The Texas Legislature's 77th session ended May 28, 2001. The Legislaturewill not reconvene until January 2003. The following is a comprehensivereview of the major tax-relatedbills passed this session. This review, however, does not attempt to analyzethe hundreds of tax bills filed. For more information, please contact a Ryan & Company professional.
The major concern for corporate taxpayers will be the 2003 Session wherea significant tax bill now seems likely.
1. SenateBill 1125 - Technical Corrections.
S.B.1125 has been signed by the Governor and will be effective September1, 2001.
S.B. 1125, Section 3, amends Texas Local Government Code Section 326.029.The bill sets forth additional contents and filing requirements of anorder canvassing the results of the election to confirm a library district.
S.B. 1125, Section 4, amends Texas Local Government Code Chapter 363,Subchapter F by adding Section 363.262. The bill requires the notificationof the Comptroller of Public Accounts in writing no later than the 10thday after the referendum returns are canvassed for a continuation ordissolution of a crime control and prevention district election by theboard of directors of the district. The bill sets forth provisions regardingthe effective date of the abolition of local crime control sales anduse tax after a district is dissolved or discontinued by referendum.
S.B. 1125, Section 6, amends Texas Local Government Code Section 383.104by adding Subsection C. The bill sets forth provisions regarding thediscontinuance of the sales and use tax of a county development districtif the tax revenue is not collected within the district before the firstanniversary of the date the tax took effect, the required notificationby the Comptroller to the board of directors of the district and thecommissioners court of the county of the discontinuance of the tax,and the authorization of the district to reimpose the tax after discontinuance.
S.B. 1125, Section 10, amends Texas Tax Code Section 111.302. The billincreases the time period from 60 to 90 days within which the Comptrolleris required to compute the total amount of a tax refund for certainad valorem taxes. If an eligible person who enters into tax abatementagreements with the municipality and the county, and the agreementsprovided to the Comptroller show the agreements exempt different portionsof the property value, then the refund amount is required to be computedbased on the greater of the portions exempted.
S.B. 1125, Section 12, amends Texas Tax Code Section 151.007(a). Thebill provides that the cost of "installation" is included in the salesprice of a taxable item.
S.B. 1125, Section 13, amends Texas Tax Code Section 151.010. The billprovides that the sales or use of a taxable item in electronic forminstead of on physical media does not alter its tax status, unless otherwiseprovided.
S.B. 1125, Section 14, amends Texas Tax Code Section 151.057. The billreplaces the sales tax exemption for "temporary help services" withan exemption for a "temporary employment service as defined by Section93.001, Labor Code."
S.B. 1125, Section 16, amends Texas Tax Code Section 151.257. The billprovides that a surety's obligation under a bond filed is not affectedby whether the surety has a record of the receipt of a copy of the Comptroller'sdetermination notice or payment demand.
S.B. 1125, Section 17, amends Texas Tax Code Chapter 151, SubchapterH by adding Section 151.3021. The bill exempts internal and externalwrapping, packing, and packaging supplies from the imposition of thelimited sales, excise, and use tax if sold to a person who is a laundryor dry cleaner for use in wrapping, packing, or packaging an item thathas been pressed and dry cleaned or laundered by the person operatingas a laundry or dry cleaner in the regular course of business.
S.B. 1125, Section 19, amends Texas Tax Code Section 151.310(d). Thebill provides that if two or more organizations jointly hold a tax-freesale or auction, each organization is authorized to hold one additionaltax-free sale or auction during the calendar year in which the jointsale or auction is held.
S.B. 1125, Section 20, amends Texas Tax Code Section 151.313. The billincludes dietary supplements as an item that is exempt from the sales,excise, and use taxation. The bill also sets forth provisions regardingthe characteristics of a product for it to be considered a dietary supplementor a drug or medicine.
S.B. 1125, Section 21, amends Texas Tax Code Section 151.317. The billprovides that the gas and electricity used in timber operations, includingthe pumping for irrigation of timber land is exempt from the limitedsales, excise, and use tax.
S.B. 1125, Section 22, amends Texas Tax Code Section 151.318. The billincludes photographic props that are necessary and essential to andused in connection with the printing process in the exemption of sales,excise, and use tax if a person engaged in certain printing or producingoperations purchases them.
S.B. 1125, Section 23, amends Texas Tax Code Chapter 151, SubchapterH, by adding Section 151.3181. The bill provides that the divergentuse of exempted manufacturing property will not result in sales anduse tax being due on the property if the divergent use occurs afterthe fourth anniversary of the date the property was purchased. The billsets forth provisions regarding the calculation of the sales and usetax due on certain exempt manufacturing properties, the amount of divergentuse, the total use of property, and the percentage of divergent use.
S.B. 1125, Section 24, amends Texas Tax Code Section 151.3185. The billprovides that the sale of a motion picture, video, or audio master bythe producer of the master and the sale of tangible personal propertyto certain entities is also exempt from the limited sales, excise, anduse tax.
S.B. 1125, Section 26, amends Texas Tax Code Section 152.052. The billauthorizes a person who is a motor vehicle owner, who is in the businessof renting motor vehicles, and holds a permit to deduct the fair marketvalue of a replaced motor vehicle that is titled to another person,if the replaced motor vehicle is offered for sale, and either personholds a beneficial ownership interest in the other person for at least80 percent or acquires all of its vehicles exclusively from franchiseddealers whose franchisor shares common ownership with the other person.
S.B. 1125, Section 27, amends Texas Tax Code Section 152.041. The billprovides that for motor vehicles designed for commercial use, the impositionof retail sales tax and tax on motor vehicles purchased outside thisstate is due on the 20th working day after the date the motor vehicleis equipped with a body or other equipment that enables it to be registeredunder the Transportation Code.
S.B. 1125, Section 30, amends Texas Tax Code Section 153.001, Subdivision(25). The bill includes dyed diesel fuel bonded users, agriculturalbonded users, and bulk users in provisions regarding motor fuel taxation.
S.B. 1125, Section 31, amends Texas Tax Code Section 151.018. The billrequires a bulk plant to post notices regarding certain duties of importersand exporters in a conspicuous location proximate to the point of receiptof shipping papers.
S.B. 1125, Section 35, amends Texas Tax Code Section 153.122. The billremoves the filing fee for a gasoline tax refund payment. S.B. 1125,Section 36, amends Texas Tax Code Section 153.203. Provisions imposinga diesel fuel tax do not apply to the volume of water that is blendedtogether with taxable diesel fuel when the finished product sold orused is clearly identified on the retail pump, storage tank, and salesinvoice as a combination of diesel fuel and water.
