Natural disasters can leave in their wake financial, physical, and emotional trauma. These disasters are unavoidable and recognized by the government as severe disadvantages to those they impact. Outlined below is an overview of Texas taxes following a natural disaster:
When the governor of Texas or the president of the United States declares a location in Texas to be a disaster area, taxpayers in the affected area are eligible for certain tax exemptions and filing extensions for their taxes.
A disaster can be natural or man-made, causing significant physical damage or destruction, loss of life or a drastic change to the environment.
Texas has had its share of declared disaster areas caused by hurricanes, tornadoes, fires and floods over the years, and our office wants to help you take care of yourself, your home or your business when disaster strikes.
Extensions for Filing Taxes
Taxpayers in Texas counties declared disaster areas can request an extension to file their taxes. The Comptroller’s office allows temporary filing extensions on a case-by-case basis. Our office will notify taxpayers when we grant or deny their extension requests.
How to Request an Extension
To request an extension, call 800-252-5555 or email ExtensionRequests@cpa.texas.gov and provide the following information:
- taxpayer name
- taxpayer number
- name of the person making the request
- email or phone number of the person making the request
- tax type(s) for which an extension is requested
- affected filing periods
Repairing Your Home or Business
In general, charges for labor to repair residential or nonresidential real property damaged in a declared disaster area are exempt from sales and use tax. The materials used to make the repairs are taxable.
For the customer to receive an exemption from tax on labor charges, the service provider must either:
- bill the customer for residential work; or
- use a separated (labor and material) contract for nonresidential work and accept an exemption certificate (PDF) from the customer for the labor.
Note: The exemption certificate must include the service provider’s name and address, the customer’s name and address and a list of the items being repaired. The certificate must also give the reason for claiming the exemption. For example, “Repair due to Hurricane Harvey in Galveston County.”
Residential Real Property
For residential real property repairs in a disaster area, the charges for labor are exempt from sales and use tax. The contract used determines the taxability of the incorporated materials.
Separated contracts – Under a separated contract (labor and material), the charges for the incorporated materials and the labor are separate. The contractor must collect tax on the incorporated materials billed to the customer, but there is no tax due on labor.
Lump-sum contracts – Lump-sum contracts are also known as “one-fixed-price” or “turn-key” contracts. The contractor bills the customer one amount for both labor and incorporated materials instead of separately stating them. Under a lump-sum contract, the contractor does not collect sales tax on the lump-sum charge for materials and labor from the customer.
Nonresidential Real Property
For nonresidential real property repairs in a disaster area, the contract used determines the taxability of the incorporated materials and labor.
Separated contracts – Under a separated contract (labor and material), the charges for the incorporated materials and the labor are separate. The service provider must collect tax on the incorporated materials billed to the customer, but there is no tax due on labor.
Lump-sum contracts – Lump-sum contracts are also known as “one-fixed-price” or “turn-key” contracts. The service provider bills the customer one amount for both labor and incorporated materials instead of separately stating them. Under a lump-sum contract, the service provider must collect sales tax on the lump-sum charge for both materials and labor from the customer.
Purchasers can claim an exemption from sales and use tax on charges for the following:
- labor to repair or restore items damaged by a declared natural disaster, including furniture and other tangible personal property; and
- laundering or dry cleaning damaged clothing or other items.
Purchasers can claim an exemption from sales tax on labor charges for cutting down damaged branches or cutting up a damaged tree.
Charges for hauling away branches, limbs or trees are taxable.
Tax is due on the purchase, lease or rental of chainsaws, stump cutters and other equipment used to repair or remove trees, etc.
If you are looking for a tax resolution in Texas, for your personal or commercial tax problems, our team can help you! Our highly qualified tax professionals work with business owners from a wide range of industries to help reduce their taxes and file accurate tax returns. Do not let your taxes overwhelm you, instead work with a team of financial professionals who will advocate for your needs. Contact us today to learn more about the services we provide.
King Financial Services For Texans
Don’t get lost in the paperwork that comes along with running a business, instead reach out to King Financial Services. Our team of financial professionals understand how overwhelming it can be to you and your staff to keep up with additional tasks and record keeping. This is why we help eliminate the workload that comes with bookkeeping in house by managing all of the additional responsibilities, such as payroll and bookkeeping.
Contact us today to learn more about the tax and financial services we offer. Sandra King is an enrolled agent, empowered by The United States Treasury to prepare your personal or business tax filing. While her services are offered nationwide, Sandra King locally serves the greater Dallas-Fort Worth area, including but not limited to Arlington, Bedford, Colleyville, Euless, Fort Worth, Grand Prairie, Hurst, Mansfield, North Richland Hills, and Richland Hills.
King Financial Services Inc
610 S Industrial Blvd. Suite 140
Euless, TX 76040
Phone: (800) 503-1343
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