Search      Search Tips   LiveHelp for Disaster Relief Find Legal Help On Tax Issues Related Resources Death and Taxes After Hurricane By: Partnership for Legal Access Hurricane Rita and Texas Taxes By: Partnership for Legal Access Tax Relief in Disaster Situations (Separate Website) By: IRS.gov more...

Donations

• Q. My PTA wants to buy school supplies and clothes to give to students who are victims of the hurricane. Are these items tax exempt?
• A. Yes. A school district or PTA may claim a sales tax exemption on purchases of clothing and school supplies that will be given to students who were victims of the storm. Vendors who sell to governmental entities like school districts must have written purchase orders/vouchers for review in the event of an audit.
• Q. I am volunteering in the disaster area. If I buy tents or other equipment in Texas to take to the disaster area to assist the victims, is my purchase tax exempt?
• A. Generally, individuals who purchase items with their own funds must pay taxes on those items, unless they are donating the item to qualified exempt entities, and never use the items for personal use. For more information on whether or not your purchase should be tax-free, email specific details to tax.help@cpa.state.tx.us, enter "Disaster Relief" on the subject line.

Fundraisers

• Q. My friends and I want to do something to help. If we hold a fundraiser for disaster relief, and give all of the proceeds to disaster relief efforts, can we sell the goods tax-free?
• A. Generally, all sales of taxable items are taxed, even if you give all of the proceeds to a charity. There are a few exceptions:
Bake sales
Car washes
Concerts - if the admission is based on donations only, or if the concert is sponsored by a non-profit organization. Otherwise, a set price for admission to a concert, even for a fundraising event, is subject to tax.

If you belong to an organization that qualifies for the sales tax exemption under the religious, educational, or charitable category, as well as organizations that fall under IRS Section 501 (c ) (3), (4), (8), (10), or (19) status, your organization can hold two one-day tax-free sales or auctions each calendar year. During each one-day sale, the organization does not need to collect sales tax. There are special rules for items over $5000. If the item is made by the organization, or is donated to the organization (and not sold back to the donor), then even those items are tax free, but all other items sold for over $5000 are taxed.

Youth athletic organizations, volunteer fire departments, and chambers of commerce cannot hold tax-free sales.

College or university student organizations affiliated with an institution of higher education can hold a one-day, tax-free sale each month, as long as the organization's primary purpose is not to engage in business or earn a profit. The special rules regarding items sold for more than $5000 described above apply to these organizations as well.

Purchases

• Q. I am a victim of Hurricane Katrina. Are my purchases exempt from Texas sales tax?
• A. No. Purchases made with personal funds for your personal use do not qualify for a sales tax exemption.

Purchases, Hotel and Motel

• Q. I am an evacuee from Hurricane Katrina. Can I stay in a Texas hotel or motel tax-free?
• A. Yes. The state and local tax on hotels and motels is waived for Hurricane Katrina evacuees from Mississippi, Louisiana, or Alabama who are setting up temporary residency in Texas.

• Q. What do hotel and motels need to do in order to grant an exemption from the hotel occupancy tax?
• A. Hotels need to retain documentation of the proof of residency from the persons occupying the room along with a completed exemption certificate. See www.window.state.tx.us/ Click on Hurricane Katrina Disaster Relief, and download the exemption certificate.

Purchases, Motor Vehicle

• Q. If I buy a motor vehicle with a FEMA or Red Cross voucher or debit card, is it exempt from the Texas motor vehicle sales tax?
• A. No. Motor vehicles purchased for personal use are taxed, even when purchased with the vouchers.

Purchases, Vouchers

• Q. If I buy something with a FEMA, Red Cross or Salvation Army debit card or voucher do I have to pay Texas sales tax on it?
• A. Generally, you do not have to pay sales tax on most items purchased with these special vouchers. The vouchers are intended to assist individuals with purchasing clothing, housing or accommodations, and food. However, the purchase of alcohol and tobacco products made with the vouchers are not tax-free.

• Q. What do retailers need to do when evacuees purchase items with vouchers?
• A. For FEMA vouchers and debit cards, retailers should keep documentation of the items purchased with the vouchers. No further documentation is necessary.

  For Red Cross vouchers, retailers should show the amount of the Red Cross voucher on the invoice, and deduct that amount before computing the sales tax. Retailers should keep a copy of the voucher to substantiate the sale to the Red Cross on behalf of the individual. No other documentation is needed.

  For Salvation Army vouchers, retailers should show the amount of the Salvation Army voucher on the invoice, deduct the amount before computing the sales tax, and keep a copy of the voucher to substantiate the sale to the Salvation Army. A completed exemption certificate is also required for purchases made with Salvation Army vouchers.

  To download an exemption certificate, see www.window.state.tx.us/, go to Hurricane Katrina Disaster Relief, and click on exemption certificate.

• Q. What does a retailer do if items are purchased with a combination of vouchers and cash or personal credit or debit cards?
• A. The retailer should collect tax on the amount of the purchase that was paid for with personal funds, but not on the amount of the exempt voucher or debit card.

• Q. Can restaurant food be purchased with FEMA or Red Cross vouchers or debit cards?
• A. Yes. The seller of the prepared food should keep a copy of the receipt in their records. The receipt must be clearly marked "Red Cross" or "FEMA" and must be signed by the person making the purchase.

Repairs

• Q. I have personal property that was damaged by the storm. Are repairs to my personal property taxable?
• A. Labor charges to repair or restore items damaged by the hurricane are exempt from sales taxes. This exemption includes labor to repair furniture, appliances, clothing and other items of tangible personal property, even if you pick up the repaired or restored item in Texas.
  

  To get the exemption for taxes on the labor charges, you need to give the seller an exemption certificate showing both the seller's and the purchaser's names and addresses and the item(s) being repaired. The certificate must also give the reason for claiming the exemption; for example, "Repair due to Hurricane Katrina in ________ county/parish, __________ state." To download the exemption certificate, go to  http://www.rev.state.la.us/sections/katrina/faq.asp.

State Taxes, Texas Sales and Use Taxes

• Q. I live in the disaster area, and I am worried that my business may not be able to file Texas sales and use taxes on time. Will my business be penalized?
• A. Damage caused by the disaster may delay filings. Businesses affected by the disaster may request a 90 day extension to file Texas tax returns. The Texas State Comptroller's Office handles requests for extensions on a case by case basis. For more information on requesting the extension, call the Comptroller's toll free tax assistance line at (800) 252-5555.