How far back could a manufacturer seek a Texas utility-tax exemption refund under the 1991 Rule 3.295 amendments?

Plain-English summary

A manufacturer eligible under the 1991 version of Rule 3.295 could request an exemption and refund for manufacturing-area lighting, heating, and cooling going back four years from the request date, but not farther.

The June 25, 1991 rule adopted an emergency rule filed September 12, 1990. The amendments restored the lighting exemption and added exemptions for utilities used to heat and cool manufacturing areas, retroactive to August 3, 1987.

Tex. Tax Code § 151.022 allowed the Comptroller to decide whether a nonstatutory rule change applied prospectively or retroactively. Even where it applied retroactively, the four-year limitations period barred relief more than four years back. A claimant applying at the time of this letter therefore could not reach August 3, 1987.

What this means for you

Retroactive eligibility and the refund period were separate questions. The rule change reached back to 1987, but an individual claim was still limited to the four years preceding the request.

Common questions

What uses did the amendments exempt? Lighting, heating, and cooling in manufacturing areas.

When were the amendments retroactively effective? August 3, 1987.

Could a claimant automatically seek a refund back to that date? No. The four-year limitations period still applied.

How far back could the client in the letter request relief? Four years from the request date.

Citations and references

• Tex. Tax Code § 151.022
• 34 Tex. Admin. Code Rule 3.295

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9204L1165G12

Original ruling text

April 15, 1992

Dear **:

Thank you for your recent letter asking about sales tax refunds, Rule
3.295, and the statute of limitations.

Your question: If a study indicates that a client facility is eligible
for sales tax exemption under the June 25, 1991, rule but not eligible under
the old rule, would the client be eligible for a refund of:

a) up to four previous years,

b) back to June 25, 1991, or

c) no refund.

Response: First some general information. Changes to a rule may be
applied retroactively or prospectively depending on the reason for the change.
For example, when a rule is changed because of a change in the Tax Code, the
change is always effective on the same date as the effective date of the law
change regardless of the effective date of the rule.

If a change is made to a rule for reasons other than law changes, Sec.
151.022 of the Texas Tax Code allows the comptroller to decide whether to apply
a rule retroactively or prospectively. The four year statute of limitations
precludes the comptroller from applying a rule change retroactively for more
than four years.

With the general guidelines in mind, answers to your specific questions
regarding Rule 3.295 are as follows: The change in the June 25, 1991, version
of Rule 3.295 simply adopted the provisions of an emergency rule filed
September 12, 1990. The emergency rule restored the lighting exemption in the
manufacturing area and provided an exemption for utilities used for cooling and
heating in the manufacturing area. The amendments were retroactive to August
3, 1987.

For a client applying for an exemption today for lighting, heating and
cooling in the manufacturing area, the four year statute of limitations would
apply. In other words, the client could request an exemption back four years
from the date of the request. The client cannot go back to August 3, 1987,
because this date is beyond the four year statute of limitations.

If you have any additional questions on the taxability of your service,
you may call me toll free at 1-800-252-5555, extension 34633. The regular
number is 512/463-4633. You may also write to the Tax Administration Division.

Sincerely,

Wanda Hutcheson
Tax Administration Division