S.B. 1125, Section 37, amends Texas Tax Code Section 153.205. The billmodifies provisions regarding the use of a signed statement to purchasedyed diesel fuel or undyed diesel fuel and prohibits a supplier frommaking a tax-free sale of any diesel fuel to a purchaser using a signedstatement unless the purchaser has an end user number or agriculturalexemption number issued by the Comptroller. The bill modifies the taxationof the sale of dyed diesel fuel and undyed diesel fuel provided a purchaserfurnishes a signed statement with certain stipulations and modifiesthe tax-free sale of dyed and undyed diesel fuel for an agriculturalnonhighway use provided the purchaser furnishes a signed statement withcertain stipulations. The bill sets forth provisions regarding the reliefof a permitted supplier from the burden of proof for nontaxable dyedor undyed diesel fuel, and the criminal penalty and forfeiture of rightsfor certain offenses related to the taxation of dyed or undyed dieselfuel.
S.B. 1125, Section 41, amends Texas Tax Code Section 153.221. The billdeletes the provision that a common or contract carrier is requiredto file a report regarding diesel fuel transactions.
S.B. 1125, Section 43, amends Texas Tax Code Section 153.225. The billdeletes provisions regarding the filing fee for diesel fuel tax refundpayments.
S.B. 1125, Sections 46 to 53 and Section 55, amend Texas Tax Code Sections154.001, 154.101, 154.102, 154.110, 154.501, 155.001, 155.041, 155.048and 155.201 respectively. The bill provides for taxation purposes, thatthe permit requirements of and the penalties applicable to cigarette,cigar, or tobacco of cigarette, cigar, and tobacco product distributors,wholesalers, bonded agents, and retailers also apply to manufacturersand importers of these products.
S.B. 1125, Section 54, amends Texas Tax Code Section 155.111. The billrequires a distributor of tobacco products to include in the requiredreport regarding the sale, distribution, exchange, or use of tobaccoproducts only tobacco products that are sold in this state if more thanfifty percent of all untaxed tobacco products received by the distributorin this state are actually sold outside of this state.
S.B. 1125, Section 56, amends Texas Tax Code Section 171.076. The billspecifies that the exemption of an incorporated cooperative credit associationfrom the franchise tax includes an organization under a federal charterfor a production credit association or an agricultural credit associationregulated by the Farm Credit Administration.
S.B. 1125, Sections 57 and 58, amend Texas Tax Code Sections 171.1032and 171.051 respectively. The sections provide, in apportioning taxableearned surplus, that a corporation is required to include in the grossreceipts from its business done in this state and its entire business,the corporation's share of certain gross receipts of each partnershipand joint venture.
S.B. 1125, Section 59, amends Texas Tax Code Section 171.176. A bankingcorporation, in order to determine the taxable income and taxable earnedsurplus, is required to exclude from the numerator of its apportionmentfactor interest earned on federal funds and interest earned on securitiessold under agreement to repurchase that are held in this state in acorrespondent bank that is domiciled in this state.
S.B. 1125, Section 60, amends Texas Tax Code Section 171.109. The billprovides that for the determination of taxable income and taxable earnedsurplus, a corporation must use the equity method of accounting whenreporting an investment in a partnership or joint venture.
S.B. 1125, Section 61, amends Texas Tax Code Section 171.1121. The billsets forth provisions regarding a corporation's share of a partnership'sgross receipts that is included in its federal taxable income that mustbe used in calculating the corporation's gross receipts for earned surpluspurposes. The gross receipts must be apportioned as though the corporationdirectly earned them.
S.B. 1125, Sections 63 to 65 and Section 71, amend Texas Tax Code Sections171.501, 171.655, 171.685 and 171.834 respectively. The bill modifiesprovisions regarding a refund for job creation in an enterprise zone,tax credit for wages paid to the participants or former participantsof the Texas Department of Criminal Justice work program, tax creditfor wages paid to certain children committed to the Texas Youth Commission,and tax credit for before and after programs for children.
S.B. 1125, Section 66, amends Texas Tax Code Section 171.705. The billprovides that for a tax credit for establishing a day-care center orpurchasing child-care services, a corporation is prohibited from claimingas a tax credit an amount before any other applicable credits that exceeds90 percent of the amount of tax due for the report for tax credit.
S.B. 1125, Section 67, amends Texas Tax Code Section 171.753. The billdecreases, from 25 percent to 5 percent of the total wages and salariespaid by a corporation for qualifying jobs during the period upon whichthe tax is based, to receive a tax credit for the specified creationof jobs by a corporation.
S.B. 1125, Section 68, amends Texas Tax Code Section 171.754. The billdeletes provisions that require the credit to be claimed in five equalinstallments of one-fifth the credit amount.
S.B. 1125, Section 72, amends Texas Tax Code Chapter 171 by adding SubchapterS. The bill prohibits the total credits for franchise taxes in the taxcredit report by a corporation, including the amount of any carryforwardcredits, from exceeding the amount of franchise tax due for the report.
S.B. 1125, Section 73, amends Texas Tax Code Section 211.055. The billdeletes provisions regarding the maximum inheritance tax imposed andrequires that the amount of inheritance taxes is not to exceed the amountof tax calculated under certain federal provisions.
S.B. 1125, Section 74, amends Texas Tax Code Section 321.102. The billprovides that the two percent limit on the combined rate of all salesand use tax imposed by municipality and a local governmental entityon an area do not apply to a local governmental entity that has outstandingindebtedness or obligations that are payable wholly or partly from thesales and use tax revenue of the entity. The bill prohibits the combinedrate of all sales and use tax imposed by a municipality, local governmentalentity, and any other political subdivisions, except library districts,having territory in the district from exceeding two percent at any locationin the municipality.
S.B. 1125, Sections 75 to 77, amend Texas Tax Code Subchapter D, Chapters321 to 323 respectively. The bill sets forth provisions regarding theissuance, imposition, retainment, and remittance of the sales and usetax of a municipality, a special purpose district, and a county.
S.B. 1125, Section 78, amends Texas Health and Safety Code Section 311.045.The bill deletes the Comptroller's office from the entities with whoma nonprofit hospital or hospital system is required to file a statementconcerning the satisfying of hospital standards no later than the 120thday after the end of the fiscal year of a hospital or hospital system.
S.B. 1125, Section 80, amends Texas Property Code Section 74.402. Thebill adds Travis County to the areas that the Comptroller's office isrequired to publish notice of a public sale in a newspaper in generalcirculation before the 21st day preceding the day on which the publicsale is held. The bill authorizes the Comptroller to post on the Comptroller'sown website the notice of a public sale to be held on the Internet orby an online auction before the seventh day preceding the date of thesale or auction is held.
