipment (asphalt pavers, concrete pavers, etc.);

(Q) rammers and tampers;

(R) rollers;

(S) saws (concrete saws, industrial saws, etc.);

(T) scrapers;

(U) surfacing equipment;

(V) tractors; and

(W) trenchers.

(2) Surcharge--A fee imposed on the sale, lease, or rental in Texas of new or used off-road, heavy-duty diesel equipment and on the storage, use, or other consumption of such equipment subject to use tax as provided for in §3.346 of this title (relating to Use Tax). This surcharge is in addition to state and local sales and use taxes that are due on the equipment and is for the benefit of the Texas Emissions Reduction Fund, which is administered by the Texas Commission on Environmental Quality.

(3) Sales price--The total amount a purchaser pays a seller for the purchase, lease, or rental of off-road, heavy-duty diesel equipment as set out in Tax Code, §151.007. The sales price includes charges for accessories, transportation, installation, services, and other expenses that are connected to the sale.

(b) Imposition of Surcharge.

(1) A surcharge is due on the sales price of off-road, heavy-duty diesel equipment sold in Texas. If the purchaser takes possession of or title to the equipment on or after September 1, 2015, the surcharge is 1.5% of the sales price. If the purchaser took possession of or title to the equipment on or after July 1, 2003, and before September 1, 2015, the surcharge is 2.0% of the sales price.

(2) A surcharge is due on the sales price, excluding separately stated interest charges, of off-road, heavy-duty diesel equipment leased under a financing lease, as defined in §3.294 of this title (relating to Rental and Lease of Tangible Personal Property). If the lessee takes possession of the equipment on or after September 1, 2015, the surcharge is 1.5% of the sales price. If the lessee took possession of the equipment on or after July 1, 2003, and before September 1, 2015, the surcharge is 2.0% of the sales price.

(3) A surcharge is due on the lease payments for off-road, heavy-duty diesel equipment that is leased under an operating lease, as defined in §3.294 of this title. If the lessee takes possession of the equipment on or after September 1, 2015, the surcharge is 1.5% of the lease payments. If the lessee took possession of the equipment on or after July 1, 2003, and before September 1, 2015, the surcharge is 2.0% of the lease payments.

(4) A surcharge is due on the sales price of off-road, heavy-duty diesel equipment purchased, leased, or rented out of state and brought into Texas for use. If the purchaser brings the equipment into Texas for use on or after September 1, 2015, the surcharge is 1.5% of the sales price. If the purchaser brought the equipment into Texas for use on or after July 1, 2003, and before September 1, 2015, the surcharge is 2.0% of the sales price. See §3.346 of this title.

(5) A 1.0% surcharge is due on off-road, heavy-duty diesel construction equipment sold, leased, or rented if the purchaser took possession of or title to the equipment on or after August 31, 2001 and before July 1, 2003. No surcharge is due on equipment sold, leased, or rented during this time period if the equipment is subject to use tax or is used in non-construction activities.

(c) Collection of surcharge. A seller must collect the surcharge from the purchaser on the sales price of each sale, lease, or rental in Texas of off-road, heavy-duty diesel equipment that is not exempt from sales tax. The surcharge is collected at the same time and in the same manner as sales or use tax. See §3.286 of this title (relating to Seller's and Purchaser's Responsibilities) for information on the collection and remittance of sales or use tax. The surcharge is collected in addition to state and local sales or use taxes but is not collected on the amount of the sales or use tax.

(d) Exemptions. No surcharge is collected on the sale, lease, or rental of off-road, heavy-duty diesel equipment that is exempt from sales and use tax. A seller who accepts a valid and properly completed resale or exemption certificate, direct payment exemption certificate, or other acceptable proof of exemption from sales and use tax is not required to collect the surcharge. For example, a seller may accept an exemption certificate in lieu of collecting sales tax and the surcharge from a farmer who purchases a bulldozer to be used exclusively in the construction or maintenance of roads and water facilities on a farm that produces agricultural products that are sold in the regular course of business.

(e) Reports and payments.

(1) A seller or purchaser with a surcharge account, including a direct payment holder, must report and pay the surcharge in the same manner as sales or use tax, but separate reports and payments for the surcharge are required.

(A) A seller's or purchaser's reporting period (i.e., monthly, quarterly, or yearly) and due date for the surcharge are determined by the amount of surcharge that the seller collects or purchaser owes. See §3.286 of this title.

(B) A purchaser who does not hold a surcharge account must report and pay the surcharge by the 20th day of the month following the month in which the purchaser acquired off-road, heavy-duty diesel powered equipment on which the seller did not collect the surcharge.

(2) A seller or purchaser must report and pay the surcharge to the comptroller on forms prescribed by the comptroller for the surcharge. A seller or purchaser is not relieved of the responsibility for filing a surcharge report and paying the surcharge by the due date because the seller or purchaser fails to receive the correct form from the comptroller.

(3) The penalties and interest imposed for failure to timely file and pay the surcharge are the same as those imposed for failure to timely file and pay sales or use tax. Likewise, the 0.5% discount for timely filing and payment is applicable to surcharge reports and payments. No prepayment discount will be paid a seller or purchaser for prepayment of the surcharges.

(f) Expiration. The surcharge expires on the last day of the state fiscal biennium during which the Texas Commission on Environmental Quality publishes in the Texas Register the notice required by Health and Safety Code, §382.037.

Source Note: The provisions of this §3.320 adopted to be effective March 19, 2002, 27 TexReg 2051; amended to be effective December 4, 2003, 28 TexReg 10775; amended to be effective January 26, 2009, 34 TexReg 433; amended to be effective May 17, 2016, 41 TexReg 3525; amended to be effective January 7, 2020, 45 TexReg 382