By:  Hirschi                                           H.B. No. 387
       73R1171 CBH-D
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to the application of the sales tax to certain
    1-3  intercorporate services.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Sections 151.346(a) and (b), Tax Code, are
    1-6  amended to read as follows:
    1-7        (a)  There are exempt from the taxes imposed by this chapter
    1-8  service transactions among:
    1-9              (1)  affiliated entities, at least one of which is a
   1-10  corporation, that report their income to the Internal Revenue
   1-11  Service on a single consolidated return for the tax year in which
   1-12  the transaction occurs; and
   1-13              (2)  corporations that are members of a brother-sister
   1-14  controlled group if the company providing the service:
   1-15                    (A)  receives only reimbursement for providing
   1-16  the service in the amount of the overhead costs for providing the
   1-17  service only;
   1-18                    (B)  provides the service only to other members
   1-19  of the controlled group; and
   1-20                    (C)  does not offer the service to the public.
   1-21        (b)  For purposes of this section:
   1-22              (1)  "Affiliated<, "affiliated> entity" includes an
   1-23  entity that would be classified as a member of an affiliated group
   1-24  under 26 U.S.C. Section 1504 but for the exclusions provided by
    2-1  that section.
    2-2              (2)  "Brother-sister controlled group" has the meaning
    2-3  assigned by Section 1563(a)(2), Internal Revenue Code of 1986.
    2-4        SECTION 2.  This Act takes effect October 1, 1993.
    2-5        SECTION 3.  The importance of this legislation and the
    2-6  crowded condition of the calendars in both houses create an
    2-7  emergency   and   an   imperative   public   necessity   that   the
    2-8  constitutional rule requiring bills to be read on three several
    2-9  days in each house be suspended, and this rule is hereby suspended.