S.B. 1125, Section 81, amends the Texas Racing Act (Article 179(e),Vernon's Texas Civil Statutes) Section 11.011. The bill amends the TexasRacing Act to remove provisions regarding the responsibility of a trackwhere a race originates for the state's share of the pari-mutuel poolif intrastate wagering pools are combined between tracks. The bill providesthat the racetrack where the wager is made is responsible for reportingand remitting the state's share of the pari-mutuel pool.
S.B. 1125, Section 83, amends Revised Statutes Article 6550c-1, Section9. The bill amends law to require the imposition of a sales and usetax by an intermunicipal commuter rail district and provides that therate of imposition is the highest combination of local sales and usetaxes imposed at the time of its creation in any local governmentaljurisdiction that is a member of a district. The bill provides thatall other local sales and use taxes which would otherwise be imposedon the district property are preempted by the imposition of this tax.The bill requires the Comptroller to administer, collect, and enforceany sales and use taxes and provides that the computation, administration,governance and use of the taxes are governed under the Municipal Salesand Use Tax Act. The bill sets forth provisions regarding the requirementof an intermunicipal commuter rail district to provide certain notificationto the Comptroller and affected local jurisdictions of the creationof the district or acquisition of additional property by the districtand the district's intent to impose a sales and use tax. The bill alsosets forth provisions regarding the requirement of the Comptroller tonotify the district no later than the 30th day after the date of thereceipt of such notification by the district whether the Comptrolleris prepared to administer the tax and provides for the effective dateof the imposition of these taxes.
S.B. 1125, Section 84, repeals Texas Tax Code Sections 151.319, Subsections(d) and (e); 171.757, Subsections (c) and (d); and 201.052, Subsection(b). The bill repeals the sales, excise, and use tax exemption on certaintangible personal property and chemicals, catalyst, and other materialsrelating to the publication of newspapers. The bill repeals provisionsregarding the expiration of tax credit for certain job creation activitieswhen the number of a corporation's full-time employees falls below thenumber of those employees the corporation had in the year in which thecorporation qualified for the credit, the credit expires and the corporationis prohibited from taking any remaining installment. The bill also repealsprovisions regarding the minimum tax rate on sweet and sour gas producedand saved in this state.
S.B. 1125, Section 87, authorizes the Comptroller, before October 1,2001, to adopt rules and take other actions as the Comptroller deemsnecessary or advisable to prepare for this Act to take effect.
|Senate Bill 1123 - Relates to the enforcement and collection of taxes, fees, and other revenue and also provides for criminal penalties.
S.B. 1123 has been signed by the Governor and will be effective September1, 2001.
S.B. 1123, Section 2, amends Texas Government Code Section 411.109.It entitles the Comptroller to obtain from the Department of PublicSafety of the State of Texas criminal history record information maintainedby the Department that the Comptroller believes is necessary for theenforcement or administration of Chapter 159 (Controlled SubstancesTax) of the Texas Tax Code.
S.B. 1123, Section 6, amends Texas Tax Code Chapter 111, SubchapterA by adding Section 111.024. It provides that a person who acquiresa business or the assets of a business from a taxpayer through a fraudulenttransfer or a sham transaction is liable for any tax, penalty, and interestowed by the taxpayer. A transfer of a business or the assets of a businessis considered to be a fraudulent transfer or a sham transaction if thetaxpayer made the transfer or undertook the transaction (1) with intentto evade, hinder, delay, or prevent the collection of any tax, penalty,or interest owed under this title or (2) without receiving a reasonablyequivalent value in exchange for the business or business assets subjectto the transfer or transaction. The bill also lists some factors tobe considered in determining the intent of the taxpayer. Additionallyit provides that this section does not apply to a transfer of a businessor the assets of a business through a court order on dissolution ofa marriage or by descent or distribution or testate succession on thedeath of a taxpayer.
S.B. 1123, Section 3, amends Texas Tax Code Section 111.020 by addingSubsection (f). It provides that compliance with Subsection (a) is nota defense to an assessment of tax liability under Section 111.024 if:(1) the amount withheld from the purchase price is not sufficient tofully satisfy the liability of the seller of the business or stock ofgoods and (2) the purchase price paid to the seller for the businessor stock of goods is not reasonably equivalent to the value of the businessor stock of goods.
S.B. 1123, Section 7, amends Texas Tax Code Section 113.009 by addingSubsection (c). It prohibits a state tax lien filed under this chapterfrom being released fully until the taxpayer pays all other taxes, penalties,interest, fees, or sums that the taxpayer owes the state and that areadministered or collected by the Comptroller.
S.B. 1123, Section 9, amends Texas Tax Code Section 151.023. To determinethe amount of tax collected and payable to the state, the amount oftax accruing and due, and whether a tax liability has been incurredunder this chapter, the bill authorizes the Comptroller or a personauthorized by the Comptroller to (1) inspect at any time during businesshours any business premises where a taxable event has occurred and examine,copy, and photograph the books, returns, records, papers, and equipmentrelating to the conduct in question and (2) require by delivery of writtennotice to the taxpayer or to an employee, representative, or agent ofthe taxpayer that, not later than the 10th working day after the datethe notice is delivered, the taxpayer produce to an agent or designatedrepresentative of the Comptroller for inspection the books, records,papers, and returns relating to the taxable activity stated in the notice.
S.B. 1123, Section 10, amends Texas Tax Code Section 151.025, Subsection(a). It requires all sellers and all other persons storing, using, orconsuming in this state a taxable item purchased from a retailer tokeep: (1) records of gross receipts, including documentation in theform of receipts, shipping manifests, invoices, and other pertinentpapers, from each rental, lease, taxable service, and taxable labortransaction occurring during each reporting period; (2) records in theform of receipts, shipping manifests, invoices, and other pertinentpapers of all purchases of taxable items from every source made duringeach reporting period; and (3) records in the form of receipts, shippingmanifests, invoices, and other pertinent papers that substantiate eachclaimed deduction or exclusion authorized by law. It also deletes languageregarding receipts invoices and other pertinent papers.
Other sections of the bill define, provide penalties for, and establishvenue for various crimes under this Act.
|Senate Bill 1689 - Redefines which insurance entities qualify for the franchise tax and clarifies who may claim a business loss after a merger.
S.B. 1689 has been signed by the Governor and will be effective September1, 2001.
S.B. 1689, Section 1, amends Texas Tax Code Section 171.052 as describedbelow.
A. Without this amendment, "a corporation that is an insurance company, surety, guaranty, or fidelity company" is eligible for a franchise tax exemption. If this bill passes, an insurance organization, title insurance company, or title insurance agent authorized to engage in insurance business in this state, now required to pay an annual tax measured by its gross premium receipts, will be exempt from the franchise tax.
B. Also, an insurance organization performing management or accounting activities in this state on fidelity company" is eligible for a franchise tax exemption. If this bill passes, an insurance organization, title insurance company, or title insurance agent authorized to engage in insurance business in this state, now required to pay an annual tax measured by its gross premium receipts, will be exempt from the franchise tax.
