On September 1, 2011, Governor Perry reissued an emergency proclamation declaring a disaster in all 254 counties in Texas  His proclamation was in response to extreme drought and the potential for wildfires throughout the state and, as a result, all rules and regulations that may inhibit or prevent prompt response to this threat are suspended for the duration of the state of disaster.  Bill can be reached via email at wleary@mfrpc.com or by telephone at 713.622.1120.

Due to this disaster declaration, taxpayers who have property damaged by a wildfire that occurred within Texas at any time since May 13, 2011, or within one of the counties included in the disaster proclamations issued between Dec. 21, 2010, and May 13, 2011, may claim an exemption from sales tax on labor charges to repair the damage. The materials and equipment used in the performance of the repairs continue to be taxable.

The exemption allowed under Tax Code Section 151.350 applies only to charges for labor to repair or restore damage resulting from the condition that caused the area to be declared a disaster area. Thus, the exemption authorized by this proclamation is limited to damage caused by a wildfire and does not extend to other repairs to personal property, or to a building or other improvement to realty.

To receive an exemption from tax on the charges for the labor, the purchaser must give the seller a Texas Sales and Use Tax Exemption Certificate (Form 01-339/back) showing both the seller's and the purchaser's names and addresses and the item(s) being repaired. The certificate must also give the reason for claiming the exemption. For example, “Repair to <property type or damaged tree> due to ‘natural disaster’ in <County>, Texas.”   A further definitive step is to encourage the vendor to provide this form to the purchaser for completion and allowing the seller not to charge tax. 

In addition, business owners affected by the recent wildfires may request an extension of time to file a tax return and pay a tax. Extensions will be granted in 30-day increments. Additional extensions can be requested up to a 90-day total.  Complete information concerning disaster-related sales tax exemptions can be found in Publication 94-182.

For more information, visit the Comptroller’s Disaster Relief Resources webpage