Adopted Rules Title 34

TITLE 34. PUBLIC FINANCE

PART 1. COMPTROLLER OF PUBLIC ACCOUNTS

SUBCHAPTER A. GENERAL RULES

The Comptroller of Public Accounts adopts the repeal of existing §3.4, concerning tax refunds for wages paid to an employee receiving financial assistance, without changes to the proposed text as published in the January 27, 2023, issue of the Texas Register (48 TexReg 341). The rule will not be republished.

The comptroller repeals the existing section as the content is out of date and no longer comports with its statutory authority and will adopt a new version under the same number and title. The repeal of §3.4 will be effective as of the date the new §3.4 takes effect.

The comptroller did not receive any comments regarding adoption of the repeal.

The comptroller adopts the repeal under Tax Code, §111.002 (Comptroller's Rules; Compliance; Forfeiture), which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2.

This section implements Tax Code §111.109.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on February 28, 2023.

TRD-202300948

Jenny Burleson

Director, Tax Policy

Comptroller of Public Accounts

Effective date: March 20, 2023

Proposal publication date: January 27, 2023

For further information, please call: (512) 475-2220

34 TAC §3.4

The Comptroller of Public Accounts adopts new §3.4, concerning tax refunds for wages paid to an employee receiving financial assistance, without changes to the proposed text as published in the January 27, 2023, issue of the Texas Register (48 TexReg 342). The rule will not be republished.

The new section replaces existing §3.4, which the comptroller is repealing. The comptroller has not updated §3.4 since its original implementation in 1995, and the statutory authority for the section has changed. New §3.4 is intended to bring the section in line with the current statute which provides for a tax refund program that is administered in conjunction with the Texas Workforce Commission (TWC). The intent of the program is to encourage the employment of individuals who are receiving federal Aid to Families with Dependent Children.

Tax Code, §111.109 (Tax Refund for Wages Paid to Employee Receiving Aid to Families With Dependent Children) reads in its entirety: "The comptroller shall issue a refund for a tax paid by a person to this state in the amount of a tax refund voucher issued by the Texas Workforce Commission under Subchapter H, Chapter 301, Labor Code, subject to the provisions of that subchapter."

Based on the limited language in the statute, the comptroller adopts new §3.4 to include only information under the purview of the comptroller. Subsection (a) outlines the basics of the program.

Subsection (b) explains the eligibility requirements and procedure for requesting a refund. The employer must first submit their application to the TWC. TWC will certify eligibility of the employer and the maximum allowable refund based on the requirements in the Labor Code. This refund amount is referred to in the statute as "the amount of a tax refund voucher." The rule refers to this generally as the "certified amount" since there is not a separate voucher provided to the comptroller. If an employer is eligible for the refund, TWC provides the certification of eligibility and refund amount to the comptroller who then processes the refund request.

Subsection (c) discusses the limitation on the amount of the refund. The refund may not exceed the lesser of the amount certified by TWC or the net tax paid to the state. In order to determine the net tax paid to the state, the comptroller reviews the tax payments reflected in its systems. As paragraph (c)(1) explains, if the certified amount exceeds the net tax paid to the state, the comptroller may contact the employer to determine if additional Texas tax was paid by the employer on its purchases. If the employer can prove that it paid Texas tax on purchases during the appropriate calendar year, the comptroller will include those payments in the net tax paid by the employer to the state. Paragraph (c)(2) explains that if the certified amount still exceeds the amount of tax paid to the state, the refund request will be granted in part, up to the amount of tax paid, but will also be denied in part. This limitation enforces the statute which allows a refund only for the amount of tax "paid" by an employer.

The comptroller did not receive any comments regarding adoption of the amendment.

The comptroller adopts the new section under Tax Code, §111.002 (Comptroller's Rules; Compliance; Forfeiture), which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2.

This section implements Tax Code, §111.109 (Tax Refund for Wages Paid to Employee Receiving Aid to Families with Dependent Children).