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

   1. (1) Off-road, heavy-duty diesel construction equipment--Diesel powered equipment of 50 horsepower or greater, other than motor vehicles, that is used in the construction of improvements to realty such as roads, buildings, and other permanent structures, or in the repair, restoration, or remodeling of real property. Off-road, heavy-duty diesel construction equipment includes accessories and attachments sold with the equipment. Off-road, heavy-duty diesel construction equipment includes:

      1. (A) backhoes;
      2. (B) bore equipment and drilling rigs;
      3. (C) bulldozers;
      4. (D) compactors (plate compactors, etc.);
      5. (E) cranes;
      6. (F) crushing and processing equipment (rock and gravel crushers, etc., used by contractors to process the construction materials they incorporate into realty);
      7. (G) dumpsters and tenders;
      8. (H) excavators;
      9. (I) forklifts (rough terrain forklifts, etc.);
      10. (J) graders;
      11. (K) light plants (generators) and signal boards;
      12. (L) loaders;
      13. (M) mixers (cement mixers, mortar mixers, etc.);
      14. (N) 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);
      15. (O) paving equipment (asphalt pavers, concrete pavers, etc.);
      16. (P) rammers and tampers;
      17. (Q) rollers;
      18. (R) saws (concrete saws, industrial saws, etc.);
      19. (S) scrapers;
      20. (T) surfacing equipment;
      21. (U) tractors;
      22. (V) trenchers.
   2. (2) Surcharge--A 1.0% fee is imposed on the sale, lease, or rental in Texas of new or used off-road, heavy-duty diesel construction equipment. This surcharge is in addition to state and local sales taxes that are due on the equipment and is for the benefit of the Texas Emissions Reduction Fund, which is administered by the Texas Natural Resources Conservation Commission.
   3. (3) Total price--The entire amount a purchaser pays a seller for the purchase, lease, or rental of off-road, heavy-duty diesel construction equipment. The total price includes charges for accessories, transportation, installation, services, and other expenses that are connected to the sale.
2. (b) Collection of surcharge. A seller must collect the surcharge from the purchaser on the total price of each sale, lease, or rental in Texas of off-road, heavy-duty diesel construction equipment that is not exempt from sales tax. The surcharge is collected at the same time and in the same manner as sales tax. See §3.286 of this title (relating to Seller's and Purchaser's Responsibilities) for information on the collection and remittance of sales tax. The surcharge is collected in addition to state and local sales taxes but is not collected on the amount of the sales tax.

3. (c) Exemptions and exclusions.

   1. (1) No surcharge is due on the sale, lease, or rental of off-road, heavy-duty diesel construction equipment that is exempt from sales 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 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.
   2. (2) No surcharge is due on the sale, lease, or rental of off-road, heavy-duty diesel equipment that is not used in construction. A seller may accept an exemption certificate in lieu of collecting the surcharge even if the sale, lease, or rental of the equipment is not exempt from sales tax. For example, a purchaser who buys equipment listed in subsection (a)(1) of this section for a purpose other than use in construction may issue an exemption certificate that states that the equipment will not be used to construct improvements to realty. The seller may accept the exemption certificate in lieu of collecting the surcharge, but is required to collect sales tax if there is no exemption from sales tax. Examples of non-construction activities include mining at quarries, and oil and gas exploration and production at oil and gas well sites.
   3. (3) No surcharge is due on the sale, lease, or rental of off-road, heavy-duty diesel construction equipment that is subject to use tax under Tax Code, Chapter 151, Subchapter D. A purchaser who brings off-road, heavy-duty diesel construction equipment into Texas for storage, use, or consumption in this state, or in other situations in which use tax rather than sales tax is due, is not required to pay or accrue the surcharge.

4. (d) Reports and payments.

   1. (1) A seller must report and pay the surcharge in the same manner as sales tax, but separate reports and payments for the surcharge are required. A seller's reporting period (i.e., monthly, quarterly, or yearly) and due date for the surcharge is determined by the amount of surcharge that the seller collects. See §3.286 of this title (relating to Seller's and Purchaser's Responsibilities).
   2. (2) A seller must report and pay the surcharge to the comptroller on forms prescribed by the comptroller for the surcharge. A seller is not relieved of the responsibility for filing a surcharge report and paying the surcharge by the due date because the seller fails to receive the correct form from the comptroller.
   3. (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 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 for prepayment of the surcharges.

5. (e) Effective date.

   1. (1) The surcharge is due on the total price of off-road, heavy-duty diesel construction equipment sold in Texas if the purchaser takes possession of or title to the construction equipment after August 31, 2001 and before October 1, 2008.
   2. (2) The surcharge is due on the total price, excluding separately stated interest charges, of off-road, heavy-duty diesel construction 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 construction equipment after August 31, 2001 and before October 1, 2008.
   3. (3) The surcharge is due on the lease payments for off-road, heavy-duty diesel construction equipment that is leased under an operating lease, as defined in §3.294, if the lessee takes possession of the construction equipment after August 31, 2001 and before October 1, 2008.

Source Note:The provisions of this §3.320 adopted to be effective March 19, 2002, 27 TexReg 2051.