What Texas Form 01-142 Is For
Texas Form 01-142 is required for the reporting and payment of the Heavy-Duty Diesel Equipment Surcharge imposed under the Texas Emissions Reduction Plan. The surcharge applies to qualifying off-road diesel vehicles with a horsepower rating of 50 or more.
The surcharge funds environmental programs administered by the Texas Comptroller that aim to reduce emissions from diesel fuel usage across Texas. Revenue supports cleaner engines, alternative fuels, and emissions reduction initiatives throughout the state.
When You’d Use Texas Form 01-142
A seller, lessor, or buyer must complete Texas Form 01-142 if they are involved in a taxable sale, lease, or rental of qualifying diesel equipment. Sellers must collect the extra charge at the time of purchase and send it back with their return.
Late filing occurs when the return or payment is submitted after the due date. Amended returns are required to correct reporting errors or submit a refund claim, subject to the Statute of Limitations.
Key Rules or Details for 2020
The surcharge rate for 2020 is 1.5 percent of the sales price, lease payment, or rental charge. The surcharge and the Texas sales and use tax need to be calculated independently.
Only diesel-powered vehicles with a horsepower rating of 50 or higher are subject to the surcharge. The Heavy-Duty Diesel Equipment Surcharge does not apply to equipment that runs on compressed or liquefied natural gas.
Several exemptions from sales tax are applicable, including manufacturing machinery, timber operation equipment, and qualifying agricultural use. When accompanied by the appropriate paperwork, some tax-exempt transactions are also excluded, and repair parts are sold separately.
Step-by-Step (High Level)
Step 1: Gather transaction records
Find out which sales, leases, and rentals of diesel equipment that meet the requirements are taxable for the time period. Review invoices, service tickets, and records of invoice formatting to determine the type of equipment you have and its horsepower capacity.
Step 2: Confirm exemptions and determine the surcharge base
Use real documents to separate transactions that are not subject to tax, such as those used for farming or manufacturing. Don't charge sales tax in addition to the surcharge. Add up the gross receipts that will be charged the extra fee instead.
Step 3: Calculate the surcharge due
Apply the correct surcharge rate to total taxable receipts. Reconcile totals to source records before moving to the form.
Step 4: Complete Form 01-142 and apply adjustments
Fill out Form 01-142 with the taxpayer's name, the dates of the reporting period, and the total amount of taxes that are due. Use any credits or changes that are shown in the GL or liability account.
Step 5: File, pay, and retain support
When it's time to pay, use the Comptroller Webfile system or another approved method to send in the return. For audits and compliance, keep track of confirmations and any other supporting documentation.
Common Mistakes and How to Avoid Them
- Charging surcharge on non-qualifying equipment: Verify the 50-horsepower threshold and diesel-power requirement using manufacturer specifications before applying the surcharge.
- Including sales tax in the surcharge base: Calculate the surcharge separately and base it only on the sales, lease, or rental price, excluding Texas Sales and Use Tax.
- Not collecting a surcharge on qualifying rentals or marketplace deals: Review equipment rental contracts and marketplace facilitator transactions, and configure billing systems to apply the surcharge consistently.
- Claiming exemptions without documentation: Obtain and retain valid exemption certificates for agricultural, timber, or manufacturing claims so that exemptions can be supported in an audit.
- Missing deadlines due to filing-frequency assumptions: Track collections to confirm whether monthly or quarterly filing applies and calendar the correct due dates to avoid late penalties.
What Happens After You File
The Texas Comptroller puts the money into the taxpayer's account after they file their return and pay. When you file electronically, you typically receive confirmation immediately. When you mail in your return, please note that it may take longer to process.
A taxpayer can check that their returns are correct, especially if the amounts they reported are different or if they claim exemptions. Taxpayers may need to give master files like invoices, sales reports with part numbers, or maintenance logs.
Refund claims and amended returns need to be looked at again before they can be approved. To settle disagreements, the Texas Comptroller can hold an administrative hearing or send a private letter ruling.
FAQs
Who must file Texas Form 01-142?
Any seller, lessor, or buyer involved in taxable transactions for qualifying off-road diesel equipment must file. This includes buyers purchasing from remote sellers who do not collect the surcharge.
Does the surcharge apply to used equipment?
Yes, the surcharge applies to both new and used diesel equipment. The determining factors are horsepower rating, fuel type, and qualifying off-road use.
Are marketplace facilitators responsible for collecting the surcharge?
Depending on how the transaction is set up and what the Texas Comptroller says, marketplace facilitators may be to blame. Responsibility often comes into play when helping with taxable equipment rental transactions.
Can a refund be requested for a surcharge paid in error?
If a surcharge was improperly collected or sent, a refund claim may be made. The claim must be filed within the statute of limitations, and the customer must receive their money back.
Is the surcharge related to other taxes in Texas?
Excise taxes, gas taxes, motor fuel taxes, corporate income taxes, and other fees associated with transportation are not included in the surcharge. It needs to be reported separately.
How long should records be retained?
It is recommended that supporting documentation be kept for at least four years. Records may be needed for administrative hearings, audits, and refund reviews.