C. Farm mutuals, local mutual aid associations, and burial associations are not subject to the franchise tax.
S.B. 1689, section 2, amends Texas Tax Code Section 171.110 to providethat a business loss can be carried forward only by the corporationthat incurred the loss and cannot be transferred to or claimed by anyother entity, including the survivor of a merger, if the loss was incurredby the corporation that did not survive the merger.
|Senate Bill 1690 - Modifies provisions relating to the taxation of insurance companies and certain insurance agents.
S.B. 1690 has been signed by the Governor and will be effective September1, 2001.
S.B. 1690 amends the Insurance Code to exempt insurance organizationsthat are authorized to do insurance business in this state (other thansurplus lines insurers), title insurance companies, and title insuranceagents from paying a tax levied in proportion to the gross premium receiptslevied by this state or any county or municipality, except as otherwiseprovided by the Tax or Labor Code. The bill prohibits this exemptionfrom being construed to limit the applicability of other taxes, fees,and assessments or to prohibit the levy and collection of certain taxes.Additionally, the bill deletes certain provisions relating to the levyof an occupational tax on insurance organizations, title insurance companies,title insurance agents, and insurance carriers or related companies.The bill also deletes the prohibition on requiring domestic insurancecompanies to pay occupation or gross receipts taxes.
5. HouseBill 1200 - Creates Tax Incentives Tied to Job Development.
H.B. 1200 was not signed by the Governor, but was automatically passed andwill be effective January 1, 2002, except Section 312.006 of the TexasTax Code, as amended by this Act, which will become effective September1, 2001.
H.B. 1200 amends Texas Tax Code, Subtitle B, Title 3 by adding Chapter313 as described below.
A. H.B. 1200 allows Texas school sistricts to cap property taxes for businesses that expand facilities and create new jobs in their area. Specifically, it authorizes the school districts to place an appraised value of a company's qualified property for school district maintenance and operations ad valorem tax purposes. To qualify for the cap, a business must:
(1) be a corporation or limited liability company, (2) use the property in connection with manufacturing, research and development, or renewable energy electric generation, (3) create at least 25 new jobs (for urban areas) or 10 new jobs (for rural areas), and (4) make a minimum property investment. In addition, the property must be located in a designated reinvestment or enterprise zone. The minimum amount of investment required and the minimum amount of value limitation allowed are determined based on a sliding scale tied to the taxable value of property in the particular school district
B. The bill requires businesses seeking to take advantage of the tax break to apply to the governing body of the school district in which the property is located. The governing body has complete discretion as to whether or not to consider an application. If it elects to consider an application, it is required to seek a recommendation from the state Comptroller and to engage a third party to conduct an economic impact evaluation. Subject to the minimum amounts imposed in the bill, the amount of the value limitation is to be negotiated and agreed to between the applicant and the governing body.
C. The bill's drafters were careful to ensure that it does not overlap with tax abatements provided under the Property Redevelopment and Tax Abatement Act (Tax Code Chapter 312) by restricting qualified property to property that is not subject to a tax abatement agreement. In a related provision, the bill also extends the Property Redevelopment and Tax Abatement Act through September 1, 2005.
6. HouseBill 1845 - Simplified Sales and Use Tax Administration Act.
H.B. 1845 has been signed by the Governor and will be effective September1, 2001.
H.B. 1845, Section 1, amends Texas Tax Code Title 2, Subtitle D by addingChapter 142 as described below.
A. Requires this state to enter into multistate discussions for the purposes of reviewing or amending the agreement embodying the simplification requirements prescribed by Section 142.007. It also prohibits this state from being represented by more than four delegates for purposes of those discussions.
B. Provides that the Comptroller is authorized and directed to participate in the development of the Streamlined Sales and Use Tax Agreement with one or more states to simplify and modernize sales and use tax administration in order to substantially reduce the burden of tax compliance for all sellers and for all types of commerce. It also authorizes the Comptroller, in the development of the agreement, to act jointly with other states that are members of the agreement to establish standards for certification of a certified service provider and certified automated system and establish performance standards for multistate sellers. In addition, it authorizes the Comptroller or the Comptroller's designee to represent this state before the other states that are signatories to the agreement.
C. Provides that the agreement authorized by this chapter does not, in whole or part, invalidate or amend a law of this state and adoption of the agreement by this state does not amend or modify a law of this state. It requires implementation of a condition of the agreement in this state, whether adopted before, at, or after membership of this state in the agreement, to be by the action of this state.
D. Prohibits the Comptroller from entering into the agreement authorized by this chapter unless the agreement requires each state to comply with the requirements prescribed by this section. The bill requires the agreement to:
1. set restrictions to limit over time the number of state rates. 2. establish uniform standards for the sourcing of transactions to taxing jurisdictions, the administration of exempt sales, and sales and use tax returns and remittances. 3. provide a central, electronic registration system that allows a seller to register to collect and remit sales and use taxes for all signatory states. 4. provide that registration with the central registration system and the collection of sales and use taxes in the signatory states will not be used as a factor in determining whether the seller has nexus with a state for any tax. 5. set restrictions to limit over time the number of state rates.
a. restricting variances between the state and local tax bases; b. requiring states to administer any sales and use taxes levied by local jurisdictions within the state so that sellers collecting and remitting these taxes will not have to register or file returns with, remit funds to, or be subject to independent audits from local taxing jurisdictions; c. restricting the frequency of changes in the local sales and use tax rates and setting effective dates for the application of local jurisdictional boundary changes to local sales and use taxes; and d. providing notice of changes in local sales and use tax rates and of changes in the boundaries of local taxing jurisdictions.
outline any monetary allowances that are to be provided by the states to sellers or certified service providers.
7. allow for a joint public and private sector study of the compliance cost on sellers and certified service providers to collect sales and use taxes for state and local governments under various levels of complexity to be completed by July 1, 2002. 8. require each state to certify compliance with the terms of the agreement before joining and to maintain compliance, under the laws of the member state, with all provisions of the agreement while a member. 9. require each state to adopt a uniform policy for certified service providers that protects the privacy of consumers and maintains the confidentiality of tax information. 10. provide for the appointment of an advisory council of private sector representatives and an advisory council of nonmember state representatives to consult with in the administration of the agreement.
E. Provides that the agreement authorized by this chapter is an accord among individual cooperating sovereigns in furtherance of their governmental functions. Further, it provides that the agreement provides a mechanism among the member states to establish and maintain a cooperative, simplified system for the application and administration of sales and use taxes under the duly adopted law of each member state.
