Top navigation skipped
Texas Emissions Reduction Plan (TERP) – Off-Road, Heavy-Duty Diesel Equipment Surcharge
Who is responsible for this tax?
The Texas Emissions Reduction Plan (TERP) Off-Road, Heavy-Duty Diesel Equipment Surcharge applies to the sale, use, lease or rental of off-road, heavy-duty diesel equipment and is based on the sale, lease or rental amount. The seller collects the surcharge along with the sales tax and remits it to the Comptroller.
Equipment Subject to the Surcharge
The surcharge is due on diesel-powered equipment of 50 horsepower or more, including mobile or stationary equipment used in construction, mining and other activities. Examples include:
- bore/drill rigs
- cement and mortar mixers
- concrete pavers
- concrete/industrial saws
- cranes
- crawler tractors/dozers
- crushing/processing equipment
- dumpsters/tenders
- excavators
- graders
- mining equipment
- off-highway tractors
- off-highway trucks
- pavers
Equipment Not Subject to the Surcharge
- repair or replacement parts or accessories related to the equipment, unless sold or leased with equipment;
- equipment used in oil and gas exploration and production at an oil or gas well site;
- equipment eligible for the agricultural use exemption;
- equipment eligible for the timber operations exemption;
- processing equipment eligible for manufacturing exemptions; and
- equipment that qualifies for exemption from sales or use tax for any other reason.
Who Must Collect and Report the Surcharge
If you sell, lease or rent off-road, heavy-duty diesel equipment of 50 horsepower or more, you must collect this surcharge on the sale, lease or rental amount. The surcharge is in addition to sales and use tax.
Use Form 01-142, Texas Off-Road, Heavy-Duty Diesel Equipment Surcharge Return (PDF), to report and pay.
Buyers who do not pay the surcharge to the seller or lessor must pay and report the surcharge directly to the Comptroller’s office on or before the 20th day of the month following the month when the purchase was made or when the equipment subject to the surcharge was brought into Texas.
Rates
| Effective Date | Rate |
|---|---|
| Sept. 1, 2015 | 1.5 percent |
| July 1, 2003 – Aug. 31, 2015 | 2 percent |
| Sept. 1, 2001 – July 1, 2003 | 1 percent |
*There was no surcharge before Sept. 1, 2001.
The surcharge rate on a lease contract is based on the date the contract was entered into. The surcharge rate on a lease renewal or extension is based on the date the contract is renewed or extended.
Due Date
Due dates are based on the surcharge collection amount:
- less than $1,500 collected per month: file quarterly
- $1,500 or more collected per month: file monthly
Returns must be filed or postmarked on or before the 20th day of the month following the end of each reporting period (for example, April 20 for March activity).
Penalties and Interest
Penalties
- A $50 penalty is assessed on each report filed after the due date.
- If tax is paid 1-30 days after the due date, a 5 percent penalty is assessed.
- If tax is paid over 30 days after the due date, a 10 percent penalty is assessed.
Interest
- Past due taxes are charged interest beginning 61 days after the due date.
- To calculate interest on past due taxes, visit Interest Owed and Earned.
Reporting and Payment Requirements
Select the amount of taxes you paid in the preceding state fiscal year (Sept. 1 – Aug. 31) to find the reporting and payment methods to use.
Less than $500,000
Select one of these reporting methods:
Select one of these payment methods:
$500,000 or more
Select one of these reporting methods:
TEXNET is the only acceptable payment method.
Discounts
There is a 0.5 percent discount for filing and paying on time.