Repealing Telecom exemption

1. Presented By: Robert Galindo, Finance Director
Item # 6
City Council Meeting
February 11, 2019
AN ORDINANCE TO REPEAL
TELECOMMUNICATIONS
EXEMPTION PER TEXAS TAX
CODE SECTION 321.210

2. 2
Telecommunications Exemption Texas Tax
Code 321.210
Telecommunications are exempt from the
taxes imposed under this chapter the
sales within the municipality of
telecommunications services unless the
application of the exemption is repealed
under this section.
BACKGROUND

3. 3
BACKGROUND
 The proposed ordinance would repeal
the exemption and would impose a local
sales and use tax on the receipts from
the sale of telecommunications services
within the city as allowed under Texas
Tax Code 321.210

4. 4
BACKGROUND
Per the Texas Comptroller’s Office, it will take
one complete quarter for the exemption to be
repealed.
Sales tax would be imposed on
telecommunications beginning July 1, 2019.
Implementation may take 3-4 months.
The current sales tax is 8.25% which is the
maximum. Proposed ordinance would not
change the sales tax rate.

5. 5
BACKGROUND
Per the Texas Comptroller’s Office, there
are over 100 cities that have already
repealed the telecommunications
exemption.
The Texas Comptroller’s Office would
notify the telecommunications companies
of the exemption being repealed.

6. 6
POLICY ANALYSIS
Proposed ordinance has be reviewed by
the City Attorney and is in compliance
with the Texas Tax Code 321.210.

7. 7
FINANCIAL ANALYSIS
 The estimate for additional sales tax
revenue is $30,000 to $40,000 every
fiscal year.