F. Provides that the agreement authorized by this chapter binds and inures only to the benefit of this state and the other member states. Also it provides that a person, other than a member state, is not an intended beneficiary of the agreement. A benefit to a person other than a state is established by the law of this state and the other member states and not by the terms of the agreement. A person does not have a cause of action or defense under the agreement or by virtue of this state's approval of the agreement. The bill prohibits a person from challenging, in any action brought under any law, an action or inaction by any department, agency, or other instrumentality of this state, or any political subdivision of this state, on the ground that the action or inaction is inconsistent with the agreement. Prohibits a law of this state, or the application of the law, from being declared invalid as to any person or circumstance on the ground that the provision or application is inconsistent with the agreement
G. Provides that a certified service provider is the agent of a seller, with whom the certified service provider has contracted, for the collection and remittance of sales and use taxes. As the seller's agent, the certified service provider is liable for sales and use tax due each member state on all sales transactions the provider processes for the seller except as provided by this section.
H. The bill provides that a seller that contracts with a certified service provider is not liable to this state for sales or use tax due on transactions processed by the certified service provider unless the seller misrepresented the type of items it sells or committed fraud. In the absence of probable cause to believe that the seller has committed fraud or made a material misrepresentation, the seller is not subject to audit on the transactions processed by the certified service provider. A seller is subject to audit for transactions not processed by the certified service provider. Authorizes the member states acting jointly to perform a system check of the seller and review the seller's procedures to determine if the certified service provider's system is functioning properly and the extent to which the seller's transactions are being processed by the certified service provider.
I. Provides that a person that provides a certified automated system is responsible for the proper functioning of that system and is liable to this state for underpayments of tax attributable to errors in the functioning of the certified automated system. A seller that uses a certified automated system remains responsible and is liable to this state for reporting and remitting tax.
J. Provides that a seller that has a proprietary system for determining the amount of tax due on transactions and has signed an agreement establishing a performance standard for that system is liable for the failure of the system to meet the performance standard.
7. House Bill 1098 - Modifies the procedure for the collection of taxes on printed materials distributed by mail.H.B. 1098 has been signed by the Governor and will be effectiveSeptember 1, 2001.
H.B. 1098, Section 1, amends Texas Tax Code Section 151.052 by addingSubsection (d) as described below.
A. The bill establishes a presumption for the purposes of the printer's tax collection duty. It is presumed that printed materials distributed by the U.S. Postal Service (either singly or in sets), addressed to individual recipients (other than the purchaser), and that are either produced at a printer's facility in this state or purchased in this state are for use in Texas. Under this presumption, the printer must collect the tax imposed under this chapter.
B. The bill also establishes the requirements to overcome the above presumption. The purchaser is required to issue an exemption certificate to the printer if the materials are for distribution to both in-state and out-of-state recipients. The certificate must state that the printed materials are for multi-state use and that the purchaser agrees to pay this state all taxes that are or may become due to this state on the taxable items purchased under the certificate.
"Printed materials" is defined under this subsection as "materials that are produced by web offset or rotogravure printing processes."
D. A printer that is relieved of the obligation to collect the taxes imposed by this chapter on the foregoing materials is required to file a report as provided by Section 151.407. H.B. 1098, Section 3, allows the Comptroller to adopt rules and forms to implement the collection requirements provided by Subsection (d) of the Texas Tax Code Section 151.052 added by this Act.
8. Senate Bill 1497 - Establishes uniform nationwide sourcing rules for state and local taxation of mobile telecommunications services.
S.B. 1497 hasbeen signed by the Governor and will be effective August 1, 2002.
S.B. 1497, Section 1, amends Texas Tax Code Chapter151, SubchapterC by adding Section 151.061 as described below.
A. Defines "home service provider," "place of primary use," and "electronic database."
B. Provides that this section applies to state and local sales and use taxes.
C. Provides that the Mobile Communications Sourcing Act (4 U.S.C. Sections 116-126) governs the sourcing of charges for mobile communications services. In accordance with that act, the following requirements have to be met:
(1) Mobile telecommunications services provided to a customer in a taxing jurisdiction shall be deemed to be provided by the customer's home service provider if the charges are billed by or for the customer's home service provider. (2) All charges deemed to be provided by the customer's home service provider are authorized to be subjected to tax, charge or fee by the taxing jurisdictions whose territorial limits encompass the customer's place of primary use. This is regardless of where the mobile telecommunications services originate, terminate, or pass through. Also, no other taxing jurisdiction may impose a tax, charge or fee on charges for such services.
D. Provides for the procedure and requirements for notifying the home service provider if the customer believes that the amount of tax or assignment of place of primary use or taxing jurisdiction included on a billing is erroneous.
E. Requires the home service provider, not later than the 60th day after the date it receives a request under Subsection (d), to review its records and the electronic database or enhanced zip code to determine the correct amount of the tax imposed of the assignment or the customer's place of primary use or taxing jurisdiction, as appropriate. If the home service provider determines that the amount of tax imposed or the assignment of place of primary use or taxing jurisdiction is incorrect, the bill requires it to correct the error and refund or credit any amount of tax erroneously collected from the customer for a period of up to four years. If the home service provider determines that the amount of tax imposed or the assignment of place of primary use or taxing jurisdiction is correct, the bill requires it to provide a written explanation to the customer.
F. Provides that the procedures prescribed by Subsections (E) and (F) are the first course of remedy available to a customer requesting a correction of assignment of place of primary use or of taxing jurisdiction or a refund of or other compensation for taxes erroneously collected by the home service provider.
G. Authorizes the state, or designated database provider, to provide an electronic database to a home service provider.
H. Requires the state or the designated database provider that provides or maintains an electronic database to provide notice of the availability of the then current electronic database, and any subsequent revisions thereof, by publication in the manner normally employed by the state.
I. Provides that a home service provider using the data contained in an electronic database is exempt from any tax, charge, or fee liability that otherwise would be due solely as a result of any error or omission in such database provided by the state or designated database provider. It also requires the home service provider to reflect changes made to such database during a calendar quarter not later than 30 days after the end of such calendar quarter.
J. Provides that if neither the state nor the designated database provider provides an of flood control taxes or the use of funds generated by flood control taxes.electronic database, a home service provider is to be exempt from any tax, charge, or fee liability in the state that otherwise would be due solely as a result of an assignment of a street address to an incorrect taxing jurisdiction. But only if, subject to Subsection (N), the home service provider employs an enhanced zip code to assign each street address to a specific taxing jurisdiction for each level of taxing jurisdiction and exercises due diligence at each level of taxing jurisdiction to ensure that each such street address is assigned to the correct taxing jurisdiction. The bill requires that if an enhanced zip code overlaps boundaries of taxing jurisdictions of the same level, the home service provider is to designate one specific jurisdiction within such enhanced zip code for use in taxing the activity for such enhanced zip code for each level of taxing jurisdiction. It also provides that any enhanced zip code assignment changed in accordance with Subsection (N) is deemed to be in compliance with this section. For purposes of this section, there is a rebuttable presumption that a home service provider has exercised due diligence if such home service provider demonstrates that it has undertaken certain requirements.
K. Provides that Subsection (J) applies to a home service provider that is in compliance with the requirements of that subsection if an electronic database is not provided until the later of: (1) 18 months after the nationwide standard numeric code has been approved by the Federation of Tax Administrators and the Multistate Tax Commission or (2) 6 months after the state or a designated database provider in the state provides such database.
L. Requires a home service provider to be responsible for obtaining and maintaining the customer's place of primary use. Subject to Subsection (N), and if the home service provider's reliance on information provided by its customer is in good faith, the bill requires the taxing jurisdiction to (1) allow a home service provider to rely on the applicable residential or business street address supplied by the home service provider's customer and (2) not hold a home service provider liable for any additional taxes, charges, or fees based on a different determination of the place of primary use for taxes, charges, or fees that are customarily passed on to the customer as a separate itemized charge.
M. Requires a taxing jurisdiction, except as provided in Subsection (n), to allow a home service provider to treat the address used by the home service provider for tax purposes for any customer under a service contract or agreement in effect two years after the date of the enactment of the Mobile Telecommunications Sourcing Act (4 U.S.C. Sections 116-126) as that customer's place of primary use for the remaining term of such service contract or agreement, for purposes of determining the taxing jurisdiction to which taxes, charges, or fees on charges for mobile telecommunications services are remitted.
N. Authorizes the state to determine that the address used for purposes of determining the taxing jurisdictions to which taxes, charges, or fees for mobile telecommunications services are remitted does not meet the definition of place of primary use under Subsection (a)(2) and give binding notice to the home service provider to change the place of primary use on a prospective basis from the date of notice of determination. Before the state gives such notice of determination, the customer shall be given an opportunity to demonstrate, in accordance with applicable state administrative procedures, that the address is the customer's place of primary use. It also authorizes the state to determine that the assignment of a taxing jurisdiction by a home service provider under Subsection (J) does not reflect the correct taxing jurisdiction and give binding notice to the home service provider to change the assignment on a prospective basis from the date of notice of determination. The home service provider shall be given an opportunity to demonstrate, in accordance with applicable state administrative procedures, that the assignment reflects the correct taxing jurisdiction.
O. If a taxing jurisdiction does not otherwise subject charges for mobile telecommunications services to taxation and if these charges are aggregated with and not separately stated from charges that are subject to taxation, then the charges for nontaxable mobile telecommunications services may be subject to taxation unless the home service provider can reasonably identify charges not subject to such tax, charge, or fee from its books and records that are kept in the regular course of business. Also, if a taxing jurisdiction does not subject charges for mobile telecommunications services to taxation, a customer may not rely upon the nontaxability of charges for mobile telecommunications services unless the customer's home service provider separately states the charges for nontaxable mobile telecommunications services from taxable charges or the home service provider elects, after receiving a written request from the customer in the form required by the provider, to provide verifiable data based upon the home service provider's books and records that are kept in the regular course of business that reasonably identifies the nontaxable charges.
S.B. 1497, Sections2 and 3, amend Texas Tax Code Sections 321.203(g) (Municipal salesand use tax) and 323.203(g) (County sales and use tax) respectively,to provide that sales of mobile communications services are carriedout according to the provisions of Section 151.061.
S.B. 1497, Section 4, amends Texas Health and Safety Code Chapter771D by adding Section 771.0735 to provide as in 1(C) above with theadditional requirement that the fee imposed on wireless telecommunicationsbills shall be administered in accordance with Texas Tax Code Section151.061.
9. House Bill 244 - Exempts certain emergency service organizations from the sales and use taxes on boats and boat motors.
H.B. 244 has been signed by the Governor and has been ineffect since May 21, 2001.
H.B. 244, Section 1, amends Texas Tax Code Chapter 160, Subchapter Bby adding Section 160.0245 to provide an exemption to the taxes imposedby this chapter on the sale or use of a taxable boat or boat motor.Volunteer fire departments and other departments, companies, and associationsorganized for the purpose of answering fire alarms and extinguishingfires or for the purpose of answering fire alarms, extinguishing fires,and providing emergency medical services may be entitled to the exemption.The department, company or association must receive no or nominal compensationfor their services and the boat or motor must be used exclusively bythem to qualify.
10. House Bill 82 - Adds an exemption from sales and use taxes for certain taxable items sold by a qualified student organization affiliated with an institution of higher learning.
H.B.82 has been signed by the Governor and will be effective October 1,2001.
H.B. 82, Section 1, amends Texas Tax Code Section 151.321 by addingSubsection (b). It provides that in each calendar year, the first $5,000of a qualified student organization's total receipts from sales of taxableitems not otherwise exempt under Subsection (a) is exempt from the salestaxes. Subsection (b) is limited by the same previous requirements asunder Subsection (a).
11. Senate Bill 601 - Creates a tax credit for investing in a certified capital company.
S.B. 601 has been signed by the Governor and has been in effectsince May 28, 2001.
S.B. 601, Section 1, amends Chapter 4 of the Insurance Code by addingSubchapter B as described below.
A. It requires the Comptroller to administer the provisions of the bill and authorizes the Comptroller to adopt rules and forms to implement the provisions.
B. The bill sets forth the qualifications and application procedures of a certified capital company.
C. The bill prohibits the management or certain types of ownership or control of a certified capital company by an insurance company, group of insurance companies, or other person who may have a premium tax liability.
D. It sets forth provisions relating to the offering material involving the sale of securities of a certified capital company, requirements for continuance of certification, evaluating of a business by the Comptroller, reports to the Comptroller and audited financial statements, renewal of certification, distributions and repayment of debt, annual review and decertification, and recapture and forfeiture of premium tax credits.
E. The bill authorizes a certified capital company to agree to indemnify against losses resulting from recapture or forfeiture of premium tax credits.
F. The bill provides that a certified investor who makes an investment of certified capital in the year of investment earns a vested credit against state premium tax liability equal to 100 percent of the certified investor's investment of certified capital, subject to specified limits. The bill authorizes a certified investor to take up to 10 percent of the vested premium tax credit in any taxable year of the certified investor.
G. The bill provides that the total amount of certified capital for which premium tax credits may be allowed under these provisions for all years in which premium tax credits are allowed is $200 million. The bill prohibits the total amount of certified capital for which premium tax credits may be allowed for all certified investors from exceeding the amount that would entitle all certified investors in certified capital companies to take total credits of $20 million in a year.
H. It requires the Comptroller to allocate the total amount of premium tax credits allowed under the provisions of the bill to certified investors in certified capital companies on a pro rata basis in accordance with specified requirements.
I. The bill sets forth provisions relating to the impact of tax credits claimed by a certified investor on insurance rates and the transferability of credit.
J. The bill requires the Comptroller to prepare a biennial report to the governor, lieutenant governor, and speaker of the house with respect to the implementation of the provisions of the bill and sets forth the required content of that report.
K. The bill provides that implementation of the provisions of the bill are subject to available revenue. The bill requires the Comptroller to implement the provisions of the bill not later than the 60th day after the effective date of the bill.
12. House Bill 394 - Changes location for filing inventory in order to conduct a going out of business sale and provides notice guidelines for the chief appraiser.
H.B. 394 hasbeen signed by the Governor and will be effective September 1, 2001.
H.B. 394, Section 1, amends Texas Business and Commerce Code Section17.83(a). It requires a person, in order to conduct a going out ofbusiness sale, to file an original inventory with the chief appraiserof the appraisal district, rather than county clerk, in which theperson's principal place of business in the state is located.
H.B. 394, Section 2, amends Chapter 17, Subchapter F of the TexasBusiness and Commerce Code by adding Section 17.835. It requires thechief appraiser, not later than the fifth business day after the dateon which a person files an original inventory under Section 17.83,to send notice of the filing to the Comptroller, the county clerkof the county in which the person's principal place of business inthe state is located, and the tax collector for each of the taxingunits that tax the property described in the original inventory.
13. Senate Bill 640 - Requires electronic filing of certain tax reports and payments.S.B. 640 has been signed by the Governor and has been in effect sinceMay 3, 2001.
S.B. 640, Section 1, amends Texas Tax Code Chapter111, Subchapter Bby adding Sections 111.0625 and 111.0626 as described below.
A. Section 111.0625 compels the Comptroller by rule to require a taxpayer who paid $100,000 or more during the preceding fiscal year in a category of payments required under this title to transfer payments in that category transfer payments in that category by means of electronic funds transfer in accordance with Section 404.095 (Electronic Transfer of Certain Payments), Government Code, if the Comptroller reasonably anticipates the person will pay at least that amount during the current fiscal year.
B. Section 111.0626 compels the Comptroller by rule to require electronic filing of a report required under Chapter 151, 201, or 202, or an international fuel tax agreement, for a taxpayer who is also required under Section 111.0625 to transfer by electronic funds transfer. The Comptroller is also authorized to adopt rules requiring electronic filing of a report not described by Subsection (a). In addition, a rule adopted under this section must provide for a waiver from the electronic filing requirement for a taxpayer who cannot comply.
S.B. 640, Section2, amends Texas Tax Code Section 111.063 to provide for authorizationfor the Comptroller to impose a penalty of five percent of the taxdue on a person who is required under Section 111.0626 to file a reportelectronically and does not file the report electronically. This penaltyis to be additional to any other penalty provided by law.
14. House Bill 445 - Allows for cities to adopt a sales and use tax to maintain and repair city streets.
H.B. 445 has been signed by the Governor and has been in effectsince June 11, 2001.
H.B. 445, Section 1, amends Texas Tax Code Title 3, Subtitle C, byadding Chapter 327. The bill allows a city to adopt a sales and usetax at an election held in the municipality only to maintain and repairmunicipal streets existing as of the date of the election to adoptthe tax. The bill defines "municipal street" as the entire width ofa way held by a municipality in fee or by easement or dedication thathas a part open for public use for vehicular travel. The rate authorizedis one quarter of one percent. The bill prohibits the adoption ofthis tax if, as a result of adopting it, the combined rate of allsales and use taxes imposed by the municipality and other politicalsubdivisions of this state having territory in the municipality wouldexceed two percent at any location in the municipality. The bill alsosets the effective date, expiration date, and election proceduresfor the tax.
15. Senate Bill 1168 - Authorizes counties to order a referendum on the increase or decrease of flood control taxes or the use of funds generated by flood control taxes.
S.B. 1168has been signed by the Governor and has been in effect since May 22,2001.
S.B. 1168, Section 1, amends Texas Local Government Code Chapter 411by adding Section 411.009. The bill authorizes the commissioners courtof a county to order a referendum on whether flood control taxes shouldbe increased or decreased, or whether an existing or proposed floodcontrol project should receive funding. The bill sets forth the ballotpropositions for such a referendum and provides for the increase ordecrease of a flood control tax according to majority vote. The billprohibits a flood control project for which a majority of the votescast at the referendum do not approve funding from receiving fundsgenerated by the flood control tax.
16. House Bill 3140 - Redefines "agricultural processing" to provide greater incentives and make businesses eligible for franchise tax credits.
H.B. 3140 hasbeen signed by the Governor and will be effective January 1, 2002.
H.B. 3140, Section 1, amends Texas Tax Code Section by redefining"agricultural processing" to add codes from the Standard IndustrialClassification Manual published by the federal Office of Managementand Budget. The added codes would include processing activities suchas producing organic fibers, medicinals, soap, gum and wood chemicals,industrial organic chemicals, adhesives, sealants, gelatin, and artgoods. The following three bills relate to the franchise tax.
17. Senate Bill 63 - Creates a qualified franchise tax credit for wages paid to persons with certain disabilities.S.B. 63 has been signed by the Governor and will become effectiveJanuary 1, 2002.
S.B. 63, Section 1, amends Texas Tax Code Chapter 171, by adding SubchapterS as described below.
A. A corporation is entitled to a credit against the tax imposed under Chapter 171 of the Tax Code.
B. A corporation qualifies for a credit for each employee:
1. Originally hired for a position located or based in this state on or after January 1, 2002; 2. Who, at the time of being hired, is an individual eligible under federal law (42 U.S.C. § 1382) for supplemental security income benefits on the basis of disability or blindness or is a recipient of social security disability insurance benefits; and 3. Who remains continuously employed with the corporation for at least 6 months, earns at least the minimum wage, works an average of at least 20 hours a week, and receives the same benefits as the employer's other workers.
C. The amount of the credit is 10 percent of the wages paid by the corporation for each qualified employee. The bill authorizes a corporation to claim the credit only for wages paid the qualified employee during the first two years of employment for a position located or based in this state. The credit claimed for each privilege period may not exceed 50 percent of the amount of net franchise tax due, after any applicable credits, for the privilege period.
D. A corporation must apply for a credit, using a form that the Comptroller is required to promulgate, on or with the tax report for the period for which the credit is claimed. A corporation is authorized to claim a credit for wages paid during an accounting period only against the tax owed for the corresponding privilege period. The bill also requires the Comptroller to adopt rules necessary to implement these provisions.
18. House Bill 1447 - Redefines "strategic investment area" to make more businesses eligible for tax incentives.
H.B. 1447 was not signed by the Governor, but was automaticallypassed and will become effective January 1, 2002.
H.B. 1447, Section 1, amends Texas Tax Code Section 171.721(2) byredefining "strategic investment area" to include "defense economicreadjustment zones" designated under Chapter 2310 of the Texas GovernmentCode.
H.B. 1447, Section 2, authorizes a corporation to claim a credit underChapter 171, Subchapters O, P, and Q, of the Texas Tax Code on a reportoriginally due on or after the effective date. Credit can be claimedfor expenses and payments incurred, qualified investments or expendituresmade, and new jobs created in that area on or after the effectivedate.
19. House Bill 2686 - Creates tax incentives for certain businesses located in enterprise defense readjustment zones, or strategic investment areas.
H.B. 2686 hasbeen signed by the Governor and will be effective September 1, 2001,except Sections 11-17 of this Act, which will become effective January1, 2002.
H.B. 2686, Section 1.01, amends Texas Government Code Section 2303.407.The bill restricts the number of new permanent jobs or retained jobseligible to be included in a computation of a tax refund for the enterpriseproject to 250 (changed from 625) or a number equal to 110 percentof the number of anticipated new permanent jobs or retained jobs specifiedin the application for designation of the business as an enterpriseproject under Section 2303.504, whichever is less.
H.B. 2686, Section 1.02, amends Texas Government Code Section 2303.504.It provides, subject to Section 2303.516, that an enterprise projectis entitled to a franchise tax credit under Chapter 171, SubchapterP or Q, rather than to a deduction from taxable capital under Section171.1015 of the Tax Code. The bill requires the Comptroller, not laterthan the 60th day after the last day of each fiscal year, to reportto the department the statewide total of the tax refunds and creditsmade under this section during that fiscal year.
H.B. 2686, Sections 1.03 and 1.05, amend Texas Government Code Chapter2303, Subchapter G and Government Code Chapter 2310, Subchapter Fby adding Sections 2303.516 and 2310.413 respectively. The sectionsauthorize the Texas Department of Economic Development to monitora qualified business or enterprise project or a defense readjustmentproject to determine whether and to what extent the business or projecthas followed through on any commitments made by it or on its behalfunder this chapter. The bill also authorizes the department to determinethat the business or project is not entitled to a refund or creditof state taxes under Section 2303.504 or Section 2310.404 if the departmentdiscovers that: (1) the business or project is not willing to cooperatewith the department in providing the department with the informationthey need to make the determination or (2) the business or projecthas substantially failed to follow through on any commitments madeby it or on its behalf under this chapter.
H.B. 2686, Section 1.04, amends Texas Government Code Section 2310.404to provide, subject to Section 2310.413, that a defense readjustmentproject is eligible for a franchise tax credit under Chapter 171 Por Q, rather than to a deduction from taxable capital under Section171.1016 of the Tax Code.
H.B. 2686, Section 1.06, amends Texas Tax Code Section 151.429. Itprovides that an enterprise project is eligible for a refund in theamount provided by this section of the taxes imposed by this chapteron purchases of taxable services and tangible personal property purchasedand consumed in the normal course of business in the enterprise zone.Additionally, the bill provides that an enterprise project, subjectto the limitations provided by this section, qualifies for a refundof taxes under this section of $5,000 (changed from $2,000) for eachnew permanent job or job that has been retained by the enterpriseproject for a qualified employee.
H.B. 2686, Section 1.08, amends Texas Tax Code Section 171.751 todefine "defense readjustment project," "enterprise project," "enterprisezone," and "readjustment zone," and to redefine "qualifying job."
H.B. 2686, Section 1.09, amends Texas Tax Code Section 171.752, SubsectionB. It authorizes a corporation to claim a credit or take a carryforwardcredit without regard to whether the strategic investment area, enterprisezone, or readjustment zone in which it created the qualifying jobssubsequently loses its designation as a strategic investment area,enterprise zone, or readjustment zone, if applicable.
H.B. 2686, Sections 1.10 and 1.13, amend Texas Tax Code Sections 171.754and 171.804 respectively. The sections authorize a corporation thathas been designated as an enterprise project or as a defense readjustmentproject, subject to Sections 171.755 or 171.805, to claim the entirecredit earned during an accounting period against the taxes imposedfor the corresponding reporting period.
H.B. 2686, Section 1.11, amends Texas Tax Code Section 171.801 todefine "defense readjustment project " and to redefine "qualifiedcapital investment."
H.B. 2686, Section 1.14, amends Texas Tax Code Section 171.721 todefine "base amount," "basic research payment," and "qualified researchexpense" and to redefine "strategic investment area."
H.B. 2686, Section 1.15, repeals Texas Tax Code Sections 171.1015,171.1016 and 171.805(c).
20. House Bill 1241 - Changes the amount of dyed diesel fuel that is tax exempt for certain agricultural and oil and gas users.
Thefollowing joint resolution passed in the Legislature, is proposing anamendment to the Texas Constitution, and is to be voted on by the publicon November 6, 2001.
H.B. 1241 was not signed by the Governor, but was automaticallypassed and will be effective September 1, 2001.
H.B. 1241, Section 1, amends Texas Tax Code Section 153.001 to define"agricultural purpose."
H.B. 1241, Section 2, amends Texas Tax Code Sections 153.205(a), (b),and (i). It provides that a purchaser of dyed diesel fuel may makethe purchase without a tax being placed on it if all of the dieselfuel will be consumed by the purchaser in oil or gas production, asapplicable. The bill also prohibits a person from making a tax-freepurchase of any diesel fuel under this section using a signed statement:(1) for the purchase of more than 7,400 (changed from 3,000) gallonsof dyed or undyed diesel fuel in a single transaction or (2) in acalendar month in which the person has previously purchased certainquantities of dyed or undyed diesel fuel from all sources.
H.B. 1241, Section 3, amends Texas Tax Code Section 153.209 to providethat this section does not affect the right of a purchaser to purchaseup to 25,000 gallons of dyed diesel fuel for the purchaser's own usein oil or gas production, or of dyed or undyed diesel fuel for thepurchaser's own use for agricultural purposes only, using a signedstatement under Section 153.205.
21. Senate Joint Resolution 2 - Allows a school district to donate certain surplus district property
S.J.R. 2 is the companion to H.J.R. 19. It proposes a constitutional amendmentauthorizing the legislature to authorize the board of trustees of an independentschool district to donate district real property and improvements formerlyused as a school. The board must determine, before making the donation,that the improvements have a historical significance, the transfer willfurther the preservation of the improvements, and the district, at thetime of the transfer, does not need the real property or improvementsfor educational purposes.